Unprecedented corporate fraud in Software History
An estimated $1.5 billion (Rs 7600 crore) may have disappeared in the fraud confessed to in 2009 by the now-jailed chairman of Satyam Computer Services Ltd. Satyam’s failures were many and systemic—from a weak auditing process to ineffective board oversight to a leader intent on committing fraud. For corporate leaders, regulators, and politicians in India, as well as for foreign investors, this “Enron moment” demanded a reassessment of the country’s progress in corporate governance. The resignations of an unprecedented 620 independent directors over the following year added to the mounting concerns.
As a consequence, India’s ranking in the CLSA4 Corporate Governance Watch 2010 slid from third to seventh in Asia. The CLSA report stated that India “has failed to adequately address key local governance challenges such as the accountability of promoters (controlling shareholders), the reputation of relatedparty transactions, and the governance of the audit profession.” The ensuing debate over reform approaches has raised such questions as, “How well are India’s companies being governed?” “Why the failures?” “Where were the regulators?” “What must be done to ensure that directors abide by best practice?”