Even before one could recover from the anger over the Mumbai terrorist attacks, we were treated to the shenanigans by the promoters of Satyam Computer Services. While adequate airtime and newsprint from vigilant investors managed to prevent a promoter siphoning $1.6 billion from minority investors, we should spend a moment to reflect the failure of systems behind this event.
On the board of Satyam are Prof Krishna Palepu, the Ross Graham Walker Professor and Senior Associate Dean at Harvard Business School (who specialises in corporate governance and was incidentally also on the board of Global Trust Bank, when that entrepreneurial venture went down); Prof M R Rao, the Dean of the ISB; and Vinod Dham, the inventor of the Pentium. Did a Board of such worthies actually approve the designs of Ramalinga Raju & family? Because we have been told that the Board of Satyam “unanimously” approved of this transaction. And even suppose they did believe in Raju’s explanation that this transaction brought to Satyam “wonderful” assets that added value, did they also believe that the best way of going about this transaction was without a shareholder approval, as per the original Satyam announcement?
It is also interesting to note that for their valuable services to the company, Krishna Palepu, M R Rao and Vinod Dham were paid compensation of Rs 92 lakh, Rs 13 lakh and Rs 12 lakh respectively, as per the 2007-2008 Annual Report.
A business professional runs the risk of being branded a business-basher, but it was also painful to see full-page advertisements celebrating the Ernst & Young Entrepreneur of the Year being awarded to Anil Agarwal of Sterlite, who was the last such promoter to attempt a Satyam-type shenanigan a few months ago, which was again successfully resisted by much-reviled hedge funds.
Anshuman Goenka, Mumbai
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