The implosion of Hyderabad based Satyam has got everyone talking about “the scam” and asking how it was allowed to go on for so long. The Satyam saga has the chance to really show how India has changed since 1991 when new economic reforms were introduced. If Satyam and all the involved players get dragged into a 20 year court battle then it’s clear nothing has changed. SEBI needs to show leadership and not crack because of political pressure. They need to prosecute and penalize the individuals and companies that allowed the accounting scandal to go undetected for so long. To really show the Indian and institutional investor things have changed, below is my laundry list:
- Rama Ragu – Taken into custody within 48 hours and starts to serve a jail sentence within 6 months of a hearing.
- Srinivas Vadlamani (Satyam CFO) – Any money made on Satyam stock is paid back. Jail time.
- G. Jayaraman (company secretary) – Any money made on Satyam stock is paid back. Jail time.
- Teja and Rama Jr. (his two sons) – Jail. You can’t tell me these two had no idea. Their dad announces a major acquisition of THEIR companies but it’s all a shame transaction?
- Other Saytam employees – Any money made on Satyam stock is paid back. Jail sentences for all of them.
- Board of Directors (BoD) – Payback any money made as a BoD member. Barred from any other BoD position, honestly I can’t see anyone hiring them anyways.
- Srinivas Talluri (partner at PwC) – Severe financial penalty. Disbarred from working for 10 years. Jail time.
- Other PwC employees involved – Severe financial penalty.
- PwC India- kicked out of the country for 15 years.
- Any political person involved – okay, now i’m pushing my luck
If even half of my wish list comes true then I think it’s a big step forward for Indian corporate governance.
The biggest winner in all this might be the actual clients of Satyam. This gives them a chance to exit their contracts due to a material change or fraud. This will allow clients to renegotiate with other vendors at cheaper rates or totally can projects.