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by Vault Consulting Editors | January 08, 2009

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These days, the ball doesn?t seem to favour the corporate tricksters? court anymore - be it Bernard Madoff or Ramalinga Raju of Satyam Computer Services.

The general mood in India Inc in response to the still-unfolding Satyam news is that of shock, awe and despair. Shocked because Satyam was one of the most respected companies in India; awed because nobody would have imagined an entrepreneur like Raju could pull-off such a heist; and despair as this is bound to have short- and long-term implications on the image of Indian IT industry.

Government and the corporate world has taken serious note of the issue. Both central and state governments have initiated criminal investigations against the company. SEBI, the Indian equivalent of the SEC, is already examining Satyam's books and those of its auditor, PricewaterhouseCoopers. The Institute of Chartered Accountants of India, meanwhile, is trying to ascertain the role of PwC, and has vowed to take action if the accounting firm is found to be guilty. For India Inc, the issue of transparency in corporate governance is at the forefront. Satyam employees are currently in panic mode, and are already on lookout for better options.

While investigations have been ordered, the media at large is not buying the theory that Satyam had an operating margin of a mere 3 percent. Despite his confession, Raju's followers are still supporting him. A website dedicated to him is testimony to this fact. Only an in-depth probe will unearth the sordid details of Raju's scheme, and such an investigation may linger on for several months. Until then, let?s hope that the fate of the Indian outsourcing industry doesn't become the next chapter in the book that begins, "Once upon a time, there was a company called Lehman Brothers?"

-Posted by: Vishal Ingole, Vault India

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