Many things had gone wrong again. After the upheavals caused by the scams of yesteryear (that had the signature of Harshad Mehta and then Ketan Parekh), the market had been tamed, or so we thought. Monitoring institutions had grown teeth. Processes were put into place to prevent further mayhem. But, alas, that was not to be. Just like Ajmal Amir Imran and his cohorts showed us ordinary citizens — our security is not as secure after all.

Even SEBI was hoodwinked. But that does not absolve it, as much as it means that its systems and processes are by-passable.

Blatantly a top-notch software company liquidated Rs 7,000 crore of investors’ money, and betrayed the confidence of its employees and customers. And before the damage can be assessed, the vultures are in the air. Each division will be hived off, the parts becoming more than the whole. If this scam had happened anywhere outside the corporate world, it would have been dubbed as the greatest robbery in post- Independence history.

Ramalinga Raju’s biggest crime is that he used creative accounting in achieving infamy. If that is true, what checks and balances do our regulators, our government, our banks and indeed the investors have to ensure that such frauds do not happen?

Alternatively, what is the assurance that it has not happened with many of the existing companies that have raised public money? Who is keeping an eye on all that cash? Definitely, the watchdog agencies have failed and, sadly, even the audit firms — not just in their duty but also in their ethos.

When companies begin to go down, there are some obvious pointers.

First, the information is not given in a forthright fashion. One could be a nodal agency such as SEBI, a journo or an audit firm — information has to be dug up. Why be so secretive when what is involved is public/investors’ money? I have seen many CEOs (especially of software companies) coming to press conferences to announce quarterly results. They talk about “new customers” and “optimism in the numbers”. When asked who these clients are they cite some non-existent, non-disclosure clause. Isn’t it time they opened up? It’s time to say “No.”

They must be open about who their customers are, because if the watchdog agencies and the public are denied that information, the first loophole in the system is created. This paves the way for “creative accounting”.

The second pointer is “sudden media silence”. In tracking organisations that have had mega successful IPOs, I suddenly realise that within the space of a few months all the media buzz would have subsided.

That IPO is not making any waves, and there is no news from the investors of what they are doing with all that money.

For instance, when someone asked the CFO of Satyam in an investor conference what all that money was doing in current account, the CFO talked rather unconvincingly about ‘temporary arrangements’, etc.

Why isn’t there any media attention on the funds mobilised in mega IPOs? But, then, as my friend from a television channel told me recently: “I cannot read numbers. I wish I could, but I cannot. So if I cannot, how can I question.”

How many truly good investigative journalists do we have in the media who are actually good at analysing numbers?

The third pointer is that such organisations seem to have only one giant in the team, which obviously is ‘the right honourable CEO’. If anyone else dares give out information, they may face the same fate as Pakistan’s security chief who was sacked last week.

All of these companies do have corporate communication heads who can only speak when told to. They are professionals who get very good salaries, but whose consciences are sealed as firmly as their lips are by their corporate masters.

The fourth pointer is when they fail to conduct normal and annual performance audits on employees with a view to defer bonuses or pay increments.

For a country that is trying to woo investors, and desperately trying to cope with recession, such corporate tragedies must be stopped. And it’s not that they cannot be. Whatever one says about Bush’s America, the watchdog agency SEC and the Justice Department have enough teeth, as will vouch the likes of Sanjay Kumar of Computer Associates, Kenneth Lay and his team at Enron and Bernard Ebbers at WorldCom, who are all serving time in jail.

White collar crime is attracting severe punishment in the US. Arthur Andersen, that famous audit company that I too wanted to be a part of, became history overnight. What happens to Price Waterhouse here in India remains to be seen.

If this does not stop, investor confidence will stop. We will become the subject of world derision. “Want to loot money in a suit – go to India.” That must not happen.

But as one legal luminary said on a news channel that I was watching when asked about this big shocker — “Yeh India hai, yahan sub kuch chalta hai.” I sadly agree with him. Ramalinga Raju will soon not be in the news.

Those who actually audited Satyam’s balance sheets will find other jobs, when in truth they should be banned from practising.

I am afraid there are more skeletons in the cupboard and I am sure that they will all roll out in time.

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