Strangely enough, one of the things I did over my quite long and quite relaxing break was watch again the documentary, Enron: The Smartest Guys in the Room, with a friend who had yet to see it. Then as now, it seems amazing that these guys could get away with what they did for so long and on such a grand scale.
BTW, if you haven’t seen the movie, it’s well worth your time. It’s a tale of greed, hubris and bad corporate culture gone wild that is as compelling as anything you’ll see at the multiplex.
The latest version has an interview with the writers of the book of the same name in which they talk about lessons from the Enron story and how we certainly haven’t seen the last of this kind of thing. Prophetic words given the mess that is Satyam.
I was astounded by this story in all its particulars. Could Hollywood have even made this up? The CEO of multi-billion dollar company, Satyam, writes a bizarre and very public confession/resignation letter to the company’s board of directors admitting that he cooked the books for years, overstating the amount of debt owed to the company, understating its liabilities and making up a cash balance of more than $1 billion.
My favorite quotes from the letter:
“It was like riding a tiger, not knowing how to get off without being eaten.”
“I am now prepared to subject myself to the laws of the land and face consequences thereof.”
How was this even possible? This is no mom-and-pop shop; Satyam is the 4th largest company in India with 53,000 employees.
If his letter is to be believed, he and none of his family benefitted from the massive fraud (except for some sales of shares for philanthropic purposes, un huh), and supposedly none of the board members – including a Harvard Business School professor and the dean of the prestigious Indian School of Business in Hyderabad – even knew about any of it.
That’s not even mentioning Pricewaterhouse Coopers, Satyam’s long-time auditor firm who signed off on the numbers. Arthur Andersen anyone?
Well now CEO Raju, his brother the Managing Director and the CFO (who hadn’t shown up to the office for a while) are in jail pending an investigation of the full extent of the fraud.
Of course, this has set off a flurry of discussions on corporate governance in India. Will we see Sarbanes-Oxley rear its expensive and overly complicated head in India? And what impact will all this have on US corporate governance? Just in time for a new administration, perhaps we’ll see a long-awaited revamp of Sarbox.
And a final ironic note: “Satyam” is Sanskrit for “truth”.
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