January 7, 2009

Sunil Kumar heads SEBI team probing Satyam

Filed under: Uncategorized — Tags: , , , , , — Sucheta Dalal @ 11:12 pm


The Securities and Exchange Board of India will send a 9 member team headed by Sunil Kumar its Divisional Chief from Chennai to probe the Satyam scam. The entire effort will be supervised by SEBI’s Executive Director Mr. Nagpal.

SEBI, which had earlier found nothing wrong with the governance practices of Satyam and went to the extraordinary length of giving it a clean chit, has now woken up to the need to examine every aspect of the activities of the Satyam promoters and management. But frankly, when the Satyam Chairman has already confessed to extensive wrong doing, all that SEBI can only check if there is more dirt than disclosed and that is an academic exercise.

At this time, the regulator would be doing more for all the stakeholders if it had called an emergency meeting to check if some value can be salvaged out of Satyam on the strength of its contracts and staff. But here is the irony. While naive Satyam employees are busy giving sound bites to the effect that the company will be taken over, most of corporate India as well as leading regulators seem to think that the government will allow the company to die through sheer neglect. Frankly, this is one of those times when most of us would be happy if we were proved wrong.
For once, we would like the government to surprise us by helping to find a buyer for Satyam in the next three days, instead of putting out press releases to say how many different agencies are probing what is already a clear case of fraud.

Ramalinga Raju’s shocking confession to a fraud of over Rs 7000 crore however answers one question that had puzzled corporate watchers — why d

atyam’s promoter hold such a low stake in the company? More shockingly, even that (8.5%) was pledged to financial institutions.

Obviously, the Rajus knew that the company was hollow inside and when it burst, someone else would be left to deal with the mess. But the script didn’t play out as they probably expected. They tried to pull off one last scam, but that failed, leaving no alternative to a confession.

What will be Ramalinga Raju’s fate after this ? Why is the government pretending to conduct and inquiry when the man has already confessed? Since when has a confession by the wrong doer needed further verification before initiating proceedings? Our regulators and P.C.Gupta, the Minister for Corporate Affairs have given out plenty of sound bites, but no real answers.

Are they giving Ramalinga Raju time to contemplate his actions or take some other drastic action of his own? My sources say that Raju’s original letter was even more devastating in its confession than the one that was ultimately sent to the regulators and the stock exchanges. There is a section of corporate India that believes that Raju, by confessing and taking the entire responsibility for the scandal on himself, is attempting to protect his family and his sons.
As usual, people in Hyderabad see a host of political interests and rivalries at play in the Satyam scandal.
Maybe time and unravelling developments will ultimately tell us the truth behind this massive scandal.

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