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Satyama Tests India: Where is the PR Campaign?

by Brandi Moore on January 13, 2009

“India’s economic slowdown may prompt further unwelcome revelations from its companies.  Some have quickly grown from small, family-operated enterprises to major international corporations. After years in which operating multiple sets of books was common practice to avoid taxation, some companies may not have developed the corporate governance standards that international investors expect.”   WSJ 1/9/09

It may seem amazing that such a well respected leader inside India, who represents the archetype of the successful Indian, one who took his wealth and handed it back onto the villages where he was born making it a life mission to help where help was so desperately needed — would wind up here.

But before we put Mr Raju in jail and slam the door its very important to really dive into what may have happened here.  Mr Raju said “it was like riding a Tiger and trying to get off without being eaten.”

The WSJ talks candidly to the issue I have spoken at length about here in previous posts—bribery and fixing the books are very much common place in India.  Its not surprising to learn that such a discrepancy could be generated with smoke and mirrors for several years.  Satyama started in 1987 and quickly grew to employ 53,000 people.  Likely, it all started when Satyama was a small firm with little to loose accept too much to the tax man.  So the creation of the dual books started.  And then it weathered on.  And on.  Until the economic tide turned and left little wiggle room for even the cooked books to be realized.

I can’t help but mention that the comparison between this and Enron is just a bit much.  Are we talking about a firm with the capability to control important markets with national effects?  No.  We are talking about an outsourcing giant in India that takes calls for some of the most important firms in the US.  The people taking the calls are still working there.  The lights are still on.

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