Satyam and Slumdog

The looting of Satyam by its founder Ramalinga Raju is not something that is new. Every Indian corporation is looted, some more and some less. So the CII and others professing shock is nothing more than crocodiles shedding tears

Mohan Guruswamy Delhi

The Satyam scandal couldn't have come at a worse moment for India. It comes at a time when the world is catching the American contagion. China, which rose to become the world's factory, manufacturing most of the cheap and shoddy goods needed for the western world and sold through its feeder pipelines like Wal-Mart, and India, which became the world's IT outsourcing base, have both been hit badly. We can take joy in the fact that China has been worst hit. But there is an ironic twist to this.

China hurts more because it grew faster and integrated more with the developed world. India's growth was tardier and its base much smaller. The level of integration with the outside world has been about half that of China. Thus the widely prevalent notion that this was due to the prescience of our policy makers who somehow foresaw this.

My friend Sitaram Yechury has been quick to claim some credit for this as according to him his party contributed most to slow down the pace of India's liberalisation! This is utter bunkum. It is akin to arguing that a beggar hurts less in a recession than a rich person. Of course he does in percentage terms. But he is at a level where every paisa less matters and the rich man is at a level when fewer rupees don't really matter. 

The looting of Satyam by its founder Ramalinga Raju is not something that is new. Every Indian corporation is looted, some more and some less, by section of its ‘management'. So the CII and others of its ilk professing shock is nothing more than crocodiles shedding tears. If they are cursing Raju, it will only be because Raju got caught and the brouhaha that followed may not allow them to continue with business as usual. It must be said to Raju's credit that he built a first class company capable of competing with the best in the business. He is a first generation industrialist and built his enterprise from scratch. Unlike the Infosys crowd, he was not a technocrat. Unlike Azim Premji, he didn't build on an inheritance. And nobody can be like the Tatas, the number one in this business as well as business as a whole. 

I don't for a moment believe the Raju story that Satyam's sales were inflated and so were its profits. That might have been true to some extent. His bench strength too might have been exaggerated a bit. But not by how much Raju pleaded guilty to in his unsigned email. What Raju seems to have been upto is to siphon off corporate funds to make other investments, mostly in real estate, and dressed his books by forging deposit receipts? He obviously didn't expect anyone to challenge the word of a man who shared the dais with Bill Clinton, or someone who got not one but several corporate governance awards? In my book, that should have been big enough reasons for taking a closer look at his books.