Voice from the Rooftop

Blog of Vincent Augustine D'Souza

No bail out for Satyam

English: Ramalinga Raju is the founder and for...

Ramalinga Raju is the founder and former Chairman of Satyam Computer Services. (Photo credit: Wikipedia)

Satyam (truth) proved to be asatyam (non-truth). Ramalinga Raju who headed Satyam committed fraud with the connivance of others which went on for years. The company is facing problems. The Government of India has stepped in, disbanded the Board of Directors and appointed three Directors. The stated objective is to safeguard the interest of shareholders and employees.

There should be no bail out for Satyam. Those who were involved in fraud must be punished. The punishment must be proportionate to the crime. If the fraud is of Rs.1,00,000/- the punishment must be at least one year of rigorous imprisonment. For Rs.1 crore it has to be 100 years. If the amount is Rs.7,800 crores it should be 7,80,000 years imprisonment. Since the duration is long the years must be converted into death penalties, one death penalty for every fifty years. The punishment must be consecutive so even if there is pardon of one death sentence others will follow. All people involved in the fraud must be punished.

Bail outs have not worked in USA. Banks who got money did not lend it but used for acquiring other banks. One company gave three million dollars bonus to its CEO. Some companies wanted more money. Even porn industry wanted bail out.

Shareholders take a risk when they buy shares. They must bear the loss. At the end of December 2008 it was clear that Satyam was going downhill. The World Bank had banned Satyam for eight years for data theft and bribery. Employees should find other jobs. There was an inquiry in Satyam in 2002. Why was nothing detected? Who were the politicians close to Ramalinga Raju? Is the action of the Government of India to safeguard their interests? It is for the shareholders of Satyam to decide who should be their Directors. An Extraordinary General Meeting could have been called.

Many companies cook up their books of account. Satyam should not be bailed out. Bailing out Satyam will set a bad precedent. Many companies will demand bail out. The truth about many other companies will be known in due course.

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