Satyam fraud calls for regulatory oversight
Leading newspapers across the globe have given enough coverage to the startling revelations of accounting fraud by Satyam Computers chairman, which have now come to be known asu00a0 'India's Enron.'
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Most of the papers are unanimous in their analysis that the scandal shows poor regulatory oversight in India and calls for immediate overhaul in corporate governance.
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Wall Street Journal gave three reports regarding the issue. "After confessing to cooking the books at one of India's largest technology companies, B Ramalinga Raju called a friend and colleague to apologize," says one of the reports.
The report quoted Utla Balaji, chief executive of Health Management and Research Institute, as saying: "He said he was sorry things happened this way, and we would continue our work transforming rural India."
"The revelation was a massive shock to followers of the companyu00a0whose name means "truth" in Sanskrit," says The Independent.
"The Securities and Exchange Board of India has launched a formal investigation and there could be action from the US Securities and Exchange Commission. Merrill Lynch, the group's banking adviser, immediately quit after the news," it says.
Guardian, in one of its several reports,u00a0says that Indians faith in the family-run business has taken a beating with the Satyam fraud.
"One possibility is that Satyam could provide an impetus for regulatory change," says the report.
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Wall Street Journal also says that the huge accounting scandal at Satyam could lead to an overhaul of corporate-governance standards in the country and force changes in how Indian companies do business.
"Although some leading Indian companies have become international powerhouses in recent years, the general standard of corporate ethics and accounting have traditionally been poor in India," says the report.
This accounting scandal may increase "investor nervousness about weak corporate governance and oversight in emerging markets," says another report by Guardian.
Dwelling at length on the frauds committed by India's "leading outsourcing company", New York Timesu00a0says: "Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestlu00c3u0083u00c2u0083u00c3u0082u00c2u00a9 and the United States government. In some cases, Satyam is even responsible for clients' finances and accounting."
The detailed report says that the revelations could cause "a major shake-up in India's enormous outsourcing industry." It also warns that the scandal may force many large companies to "investigate and perhaps revamp their back offices."
According to the report, the size and scope of the fraud raises questions about "regulatory oversight in India and beyond."
"Satyam has been under close scrutiny in recent months, after an October report that the company had been banned from World Bank contracts for installing spy software on some World Bank computers. Satyam denied the accusation but in December, the World Bank confirmed without elaboration on the cause that Satyam had been banned," it says.
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