The recent fraud committed by Ramalinga Raju and his accomplices has done unimaginable amount of damage to Satyam as well as the image of the Indian IT industry, brand Hyderabad and more specifically India Inc.   We usually do not take lessons from our mistakes and therefore history repeats. Hope ,now on, it would be different. Some observations :

1. Recently Indian Government came out with an integrated agency (National Investigation Agency)to deal with any kind of terrorism anywhere in the country.  This  can freely interact with or bypass other state investigating agencies for a speedy and efficient investigation.  Inspite of a scam of this colossal nature I am surprised to find that SEBI has not been able to interrogate Ramalinga Raju so far in the last three weeks . SEBI now needs to cross several hurdles before it can actually reach Raju. If SEBI can’t even nab Raju who is in Government custody in the same location in the country , how do you think Indian government can ever make surgical strike in Pakistan? Just forget it.  It is a shame for a democratic India that its own machineries are failing to orchestrate  together good enough for a speeding up the enquiry process.

2. The external auditors’ role has come under scrutiny and some are now talking about bringing another set of auditor to oversee the external auditors and this process will go on unquestioned till we bump into a similar scam.  So what is needed is a more stringent government supervision of all the Boards in private sector where the company turnover exceeds a certain amount. The promoters should be discouraged to be on the board when the company turnover goes beyond a specified limit.  This will ensure more transparency and integrity in the system and derisk corporate India from a very large exposure as it happened in the case of Satyam. Company’s Law Board of India must bring out suitable changes to make this happen.

3. Following the resignation or termination of the previous board. Satyam has been grappling to find a new CEO or CFO.No internal candidate emerged as an automatic choice . This shows that second line of leadership is not adequately groomed in most of the organizations and as a result such  organizations are always prone to  leadership crisis when the existing leader is not there in the system.  Succession plan and leadership development need to be given special attention in the corporate sector and should be enforced by the government as a stipulation.Tatas and Infosys are good example.

4. Ironically ,in 2008  only Satyam received the Golden Peacock Global Award for the best corporate governance and this prestigious award  was given by world council for corporate governance.  Few years ago Raju received the E&Y entrepreneur of the year award. Last year Anna university conferred honorary doctorate on Ramalinga Raju. While a little aberration between the real and  “perceived to be” is possible, such a wide gap between the reality and  the perception of the person or the organization  simply go to point that we lack a robust framework which does not  appropriately evaluate individuals. Such social and global recognitions should be carefully implemented, otherwise they mislead  the public at large, and one cannot be blamed harboring the views that such recognitions can even be bought. Why is there no public lawsuit against the world council of corporate governance and Ernst  & Young for recognizing a wrong individual  and thus unduly influencing the investors.

5. A scam of Rupees 7800 crore is not just a mere scam, it is a financial terrorism  that I would equate with the kind of terrorist activity we just saw in Mumbai. But look at the way Raju and Ramu are treated during interrogation ! They can be interrogated only during the day time, no third degree and the lawyer would be present during the interrogation. It is like interrogating the son in law ! Will an ordinary suspect be also treated the same way? Where are all those narco analysis test , lie detectors and so on ?

6.  There is so much of suspicion over the fairness of the trials and  investigation.  If Tamilnadu’s ex Chief Minister Ms. Jayalalitha’s judicial case could be transferred from Tamil Nadu to Karnataka  fearing undue interference in the judiciary process, why cann’t we immediately transfer the investigation to  CBI and judiciary trial process to some other non-congress ruled state ?

7.  The recent incident has also brought to light the role of independent directors.  Having closely worked with several boards for many years, I know that independent directors hardly get time  to critically go through all the agenda of the board meeting due to many other commitments they keep.  I can confidently say, this is true in almost all the corporate entities .   Many of these independent directors are from the academic institutes.  They primarily look at the theoretical aspects of the decision and mostly take a bird’s eye view of the issues.  Sometimes it is fashionable for many to be an independent director on several  boards, some even say they add to the profile!  Therefore it should be made mandatory that one individual cannot be an independent director on more than two corporate entities.  This should be done to ensure independent directors give more time to analysis of the decision and not just to accord the quorum and make the promoters happy.