Click to play videoNew Delhi: Once a poster boy for the IT world, Satyam chairman Ramalinga Raju resigned from his post on Wednesday morning after confessing to having forged and inflated the company's accounts for years.
Raju admitted that Satyam's balance sheet was inflated and forged to the extent of Rs 7,136 crore and that he'd been cooking books for several years.
He said none of the board members were aware of this.
This has sparked fears of Indian IT industry facing a collective jolt in the global market. CNN-IBN discussed the fallout and its implications on its show India at 9 with Infosys Co-Chairman Nandan Nilekani and CNBC-TV 18’s Managing Editor Udayan Mukherjee.
CNN-IBN: Udayan, you termed Raju's letter a suicide note. What's your take on this corporate shocker?
Udayan: It is one of biggest scams in corporate Indian history and will have very deep ramifications. It also affects global sentiment – both investor and corporate. Especially the clients who look at India as a major outsourcing hub. However, it’s not fair to extrapolate Satyam. There are fears of other skeletons in IT closets. FII investors would have lost a lot of money, they would question Indian corporate governance. An extreme reaction would be to say that India as a market deserves de-rating or IT companies will stop outsourcing or global companies will stop outsourcing and that there will be collateral damage.
CNN-IBN: Mr Nilekani, your colleague Mohandas Pai says this is straight from Ripley's Believe it or Not. Your reactions on what you saw and heard today from another IT stalwart.
Nilekani: The scale of the scam and the elaborate cover-up is mind boggling. Government has to show to the world take we take corporate malfunctions seriously.
CNN-IBN: Are the auditors who cleared this and independent directors equally liable to this corporate fraud?
Nilekani: There has been a massive failure in the ecosystem of the company. In Infosys, bank statements are sent to audit firms directly from the bank. So, checks and balances are required. It is an isolated incident of rogue behaviour.
We need to come out strongly against it but don’t extrapolate. I do believe people will look at individual companies with impeccable standards of corporate governance. They will demand more accountability, which is fair.
All of us who run companies must put corporate governance at the forefront. Declare everything and do not shake the confidence of shareholders.
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