For Satyam eva jayate: Reform political funding

Mahindra Satyam, formerly Satyam Computers, has met a statutory requirement by finalising its accounts for FY 2009 and FY 2010, 18 months after the software firm’s founder Ramalinga Raju confessed to mammoth fraud. The only thing that is clear is that the company is doing well now: It has added new clients, bagged a part of the unique identity number project and is building on core competencies to regain lost ground. The management expects the company to turn profitable in two years. However, the financials do not give a clear picture on the actual losses suffered by erstwhile Satyam, thanks to a heavy dose of qualifications and the forensic audit’s failure to track fund diversion and missing transaction trails.

So, the hole in the company, estimated at Rs 7,955 crore, conforms to largely what Raju had confessed to in January 2009. Sure, forensic auditors were hamstrung as records were either missing or destroyed. Also, they unfortunately had limited access to documents seized by the government. Ongoing investigations into the Satyam fraud could bring in some clarity. However, the results of the forensic audit raise questions on whether our investigating agencies and auditors have the expertise or the will to unearth complex accounting frauds. A correct picture is a must to prosecute perpetrators of the fraud, and to facilitate the company’s planned merger with Tech Mahindra.

A special court is hearing the Satyam case. The Central Bureau of Investigation should expedite investigation into the scam for speedy completion of the trial. The government, on its part, should implement its plan to put in place early warning systems to detect fraud and work for speedy passage of the Companies Bill, 2009 to make statutory auditors and independent directors more accountable. In parallel, the government should reform political funding to usher in transparency in the relationship between companies and political parties. This would mark an end to the unholy nexus between companies and the political establishment, widely held to be the reason for the dire state of corporate governance in India and for the slow pace of investigation into the Satyam scam.