NEWS

Satyam Board Dissolved, Peer Review Audit Of Nifty Stocks Ordered

January 09, 2009
Aaman Lamba

The implosion of a good company gathered pace today when the Indian government announced the dissolution of the rump board that existed following the resignations of the independent directors and the Chairman and Managing Director of Satyam Computers. Acting through the Company Law Board, the government effectively nationalized the company and announced it would constitute a new 10-member board of independent directors within seven days consisting of "people of repute and dignity". Soon after, ex-Chairman Ramlinga Raju surrendered before the Andhra Pradesh police, after being untraceable for two days.

The material losses that appear to have been sustained by shareholders and the doubt over the accuracy of the auditing performed by Pricewaterhouse Coopers moved the SEBI chairman to announce that they would be asking all Nifty companies and other selected ones to submit their working books to a different auditor for a peer review. This unprecendented step might expose additional skeletons in the closet of various companies, but will go a long way in demonstrating the assertiveness and efficacy of India's regulators and government bodies.

Continuing with its penchant for rumor and provocative news reportage, the mainstream media floated a report today about Satyam announcing a two month hiatus of pay for its employees. This was rapidly debunked by employees, who indicated this was a misrepresentation of an internal employee discussion about sacrificing some pay, up to two months worth, to save the company they had built together.

Additional ambiguity was sought to be created in the misreading of the Infosys announcement that it would not poach employees or clients from the beleaguered Satyam into a statement that the employees were somehow un-employable.

The Indian government is dealing with a welter of issues all at once, and appears to be rising to the challenge, ending the petroleum officers' strike, besides superceding the Satyam board. This new economic order, with an assertive government acting fast and a big broom sweeping clean the excesses of the past, is a refreshing change, and might see an uptick in world perception about India's lethargic State.

The world economic situation continued to worsen, with United States job losses rising to 524,000, with an annualized drop of 7.2%, the highest since the end of World War II.

As the year progresses, it is already evident that this will be a year of many surprises, and things will only get darker before any glimmer of hope is seen. The rejuvenated expansion of the State might help stem the rising tide of economic fear, but this might come at the cost of free markets, which have their own way of working things out.

Aaman Lamba is the Publisher of Desicritics.org, a Blogcritics network site. He also blogs, more infrequently nowadays, at Audit Trails Of Self
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Satyam Board Dissolved, Peer Review Audit Of Nifty Stocks Ordered

 

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#1
Sudnerapandyan
URL
January 9, 2009
06:11 PM

Asking all Nifty companies and other selected ones to submit their working books to a different auditor for a peer review is a good move.

Hopefully this will not lead to a Pandora's box.

Nice article. Thank you.

#2
Slime_id
January 9, 2009
08:54 PM

Aman: "As the year progresses, it is already evident that this will be a year of many surprises, and things will only get darker before any glimmer of hope is seen."

i wish the year is brighter for all folks. I hope the darker days are less. I wish people are more happy. I wish people are more prosperous. Satyam folks will find jobs. India is a land of opportunities as are most of world countries. I wish the survival spirit persists and we all get to greater heights than ever. God Bless All!

#3
blokesablogin
January 10, 2009
05:34 AM

Even greater a fraud than Sathyam is Reliance- but then once you bid adieu to your conscience, you recognize the illusion this world is and perpetrate "fraud"! A fraud within a myth. Economic liberalization has brought in these excellent international accounting practices that create value when there is none! The average pawn broker will tell you ow he will lend less than what the collateral is worth- that is the secret of economic success. You can never win when you pay more than what something is worth and then expect to turn a profit! all these share play is just that- pawns in the share market.

#4
Anil
January 10, 2009
12:03 PM

Aaman

Well written and balanced article.

How can we put pressure on media to observe some more restraint and be objective? After all, media is the only hope (if at all) left for Indian people in this mess.

Anil

#5
MC Shalom
URL
January 10, 2009
12:40 PM

Recession or Depression?

A Credit Free, Free Market Economy Is Possible.

Both Dynamic on the Short Run & Stable on the Long Run.

✔ Introduction.

✔ The Numbered Account.

✔ The Credit Free Money: The Dinar-Shekel (AKA The DaSh).

✔ Asset Transfer: The Right Grant Operation.

✔ A Specific Application of Employment Interest and Money [For Economists].


Hence, We Shall Cancel All Interest Bearing Debt

In This Age of Turbulence People Want an Exit Strategy Out of Credit
An Adventure in a New World Economic Order.



The alternative would be to wait till, on the long run, most of our productive assets get physically destroyed either by war or by rust.
It will be either awfully deadly or dramatically long.

Press release of my open letter to Chairman Ben S. Bernanke:

Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work.


Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
1776 - Annuit Cúptis.

#6
Sunderapandyan
URL
January 14, 2009
11:12 PM

The Government of India has decided (or is deciding) to give 2000 crores to bail out Satyam which most of us would appreciate.

Here is a totally different perspective to this issue: Farmer suicides in our country since 1997 to 2008 total 1,82,936. Those farmers WERE NEVER BAILED OUT.

Dr Rudhran examines the correlation from a common mans perspective: www.kalugu.com

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