Corporate India or Corrupt India The Satyam of the Loot March

SOROOR AHMED analyses the first major multi-crore scam in India, involving Satyam’s Ramalinga Raju and concludes that corporate India is drifting from democracy to plutocracy.

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SOROOR AHMED analyses the first major multi-crore scam in India, involving Satyam’s Ramalinga Raju and concludes that corporate India is drifting from democracy to plutocracy.

Harshad Mehta, Ketan Parekh, Ramalinga Raju. The list goes long and long – seems to be unending. One day they are our icons, celebrities, business leaders, the flag-bearers of our economy, those on whom the country should be proud of. They find place in the list of billionaires of the world and what not. The next day they are dumped in the dustbin of the corporate history as they are charged with looting the country and tarnishing its image. After a few weeks or months of media-hype everything is back to normal as most of them are enlarged on bail. Rs 3,500 crore, Rs 5,000 crore, Rs 7,136 crore scams – the figures do not concern us much as India’s growth rate continues to look up.

Corporate India was struck by the first big scandal just 10 months after the introduction of crass capitalism – liberalisation, privatisation and globalisation (LPG) – in June 1991. In April 1992 the infamous Harshad Mehta scam hit the country. With the help of speculation and other dirty tricks he managed to swindle Rs 5,000 crore or may be more.

In the last 18 years of capitalism the country witnessed dozens – even much more – multi-billion scams. But the Satyam scandal seems to be the first major one to be unearthed in India or even in the world, when capitalism is gasping for its breath. Now even in the cradle of capitalism, the United States of America, economists have started talking about the regulated and mixed economy. Capitalist economy, be it the United States or Japan, is not new to such cheats. The story of US giant, Enron, is not unknown. We too suffered a loss of hundreds of crores and our power plant never came up in Maharashtra.

Ramalinga Raju’s story is somewhat different. The US educated promoter chairman of fourth largest I-T industry of India – after Tata Consultancy Service, Infosys and Wipro – was till recently the darling of both the print and electronic media. In 2002 and 2008 Satyam Computers won top awards for corporate governance. Raju started his company with 20 employees after his return from the US in 1977. Till January 7 his empire had grown to different countries and had 53,000 men and women working under him. He studied in Ohio and Harvard Business School – perhaps this was what he studied?

But what he has done cannot be done alone. It gives an idea of how rotten the corporate India is. How can he cook the book by staggering Rs 7,136 crore without the management and statutory auditors knowing it? What were the bank bigwigs doing? For what is the Registrar of Companies paid for? Have all the other agencies ceased to exist?

And how can the company cook its book for several years by inflating revenues and profits thus boosting its cash and bank balances and showing interest. In September 2008 it showed a non-existent cash and bank balance of Rs 5,040 crore and hundreds of crores of interest. Raju had been lying for years to the share holders, employees and the world at large – all this to keep the rate of share high in the global market. When all this was going on with the tacit cooperation of those who matter in running the country’s economy we were busy rewarding him for the corporate governance.

We went on praising the then Andhra Pradesh chief minister, Chandrababu Naidu, for transforming Hyderabad into Cyberabad. But it was none else but Naidu, then with the National Democratic Alliance, who used to parade Raju as the poster boy of state’s development before the foreign dignitaries. This included the then US President, Bill Clinton, in March 2001. We never realised the in-built flaw in capitalism. Due to right connection Raju grew in confidence and was fully aware that he cannot be caught in his act. Even the current chief minister, Y Rajshekara Reddy, initially stood behind him.

But the story is not just what he did and how he managed to do? He has swindled thousands of crores of rupees of the people of the country and even outside – not alone. Yet the big question is what will happen to him. Harshad Mehta’s case is the pointer to the fact. One day he was the country’s biggest fraud. A few months later he was out on bail. Even further later he was seen giving interviews to the newspapers and television channels – though at very nascent stage then – on the budget of the country. He ended up becoming a columnist on business issues only to die later at the age of 38.

26/11 might not have driven the international investors away from India, but 7/1 will certainly do so. January 7, 2009 was the day when Raju confessed to his crime. If corporate India wants to improve the brutally tarnished image, it will have to act and act swiftly. Raju, it needs to be mentioned, heads a multi-national company and can be booked outside too as he had cheated foreign firms too. So before that we must act.

But the way things are going, it seems that cover-up operation is also on as the whole story has the potential to shake the very foundation of India’s corporate sector. Raju’s company alone is not busy in such fraudulent act. There are many more busy in swindling money and cooking books, but they are lucky ones and not getting trapped. They are busy committing crime with impunity.

In the fly-by-night business world of cheats and swindlers even the proverbs deserve to be changed. Instead of morning shows the day, it should be the night shows the days ahead. The way Raju surrendered before the director general of Andhra Pradesh police in Hyderabad raises several eyebrows. Why was this high-profile media drama enacted late on January 9 night. Why was he not nabbed from his home or company like ordinary criminals and produced before the court? After all business-wise he had done more harm to the country and its people than the terrorists who failed to deter the flow of foreign investment. The very first signal is wrong.

Be it the story of Harsha Mehta or Ramalinga Raju or hundreds of corporate scams hitting the country at regular intervals, they all suggest that corporate India is drifting from democracy to plutocracy. A price to pay for embracing crass capitalism.