The Hindu Business Line : Revamp at Satyam

The Government clearly had little choice but to reconstitute the Board of Satyam Computers, already depleted by the resignation of independent members and the inglorious exit of its promoter-directors. In an era where liberalism has been the guiding principle of public policy, it is not often that the State is inclined to intervene in the affairs of a company; such intervention would, most likely, not be welcome. Without doubt, the present case falls in the category of the exceptional and warrants the Government’s move. After all, the scandal that has rocked the company is unprecedented in nature and scale, not to mention the perpetrators’ rank in the corporate echelon. Anything less than a complete overhaul of the Board would have failed to restore the confidence of all the stakeholders. Equally, there is little to argue with the Government’s choice of persons nominated to the Board. Mr Deepak Parekh is a seasoned banker of some renown. Mr Kiran Karnik has vast management experience including a stint as the head of Nasscom, the software industry’s trade body. Mr Achuthan brings with him the expertise of securities market regulation, having headed the Securities Appellate Tribunal. So enormous is the challenge and so little by way of reward that they would have been forgiven for declining the invitation. It is a tribute to their sense of societal commitment that they chose to accept a crown that is certain to be full of thorns.

The complex nature of the assignment also explains why the Government has been unable to come up with more than three names, although the Company Law Board had approved the appointment of up to ten new members. With the resignation of the executive chairman and managing director and the restraint placed by the Government on the chief operating officer to function as a member of the Board, the company is bereft of people at the Board level with responsibility for day-to-day activities. It is still unclear if the heads of business verticals and those heading various support services within the organisation were, as they claim, completely in the dark about what was going on.

The three-member Board thus faces a dilemma here. It cannot be seen as reposing faith in the capabilities of those with executive responsibilities in the layer immediately below the Board until their culpability or otherwise is established. At the same time, it must guard against the charge of witch-hunting. Striking a balance is critical. The broader agenda of restoring customer confidence and boosting employee morale cannot be achieved unless the new Board completes the investigation on the irregularities and reports quickly the true extent of falsification of accounts, whether there has been any siphoning of funds and, if so, the quantum thereof.

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