January 12, 2009
 

Phrase of the month: "All options are open"

"All options are open" seems to be the flavour of the fortnight month. Pranab Mukherjee and AK Anthony have used it in reference to Pakistan's attitude towards taking action against various terrorist outfits.

Yesterday Prem Chand Gupta, the minister for corporate affairs, also used the same phrase when asked about the demands by institutional investors to have representation on the revamped board of Asatyam Satyam after the names of the first three directors of the revamped board were announced.

There're a few aspects of the admission by ex-chairman Ramalinga Raju about inflated cash balances and profits for the past few years that I really struck me.

• Assuming that PWC was also hand-in-glove with the ex-chairman, what were the other directors on the board doing? Can they also be accused of complicity? It is inconceivable that Ramalinga Raju and CFO Srinivas Vadlamani were the only ones to know about what was happening.
  
• Don't auditors (internal or external) make any effort to verify the actual position of cash balances or profits of a company? Do they just go accept what's given to them using the "Customer is always right" maxim?
  
• Doesn't the Andhra CM YS Rajashekara Reddy know that a board with Azim Premji, NR Narayanamurthy and S Ramadorai is, despite the credentials & integrity of the people involved, a sure case of 'conflict of interest'?
  
• This isn't by any stretch of imagination the first accounting scandal for corporate India. It is the first one where a company's head has owned up to cooking the books. It is entirely likely that Ramalinga Raju would have in fact got away with it had he gone through with the Maytas acquisitions.

Labels: accounting, india, satyam, scam