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January 9, 2009
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:icon1389ad:
This is worth a full view or download to read the screen shot text.

What a tragic irony!

In case you haven't heard, Satyam was the fourth-largest IT outsourcing company in India, with 55,000 employees (or so they claimed). The CEO, Ramalinga Raju, recently resigned after admitting massive financial fraud. As of this writing, the company is almost out of cash.

Satyam has done business with companies and governments in over 60 countries, including the U.S. This scandal appears to be even larger in scope than the Enron/Arthur Andersen scandal of late 2001. Price Waterhouse, the Indian subsidiary of PricewaterhouseCoopers, is facing close scrutiny over having signed off on Satyam's audits.

Obviously, the much-touted Sarbanes-Oxley law enacted after the Enron/Arthur Andersen debacle did nothing to prevent the recent collapse of the U.S. real estate, stock market, and financial sector. The take-home lesson is that once any corporation becomes multinational in scope, and politically well-connected, no laws, no regulations, no bureaucratic restructuring can possibly keep it honest if its management chooses to do otherwise.

Outsourcing and offshoring are always and everywhere the enemies of accountability. The further away one's trading partners are located, the harder it is to comprehend what they are up to, and that will never change.

Corporate cheating is contagious. Whenever one major company in an industry has been "cooking the books" to promote or exaggerate its own success, what effect do you suppose that has? Think about it! Every other executive, every other company in that industry will be pressured to match or exceed the cheater's inflated results, by fair means or foul, or face the wrath of board members and stockholders.

Some news links and other sources:

Business Standard: Regulators, government tighten noose around Satyam

Business Standard: Government supersedes Satyam board

Wikipedia: Satyam Computer Services Ltd.

NYT: Satyam Chief Admits Huge Fraud

IHT: India hears calls for Satyam bailout

IHT: Auditor in cross hairs over fraud at Satyam

The Australian: Police arrest Satyam founder, Government sacks board

Information Week Blog: Satyam And Its 8-Year Ban from World Bank

Bloomberg.com: Satyam U.S. Investors File Actions Alleging Fraud (Update2)

TheDeal.com: Enron went bankrupt, but what of Satyam's future?

Perhaps some of this would be funny if it were not so sad.

Note: The screen capture was taken by 1389AD from www.satyam.com, shortly after the announcement. The pixelated area was blurred in the original.

More funny, ironic, and sometimes tragic FAILage by 1389AD: [link].
:iconshad0wfire1:
!Shad0wfire1 Jan 10, 2009
Amazing they get away with it for so long, scary thing is knowing a lot of businesses operate it won't be long until they are caught out.

Guess I can keep "business ethics" in my list of oxymorons, If I had a company it just wouldn't ever include stock or share holders at all.

--
"Laughter and tears are both responses to frustration and exhaustion. I myself prefer to laugh, since there is less cleaning up to do afterward." - Kurt Vonnegut

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~1389AD Jan 10, 2009
Not having stocks or shareholders (i.e., not having a corporation) means sole proprietorships or partnerships only, which makes it much more difficult to put together a big organization. Limiting the size and growth of organizations is not entirely a bad thing, because the bigger an organization gets, the more chance it has to exert undue influence on the government, the press, and anybody else who should be keeping an eye on it - including auditing firms. The downside is that it is impractical or impossible to make and provide some goods and services without large organizations.

There are no easy answers... given the fallibility of human beings, we will always have to be on the lookout for cheating and corruption.

--
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!Shad0wfire1 Jan 10, 2009
I would prefer a lot of small companies in partnership but I guess the corruption could still happen anywhere.

I do like how Google do it, giving more power to the engineers then the managers and sales people sounds good to me. :)

--
"Laughter and tears are both responses to frustration and exhaustion. I myself prefer to laugh, since there is less cleaning up to do afterward." - Kurt Vonnegut

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