Mood:  don't ask

An Indian SME owner maintains two books of accounts -- one which is full of under-invoicing and depressed figures meant for his wife and the IT department, and the other which is full of inflated figures meant for his mistress. Ravi Mohan, MD & Head of South Asia, Standard & Poor's tells this joke quite often whenever he addresses seminars on corporate governance. Satyam would now qualify to be a SME unit after its market capitalisation eroded post-Ramalinga Raju's confessional scandal. What makes Satyam scandal so different from the earlier financial scams is that it is not just about the promoters. There seems to be incontrovertible evidence of foul play by auditors both within the company as well as independent firms which are amongst the world's most renowned ones, banks and top executives. On the sidelines politicians of all hues are shadow-boxing to bring their rivals down.

Though many in the media try to draw an analogy with the Enron scandal in the US, there is one big difference. The US Securities and Exchange Commission (SEC) officials had actually confessed during the inquiry proceedings in the open court that they could not understand and decipher the complicated financial statements submitted by Enron. That was not surprising for Indian journalists as the power purchase agreement (PPA) signed between the government of Maharashtra and the company was admittedly way beyond the comprehension of Maharashtra State Electricity Board officials. At press conferences Ms Rebecca Mark, then chief of Enron would tire journalists with formulas and calculations which revealed nothing. Till now no official in Satyam or outside has made a pretext of complicated accounting systems and practices for the oversight. It is yet an open and shut case of forgery and deliberate non-disclosure.

The media and stock analysts have also got to take equal blame for the Satyam scandal because it was their job to unravel the truth. The fact of the matter is that few media houses have employed enough staff analysts and reporters to go through every annual report with a fine comb cover to cover. That way Indian media houses are much less capable than their western counterparts to find the truth in listed companies which have millions of investors.

The way PricewaterhouseCoopers has been saying that they had to depend on the data provided by Satyam officials while scrutinising the company account books reminds one of the scandal in the 1990s wherein top LIC officials were taken for a ride by a lawyer consultancy firm in a real estate deal. The LIC officials had bought a plot of land to build residential flats in Mumbai for their life after  retirement. But the land owner had sold the same plot to two other parties earlier. Then it got mired in a legal tangle. When the lawyer firm was asked about its dereliction of duty as they had given a free-of-encumbrances certificate on the plot to the LIC officials the lawyer firm made a startling disclosure. It said that they depend on the documents provided by the land-owner and nothing else for issuing free-of-encumbrances certificate. It was incumbent on the LIC officials to check up municipal records to ascertain if the plot has any other claimant. In case of the external auditors of Satyam it is not just a case of dereliction of duty. It is like the police colluding with the culprits to share the booty.

We shouldn't be shocked, rather we should be amused, if several more corporates with large work force declare delinquency in the wake of Ramalinga Raju's disclosure. It is not the current downturn which forced Raju to resort to cooking up books, rather he started the window-dressing when there was a boom in the software industry. His calculations went wrong, according to reported revelations in the media, when he bought land at high cost along with his partners. He could not liquidate it when there was a slump in prices.

Though his partners gave up their holdings he alone prayed for better realisation. But the inevitable is taking too long to come as land prices are still in the dumps. The trail of money from the software giant to Raju's real estate venture will ostensibly be proved. It's just a matter of time. But many foreign investors might get unnerved by the callous behaviour of various parties involved in the scam. It is also inevitable that sweetheart deals between the auditors, top executives and promoters will be unearthed during the investigations. It is shocking that this went on for nearly 28 quarters. Quarter after quarter Satyam top officials sat at analysts meets with poker face glibly talking about their great performance and giving guidance on fantastic growth prospects. Investors lapped it up as they were not able to separate the chaff from the wheat. For them every top ranking software company was an Infosys and every promoter of these companies was a Narayan Murthy.

The fact that Ramalinga Raju could not cover up the losses of the conjured-up numbers in Satyam books even during the boom period makes investors, especially the foreign institutional ones, to ask if Raju had been able to turn the tide during the boom period the scandal would have never surfaced. Rather Raju would have become a hero in the software industry whose vision, foresight and the intrepid decision-making would have become case study material in management schools.

Now let me add a few personal notes. Honest businessman is an oxymoron, more so in India. Is there a single business leader in India who can say with his hand on his heart that all that he did in his business was ethical?! This includes the interim chairman of Satyam board Deepak Parekh, whose prophecy of real estate slump for the last five years has become a joke in industry. Millions of home-buyers have put off their plans to buy flats even as real estate sector bled on high cost of funds because of this man's statements. But perhaps the PMO could not get any better replacement for Ramalinga Raju than Deepak Parekh.

I have of late, come to realise that honest Indian is itself an oxymoron. As I explained somewhere else in this blogsite, have you ever wondered why Mahatma Gandhi was born in India to teach Indians honesty and truthfulness. And almost all religions emanating out of Indian subcontinent beseech its followers to abjure playing dirty political games in life. It is only because we Indians have unmatched quality in all these attributes, much more than our western counterparts.

Look at ourselves. How many of us pay income tax honestly. Rather, as I found much to my chagrin, paying taxes honestly only gets you a bad image of being a fool. You are considered smart and suave if you are able to produce fake bills in the office to avoid income tax.

And thirdly, if Ramalinga Raju has been inflating numbers, both in past performance of Satyam as well as future guidance he is only doing what we all are so adept at. Tune into any TV channel and you will find that every ad claims outrageous results of using various products and services. Axe deos are supposed to floor women, they are shown jumping into your bed. Children drinking Boost and Horlicks daily are shown to excel in their school studies as well as sports. Every month a new detergent soap comes on prime time television to tell us how it can remove stains without leaving even a mark. If Satyam guidance had been off the mark by a few crores of rupees what about headlamps and brake linings of vehicles promising to guarantee safe ride for the occupants of the car. Why is that when Satyam chief inflates numbers to bring in more business it is sacrilege, amounting to grave crime, media frenzy and name-calling on prime time news?

Lastly, let me ask you all a relevant question taking a leaf out of the recent history of companies going bust in the US. When Lehman Brothers, General Motors and Citibank were being bailed out by the US government with billions of dollars through a state intervention programme I was wondering why should government get involved in managing business. Let the market forces work their way. I was also surprised when markets across the world did not take kindly to these bail-out packages. The stock markets did not show any marked improvement on US government's announcement of saving the monoliths from sinking into the quagmire.

Incumbent US president Barrack Obama is planning for a trillion dollar bailout package soon after taking reins. Well, my opinion would remain the same. That is also why I am a little alarmed by the Indian government's stated intention of saving the 60,000+ jobs in Satyam. Good people will always get absorbed elsewhere and they don't need a job guarantee scheme. It is also not a good free-market policy to preserve jobs when there is no work. The idea of preserving jobs at Satyam is as bad as the reservation policy, which can only compromise quality, breed strife and inequality in society and cause grievous harm to consumer movement -- all that this blogsite and this writer stand for.

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Posted by Anil Nair at 10:17 PM

Updated: Sunday, 18 January 2009 1:17 PM

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Mood:  bright

Minority Affairs Minister A.R. Antulay’s statement that the Maharashtra Anti-Terrorist Squad (ATS) chief Hemant Karkare’s death has been caused by Hindu radical groups is not surprising. The alliance at the Center which prided in scrapping POTA, so much so that its Common Minimum Programme (CMP) stated that as a matter of policy change to woo the minority community, should be expected to have cabinet ministers who would toe a Pakistan line of argument. Also, not surprisingly, there has been a deafening silence from the prime minister’s office on the issue. Mr Antulay when asked to clarify added for good measure: “I don’t need to explain anything to anyone”. After all, Mr Antulay has only taken a leaf out of Prime Minister Manmohan Singh’s book on how to pander to minority communities.

 Till the time of going to press the Congress Party spokesmen were on a part-denial mode. Abhishek Singhvi’s statements to the media were laced with “our party completely disassociates from the minister’s statement in the Parliament”. The party spokesman who otherwise would not stay his hand when suggesting what Narendra Modi or Yeddyurappa should do, maintained a sanitised version of “we cannot suggest if the PM or the government should sack Antulay”.

One wonders why this politeness does not extend to opposition party-led state governments. Nor was this strict adherence to protocol seen when the NDA government was in power and the POTA Bill was passed. Congress party survives on the belief that public memory is short. Look at the ardent plea made by the new Home Minister P. Chidambaram that the new anti-terror law has to be passed with everyone’s consent in the House. “We could make all the necessary amends as we go on”, he said on the floor of the House while introducing the new anti-terror Bill. It must have been deja vu for Opposition leader Shri L.K. Advani.

Also, in this whole episode post-26/11, the BJP should be credited for showing its true nationalist colour. Shri Advani’s unconditional support to the government in its war on terrorism was a true reflection of the national mood. Earlier BJP spokesman Ravi Shankar Prasad made it clear in media briefings that BJP would support the government in any of the tough decisions to be taken in the war against terror. Juxtapose this to the post-Parliament attack in 2002. By evening of that fateful day Congressmen were busy cornering NDA ministers asking: “you passed POTA Bill with all the fanfare. Did that prevent the attack on Parliament?” The argument put forth was that POTA did not prevent the attacks as it did not deter the terrorists one bit. It took one viewer’s opinion shown on the ticker on NDTV 24x7 to put things in perspective: “traffic regulations are flouted everywhere, every time. Does that mean that we do away with traffic rules?!”

Mr Antulay’s reaction in the Parliament is a classic case of how the war on terror is compromised in this country. Every earnest effort made by the security agencies has been questioned and investigated by the secular governments. Former police chief of Punjab KPS Gill who brought terrorism in Punjab to a glorious end often states this at public meetings about how his officers are still doing the rounds in the courts because some human rights NGOs have questioned their action. The government does not provide any succour though it will take all the credit for bringing the tragic saga to an end in Punjab.

Antulay’s conspiracy theories may come in handy to pander to the minority community. Antulay can be forgiven for his comment in view of what the prime minister said a year ago in the midst of passing the Indo-nuclear deal that minority communities have priority in access to national resources.

But in Mumbai it is not just the politicians who have become discredited. Former Home Minister of Maharashtra R.R. Patil who has become so arrogant to say such small terror attacks in big cities are quite normal recently told a reporter: “will bullet proof jackets and better fire power prevent terrorist attacks?!”

The government’s hypocrisy and lack of understanding of the gravity of the situation have been underscored by pseudo-secularism. The other grave concern of the citizens of Mumbai is related to the lack of proper training given to any the state departments in dealing with a crisis seen on 26/11. Ratan Tata, chairman of the Tata group, went on record to say that most of the security agencies and state utilities were at a loss in dealing with the crisis. Fire tenders came in late, policemen were found removing their safety gear at ground zero, some policemen even quietly left for home when they were informed of the terrorist attacks, police were found more engaged in crowd control than saving lives, television media was hysteric so much so that news anchors were howling at everyone on air and the most defining moment was the large crowd outside Taj hotel brandishing cell phone cameras trying to take pictures of terrorists who were still engaged in a pitched battle with the commandoes. If the terrorists had dropped a grenade from the top floor of Taj hotel on the crowd below the area would have looked like a scene out of ‘Saving Private Ryan”. Intelligence has failed, but the way various agencies were bickering over who is to be blamed for the crisis was most unnerving.

It’s tragic that Ratan Tata says his hotels will have their own anti-terror systems and personnel in place. Does this mean that the state has become so inept in providing security to its people. It is sad to see Bollywood actors scampering for enhanced personal security systems. It only means that the state has completely failed in providing security to people. As one Mumbai local train debate on the issue concluded that the world has entered the 21st century of sophistication but India is still caught in R.K. Narayanan’s Malgudy Days of simplicity and immaturity.

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Posted by Anil Nair at 6:24 PM

Updated: Saturday, 17 January 2009 11:57 AM

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Mood:  chillin'

If there is a Google to check the most asked question in Mumbai today it is this: what makes the latest terror attacks in Mumbai different from the earlier ones? There are several hypotheses and innuendoes to explain why the government has sat up to take notice and introduced a slew of measures to combat further attacks. The remarkable thing is the international reaction which is so unusually pro-India this time round. Earlier terror attacks in Mumbai have been more gruesome, taking a much wider toll in terms of the number of dead and the injured. But Pakistan made a huge mistake this time if they thought that the reaction in India and abroad would be tepid.

First and foremost, the 24x7 news coverage put paid to Pakistan’s complicity in the attacks, so much so that even if the terrorists enjoyed full media exposure for days on the end, the outrage in the world community, especially in the West, made sure that action against Pakistan would be commensurate with the outrage. Second, if Pakistan had presumed that attacking Israelis in Mumbai would only attract the same kind of indignation as that of attacking Hindus, they were terribly mistaken. The cruel joke that has gained most currency in Mumbai local trains is that Ajmal Qasab could have joined Bollywood and become a national hero like Sanjay Dutt if it weren’t for the attack on Jews. In all the former terrorist attacks in Mumbai the death toll always had been more than double of that seen in the latest attack.

The US all this while had only paid lip service to India’s pain for being at the receiving end of Islamic terrorism, but attack on Jews in Mumbai ensured that the US and western Europe demonstrably came on India’s side. The happy change in attitude towards Pakistan’s complicity in breeding terrorism has resulted in the United Nations banning Jamaat-ul-Daawa which is a front for Lashkar-e-Taiba. It should not be lost on anyone that banning a terrorist organisation in Pakistan does not mean anything, as the arrested people are free to move about to propagate and conspire further attacks on India. Pakistan should have learnt the lesson when a journalist of the Wall Street Journal Daniel Pearl was abducted and killed by what is now popularly known as non-state actors. The accused in that case was promptly booked and sentenced to imprisonment because Daniel Pearl was an American national.

Unlike in India where there is no value for its citizen’s lives, most countries in the West don’t take things lying down. It is always an eye for an eye. Pranab Mukherjee might fret and fume in the Parliament over Pakistan’s complicity in repeated terrorist attacks but would not forget to add the rider at the end of his speech: “war cannot solve problems”. The world is almost convinced that unlike Israel, India simply does not have the courage and the fortitude to take Pakistan to task.

On December 3, over one lakh Mumbaikars assembled at the Gateway of India in a congregation called by a local organisation to protest against Pakistan. The majority of the protesters that day, and that is over 70 per cent of the crowd, was made of college-going youngsters. The groundswell support that was evident that day on the streets of Mumbai had to be seen to be believed. Though most news media reported that people were angry against the politicians, the real anger was directed at our western neighbour. There were placards calling Dawood Ibrahim by four-letter words, even as slogans by student group were laced with the choicest abuses. Surely, that day offline editors in news channels had a hard time editing the footage.

All this only reflects on the growing impatience of people who want to see some substantial action. The growing feeling among the common people is that Pakistan has to be given a resounding slap on its face. The least that people had expected was an apology from our Prime Minister for mishandling the combat efforts. “After every terror incident all that our politicians do is to call it an intelligence failure. One wonders if this country has any intelligence at all, and the pun is intended there”, Sourav Das (name changed), a student of KC College told this reporter at the Gateway of India protest rally. The whole emphasis of the Indian government has been to ask the US to take action against Pakistan. People in this country are perplexed over the sabre-rattling and threats, for which Pakistan only shows its unconcealed amusement. Why is the Indian government so petrified about taking direct action against Pakistan. “There was not even a customary by-your-leave when the US attacked Afghanistan or Iraq to retaliate the terror attack on the twin towers in New York. The world community was a mute bystander”, said another student.

The reaction of the Indian government to terrorist attacks planned and executed by Pakistan has become quite predictable. It goes without saying that the death toll this time which included the CEO-types residing at the Taj Hotel has ensured that the government does not just give a fleeting look, make all the right noises of fighting terrorism and finally start counting Muslim votes when it comes to bringing tough laws to combat terrorism. The pressure being put by corporate India on the government to prevent any such future attacks by making all the amends in policy as well as execution may be subtle and under-cover, but it will certainly teach Pakistan that this time the worm has turned.

Posted by Anil Nair at 12:15 AM

Updated: Saturday, 17 January 2009 11:59 AM

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