The swiftness with which the sale of Satyam was effected has made headlines (please see links below). At stake were not only the interests of the company and its stakeholders (including shareholders, employees, customer, and so on) but also the credibility of India as an investment destination (particularly in the IT sector). These interests can largely be said to have been preserved (without much damage done) by the deft handling of the situation. What is important is that the process was not a private affair, but was orchestrated by the Government of India. Players include the Ministry of Corporate Affairs, the Company Law Board and the directors appointed to the board of Satyam after the fraud came to light. The result could potentially have been very different (read bankruptcy) and undesirable had the events taken a different turn.
The following are links to some recent press reports and editorials:
While the task of finding a buyer for Satyam may have been accomplished, it is necessary to bring the accused in the fraud to book with equal zeal, failing which there could be a moral hazard problem. While the investigations by regulatory authorities have met with several hurdles along the way, they too have acted with unprecedented speed. Satyam’s sale decision coincides with the conclusion of the probe by the Serious Fraud Investigation Office (SFIO), whose “report runs into 12,000 pages in 30 volumes”. Earlier this month the Central Bureau of Investigation (CBI) filed its charge sheet in the case.
It seems that considerable progress has been accomplished within 100 days since the revelation of the fraud at Satyam, but there is still a long way to go before the saga can reach its logical end.
Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.
