One small question about Scam Satyam

Everyone’s blaming everyone for Scam Satyam.

What were the auditors (the hallowed PwC) doing?

What was SEBI doing?

What was India Inc doing?

What were Satyam’s ‘independent’ directors doing?   

Not surprisingly, politicians are also being blamed.

Even the ‘greedy investors‘ are being blamed.

But is it only me or are there others asking: what was the business media doing? We’ve had such a surge in the number of business TV channels, magazines and papers and some are still in the process of launching depite the ‘downturn’. The business media boom, riding on the economic boom in general, is stll riding the tiger. It’s said to be difficult even in these difficult times to hire good business journalists – they’re all taken by somebody else’s new venture.

So my question is, don’t these business journalists ever smell a scam? They have to wait for a CEO to confess that he cheated a billion US dollars? Why does the business press just keeps sucking up to these CEOs – look at Mallya’s yacht, look at Ambani’s home, look what a loser you are to not be investing. Boom, boom, boom.

This is generally in keeping with the mandate of business journalists in India to keep up the feelgood factor, to be part of the boom, even benefit personally by recommending stocks that the Star Busniess Anchor holds without anyone knowing.

Looking for a scam? Sorry, are you a commie? Your days are over. Welcome to new India. Google around and be shocked to see how many are defending Satyam, how many are saying we should have allowed Satyam to go ahead with the Maytas deal! Those who argue for a regulations-free markets are at a loss of words, their aggression and arrogance long gone.

PS: I found someone who’s not yet being blamed: an IT trade union that is saying I Told You So!



11 thoughts on “One small question about Scam Satyam”

  1. So my question is, don’t these business journalists ever smell a scam?

    this is a paraphrased saying i picked up in the US: “it is hard to get a man to notice something when his paycheck depends upon him not noticing it.”

  2. These Business journalists are part and parcel of scam. I had asked my nice to apply in satayam about month ago and she replied that satyam is not doing well ,she is just passed her bank had banned satyam for 8 years but our so called intelligent buisiness journalist did not smell because their head was inside the wine bottle which was given by Satyam and other buisiness company.

  3. It’s just a lot of piling on isn’t it? I am just waiting for the politicians to jump on, they aren’t sure how to milk it .. yet.

    And as for the trade unions, they should have made a huge noise when it mattered, now is too late. There was another ex-bureaucrat (do they ever become ex?) who probably covered his butt with paper trail and was talking to the media about how he had warned.

    Fact is that IT companies are too beloved for anyone to look at them with any suspicion. It is one of the industries that still has a reputation of having been built with more honesty than others as apparently, the opportunities for corruption is limited (it was not around during the license-raj era and it is ALL educated people, engineers and all).

    Media is FIFO, they hype it up, they bring it down and unless one of these media companies go bust, they are not going to take their jobs seriously..maybe even then they won’t.

  4. But how would the business media smell a rat when the framework in place to perform the due diligence via audits, fails to do so (or chooses to look the other way)?

  5. All independent director were in America having fun and giving lecture about how to cook the audit book.On christmas eve,world bank announced that it had blacklisted Satyam for improper benifits to bank staff(Bribe)and lack of documentation on invoice.Raju lingam family stake in company which stood 8.6% at the end of september ,fell to just 3.6%6th of january 2009.our so called intellectuals business media were on dole of Satyam and CII.

  6. I used to be a business journalist. I agree that this is a sign that there is something seriously wrong with India’s business press if they couldn’t find this and/or publish it.

    That said, my editor would have loved for me to unearth such a scam (and in fact one of my coworkers did prior to the DLF IPO). While admittedly biased, I think the issue is who pays the bills and what the (editors think the) readers want to read, not the reporters, who are basically minions, regardless of the ideology of the paper. News for news sake take a lot of work and a lot of time and newspapers are particularly bad at allowing reporters to do the time and space to do either adequately, in my experience, let alone the incentives or the training.

  7. To add my two cents worth; the fact is that PwC gave Satyam a clean chit. There is no way that anyone outside the company can really have access to the books (the way PwC had) that would suggest that something is seriously wrong.

    A statement by the new board at Satyam has announced that they shall assign a new auditor in 48 hours, and shall re-do their books for the last few periods.

    Satyam – it appears – overstated their earnings and cash balance – claiming it was $1.1 bn as opposed to $66mn. While these are actually the easiest things to check – the audit firm could simply have asked for statements from banks verifying that the money was indeed present – as Satyam claimed it was; it would have been difficult to glean such information from, say, the company’s quarterly earning reports.

    An article yesterday’s Wall Street Journal suggests that there were few warning signs – kotak mahindra securities raised a red flag when they asked Satyam why such large sums of money were held in zero interest accounts – when they could have been earning about 9 % on the cash in a fixed deposit. The answer, as we now know, is because there was no cash to be deposited.

    The Maytas fiasco – it now appears – was an attempt to replace fictitious assets with real ones (from Maytas’s books).

    Why we dont read more about business scams is largely because business is clearly much better at hiding its tracks than the government. Businesses are also quicker to respond to un-substantiated rumour than the state is – usually with legal notices. Further, inaccurate reporting can actually wipe out share-holder value; so one has to be far more careful.

    Satyam’s stock prices have (correctly) nose-dived over the last few days – dropping from about $10 a share on the NYSE on 9th Jan to its current level of $1.50 (source: google finance: However, if (and that’s a huge IF) the news that Satyam had been cooking the books had turned out to be false, the company would have been wiped out anyway.

    That said, it is true that business reportage in India is fairly insipid – far more press conference driven than other news; and there are serious conflict of interest problems. But like i pointed out in another comment – every shortcoming in the press is not a function of it being driven by advertiser revenue. If only someone could offer me a better model of financing a newspaper – i would be happy to engage with it.

  8. Dear Business editors,Wipro was banned from world bank in 1997 but no hindu intellectuals had informed the Indian population about the wipro,this is called indian brotherhood.

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