Reactions to the Satyam fiasco

08 January 2009

With the Satyam episode having badly mauled the image of corporate India, business chiefs and industry body have swiftly moved in with a host of suggestions to tighten corporate controls to prevent the recurrence of other damaging corporate frauds.

''The decline in governance and institutions represents a serious challenge to India," says Rajeev Chandrasekhar, MP and FICCI president. "After a decade and a half of focusing on economic and business reforms, it is imperative that the more difficult and as important objectives of governance reforms and accountability become the most  important priority / focus in the coming years, and should find a place in the manifestos of all political parties for the forthcoming general elections. ''

K V Kamath president CII, said, "The Confederation of Indian Industry (CII) today expressed its shock and disappointment at the disclosures made by  B Ramalinga Raju on the financial position and financial statements of Satyam Computer Services. CII believes there is a need to immediately examine the loopholes in regulation, accounting, audit and governance that allowed such lapses to occur and address them with urgency.

"While the occurrence of such events in a major company is a matter of deep regret, CII believes it would be inappropriate for this to be the basis of questioning of general governance standards in other companies. Corporate India must however reflect on ways to demonstrate its quality of governance and enhance the confidence of stakeholders.

ICAI president Ved Jain said that the chartered account practitioners' body was contemplating taking serious action after determining whether the auditors had been negligent or, worse, were hand-in-glove with those who perpetrated the fraud.
 
Saying he had never imagined something of this magnitude would happen, Mohandas Pai, head, HR Administration, Infosys, mooted the tightening  of the auditing process and suggested measures like ensuring systems for bank balance confirmations being sent directly to a company's auditors.

He also said that outsourcing clients would take a more cautious approach towards Indian outsourcing services suppliers after the Satyam founder's confession to accounting hoax and people having large exposure to outsourcing will consolidate and work to minimise risks.