The Hindu Business Line : Shocked at Satyam affair, chambers call for blocking corporate loopholes

Hyderabad/New Delhi, Jan. 7 India Inc has expressed shock and disbelief at the Satyam episode, stating that loopholes must be plugged in regulation, audit and governance to restore the confidence of the stakeholders in corporate firms.

The country’s primary business associations – FICCI, CII and Assocham – said it was time corporate India did some serious introspection and improved governance standards.

In a statement, the President of FICCI, Mr Rajeev Chandrasekhar, said: “This fraud on the investors and employees of the company shows a systemic breakdown in audit and board oversight of the company. Questions will need to be asked, and (it will have to be) quickly established how this happened and who caused it to happen.”

Mr Rajeev Chandrashekhar

The FICCI chief stressed the need for regulators to move quickly to demonstrate that this is an exceptional case among corporates and that investors need not worry about Indian corporate governance and accounting standards.

The Confederation of Indian Industry’s President, Mr K V Kamath, called for an urgent examination of the loopholes in regulation, accounting, audit and governance that allowed such lapses to occur. “While the occurrence of such events in a major company is a matter of deep regret, CII believes it would be inappropriate for this to be the basis of questioning of general governance standards in other companies,” said a CII release.While the occurrence of such events in a major company is a matter of deep regret, the CII said that it would be inappropriate for this to be the basis of questioning of general governance standards in other companies.

“Corporate India must, however, reflect on ways to demonstrate its quality of governance and enhance the confidence of stakeholders,” it added.

The Associated Chambers of Commerce and Industry of India (Assocham) suggested setting up of a special committee to investigate the issue so that the culprits are identified and brought to book.

The chamber spokesman told Business Line that the Government should hasten the process of investigating the matter so that the confidence of investors in Indian corporate world is retained.

FICCI also said that the Satyam case brings to the fore a few questions on implementation glitches. “This is where the regulator, in consultation with India Inc, could create checks and balances to ensure effective implementation of corporate governance norms,” it added.

The industry also said it was time corporate India stopped giving itself self-congratulatory awards and gave a hard look on deeper issues relating to corporate governance.