Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Outsourcing Corporate Crime To IndiaThe CEO of one of India's largest outsourcing companies, Satyam (Irony alert: the word means "truth" in Sanskrit), has resigned in what may be the country's largest case of corporate fraud. Analysts are likening it to the Enron scandal. The New York Stock Exchange halted trading on the stock after the news broke.Ramalinga Raju, company founder and now ex-CEO, announced in a statement that about $1 billion (or 94%) in cash on the company's book was fictitious. The company's auditors, US-based PricewaterhouseCoopers, said they are "looking into the matter." The World Bank, one of the firm's major clients, recently cut off business relations citing "improper benefits" given to Bank officials. The company was recently recognized with a "Golden Peacock" award for corporate governance by an Indian business association. Early reports indicate that the accounting scandal could spread quickly to other firms and imperil India's huge outsourcing industry. A full report from Reuters is here. Labels: Corporate Fraud, Corporate Swindles, India, outsourcing Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!).
Comments:
"Early reports indicate that this could quickly spread?" - Which early reports? How can an accounting scandal in one company "spread" to another?
I seriously feel that the title shouldn't have been "outsourcing corporate crime to India". It is true that this is a shameful situation created by Ramalinga Raju for the Indian business community; however, this does not displays the ethics of Indian corporate world as a whole. We all also know how India has emerged as a top investment destination in recent times, and how Indians, in particular, continue to be some of the best brains in world. Indian corporates such as the Tata's, Munjal's etc have time and again displayed their transparent corporate governance. Although this is a time to be more precautious, but definitely not of forming strong opinions.
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 : Thursday, January 08, 2009 9:54:00 AM
Prasanth and Deepak --
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If such a highly admired company, recipient just 3 months ago of an award for excellence in corporate governance, can perpetuate such a scam, this surely casts doubts about the accounting and oversight of every other major company in India. Analysts in the linked article, and elsewhere, have said that other companies are sure to come under intense scrutiny in the coming months, and it would hardly be surprising if other scandals emerge. Sadly, India seems to be learning the worst lessons of US capitalism. << Home |
