Business Reforms

» Preventing future aSatyams

How to deal with an unprecedented business crisis, please read at
http://economictimes.indiatimes.com/Opinion/Preventing_future_aSatyams/articleshow/3970414.cms

» ASatyam saga calls for total overall of business systems

In the last three months, there has been a major shakeup in the business environment, starting with US and then spreading to other continents and sub-continents.

The icon of the modern free capitalism which the US was supposed to be, has fallen on the wayside and the challenge today is not just to provide impetus to economic growth and recoup the lost pieces of business. But the real challenge seems to be in developing a proper architecture for modern businesses, so as to sufficiently take care of speculative practices that have struck deep roots. Can we develop proper sets of business systems and practices, which will have an inherent capacity to avoid the frequent cycles of booms and busts? Policy makers in different countries are currently engaged in micromanagement of the current meltdown, but the governments around the world will have to ultimately take up future issues of developing proper business institutions that will regulate the businesses without causing undue interference in their wealth generating capacity and will allow to them the freedom for creativity and entrepreneurship.

In the Indian context, we have had a great business ‘Tsunami’ by way of Satyam’s biggest fraudulent disclosure. India’s IT sector once upon a time was an icon of transparency and accountability; it had companies like Infosys and TCS which can certainly stand tall in the midst of many in-transparent Indian businesses. Much has already been written about Satyam. But, we only hope that Satyam is an exception and India’s IT industry will emerge champions once again.

Lessons from Satyam however should not be lost sight of. It has all the masala of a typical bollywood movie: complete failure and most disgraceful behaviour on the part of owners, failure of other share holders, independent Directors, Auditors and various Governmental Institutions. The true story would be known only after detailed investigations by various agencies come to a close. But suffice it to say that even big crimes have some small trails. Satyam too seems to have had left a number of trails, such as income tax notice to the company in 2001-02, which was politically managed and suppressed.

IRRO community only expects that the agencies concerned will dig deep into the trenches and come out with all the individual elements of fraud. New laws, regulations and requirements need to be devised which will provide deterrence to such practices for future.

For more, please visit our website www.irro.org
Download this issue of Feb-2009 eNewsLetter

Please send your feedback at irrorg@gmail.com or feedback@irro.org
Articles may be sent at editor@irro.org