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Corporate Governance in Satyam
Corporate Governance in Satyam
Submitted By:
Kedarnath Aundhekar (2010202) Ketan Ghatkar (2010203) Kirti Tewari (2010205) Kshitij Varshney (2010206) Nishankumar Patel (2010213)
CORPORATE GOVERNANCE
Corporate governance is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients, and government regulations. A well-defined and enforced corporate governance provides a structure that, at least in theory, works for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical standards and best practices as well as to formal laws. To that end, organizations have been formed at the regional, national, and global levels. In recent years, corporate governance has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officers. An integral part of an effective corporate governance regime includes provisions for civil or crimin al prosecution of individuals who conduct unethical or illegal acts in the name of the enterprise.
billion cash would have gone to Maytas Properties (where promoters were 100 per cent holding) and in Maytas Infrastructures. Fourthly, Ramalinga Raju was holding only 8.5 per cent stake of Satyam computer so how can he take decisions of transferring its cash to a company owned by his son without asking the rest of the 91.5 per cent stake holders? Fifthly, in the name of diversification from software to entirely new area of reality why has a relatively new company Maytas been chosen when several other big players are still there? Sixthly, is it really time to go for shopping in a sector where the economic slowdown is at its severest form? However, not a single independent director blew the whistle when Raju attempted to acquire Maytas. They not only failed to guide the board on critical issues like blocking the controversial Maytas deal but also failed to protect the interest of the shareholders by turning a blind eye to Raju's wrong -doings that were being committed brazenly over several years. No wonder, after the Maytas deal fell through, the conscience of some independent directors pricked them enough to persuade them to resign rather than hold onto their positions. Some corporate governance experts pointed out that though the independent directors were responsible for good governance in companies, they themselves relied mostly on the information presented to them by the management, and that it was not possible for them to investigate such accounting frauds. The Satyam saga has also revealed that auditors can fail in their duty to check the promoter -driven agendas.
Another issue which was troubling that this infraction had escaped notice by the corporate office in spite of regular divisional performance reviews especially in the context of the ongoing recession. Since things were going right and numbers looked good, a lot of details were overlooked. Clearly, the control system needed to be reviewed.