dear friends
I give below the views of Mr K T Jagannathan, Senior Asst. Editor, The Hindu analysing the current situation. He has brought out many points to think over. Please read on.
Srinivasan
Prime Point
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I have a few points to make on Satyam imbroglio. We may endlessly debate if Satyam is caused by the greed of a single individual who answers the call Ramalinga Raju or an avoidable accident caused via collusion by multiplicity of actors. I feel Satyam will bring forth some stability and act as a leveller. It would, hopefully, be a warning to corporates who cook up books, collude with politicians and indulge in all kinds of undesirable practices. Post-Satyam, the pure money-induced hops in jobs will come down drastically. The global melt-down and the resultant impact in India will further see the `safety factor' taking precedence among job-hoppers. That should be good news for employers, especially the guys in the manufacturing sector who have been facing some tough competition (vis-a-vis getting people) by their peers in the software industry.
I also feel that the `quarter business' must go. The compulsory filing of `quarter results' has seen companies go virtually mad and indulge in competitive number cook-ups. As a result, it has triggered unwanted pressure on top managements to show up some rosy numbers to keep investors, markets and everybody happy. If proof were needed, Satyam is there for all of us to comprehend the fall-out of this stupid stipulation.
I have some comments on auditors and credit rating agencies. First rating agenices. They are paid by companies rated by them! The irony is there for all to see. More often than not, they react to an event. The `reactionsit' credit rating agenices do no service to investors (poor me and you) at all. The net result is that a commoner-investor who goes by the recommendations of these rating agenices end up losing his shirt. Unlike these poor fellows, the bigger and wiser institutional investors are, in any case, tipped off by the company managements (as it had happened in the case of Satyam where Ramaligna Raju tips off these biggies about his impending disclosure). So, something must be done to make these rating outfits accountable. Likewise, the auditors too are always go hand in glove with the company managements. This was the case in bygone days. This is the case in Satyam episode. This will be the case in the coming days, too. How do we break this auditor-management collusion? It is easier said. but difficult to achieve.
The role of independent auditors must be looked into afresh. Why are they inducted into the boards? They are there because they have domain knowledge and they have experience to guide the company.However, independent directors have become organmental positions. Either they dont know what is happening inside or they just turn a blind eye to what is happening. Either way, they can't just wash away their responsibility. People put their money and faith into a company because these eminent people are their on its board. We have seen people losing money and trust in many non-banking finance companies. We are now seeing it in Satyam too. Independent directors cannot have the cake and eat it too.
More importantly, i would also argue for a sense of responsibility from the media as well. WE, in the media, tend to give a go by to the ``basics''. Check, re-check and cross-check - that is governing principle. IN our quest for `exclusives', we forget the basic lessons. A sense of `level-headness' is very very important. And, we need to take a inward dip and rediscover the truth.
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