Aham Asatyam - B Ramalinga Raju of Satyam Computers
The letter written by Mr Ramalinga Raju, the promoter of Satyam Computer Services Ltd, admitting to window dressing of the Profit and Loss Account and Balance Sheet of Satyam Computers has sent shockwaves across the country.
How is it possible for a business house managed by a Board of Diretors comprising of promoters and Indipendent Directors to present cooked-up figures quarter after quarter?
Why did not the people responsible for maintenance of accounts - the team led by the Chief Financial Officer Mr Srinivas - reveal this massive fraud?
How is it possible for the statutory auditors to certify the Balance Sheet as “True and Fair” when almost 80% of the total assets reported is fictitious and such assets are cash and bank balances - perhaps the most easily verifiable of all assets in a Balance Sheet?
How is it that the Independent Directors did not question the loss of interest due to large amounts said to be lying in current accounts? Even a layman would know that such balances do not earn any interest?
It is not possible to accept the plea of Mr Ramalinga Raju that no one else except him is responsible for the fraud. There is a massive failure of internal controls in the organisation. There cannot be any doubt that many more people are involved and they must also be made accountable along with Mr Ramalinga Raju.
The role of the new management is crucial inthis regard. They must provide full support to the authorities investigating the fraud. The various authorities, including and not limited to, SEBI, Ministry of Company Affairs, Institute of Chartered Accountants of India, SEC of US, the stock exchanges and police, must conduct a full and complete investigation of the fraud. They must identify the reasons for the failure of internal controls and audits that allowed the fraud to remain undetected for such a long period. They must also suggest measures to ensure that such frauds are not repeated in future. And the Government must enact rules and regulations as suggested by the investigators.
Frauds are a fact of life. As long as there is human greed, there will be frauds. Remember Harshad Mehta, Khetan Parikh, Bernard Madoff, Enron, Worldcom, et al.But the rules and regulations must make it difficult to commit a fraud. And the same rules and regulations must ensure speedy punishment of the perpetrators of frauds as a lesson to others. We have a very poor track record in respest of punishing the fraudsters. This must change.
Let us hope we emerge stronger from this scandal, that we have better audits, accounts and corporate governance.