Saturday, January 03, 2009

Should Satyam be defended?

Rajeev Srinivasan thinks the actions of Satyam are not that heinous. He seems to suggest that since every body is corrupt, Satyam is allowed to be corrupt too. Read his views here.

The main arguments:

1) The advisers are responsible. I agree partly to this, but the board and the promoters have to clear this. There are no uni-lateral banker led transactions. Not when $1.6 bn and the company 's reputation was at stake. And how can someone not expect a backlash? An 8% owned company buying out majority owned promoter companies? The father was trying to rescue his sons a la Madoff?? Give me a break.

2) It was a poison pill against takeovers. The argument would have stood if the two target companies had lots of capital at hand. And taking over companies is not exactly so easy in India.

3) It happens everywhere - why only bother with Satyam? True, but a bunch of wrongs don't exactly make a right. The board has been manipulated, the deal was being contemplated at crazy valuations and the deal would only have made the promoters rich. Need anyone say more?

Of course Satyam may have had exemplary governance up until now, but these mistakes cannot be forgiven because they will take down the company and the shareholders. That's the only analogy - mistakes made by the management costing investors dear, Lehman or Bear anyone?

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