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Big foreign firms such as Enron, WorldCom, Arthur Andersen, Global Crossing and, closer home, Dunlop India Ltd, GKW, Metal Box, Shaw Wallace and Global Trust Bank all bit the dust because of corporate greed. But the country saw the height of hoodwinking in the corporate world when Satyam Computers Services, India's fourth largest software firm until 2008 , earned notoriety by the astounding confession of its founder-Chairman B. Ramainga Raju that left a Rs 7,000-crore crater in Satyam's books of accounts.
The tome ‘The Price-When Bookkeeping Means Book-Cooking' ( Frontpage Publications Ltd ) under review by a journalist with three decades of experience interspersed with a brief foray into the corporate world, chronicles this saga of corporate shenanigans in all its dirty but disturbing details. The company's auditor, PricewaterhouseCoopers or its local associate member in India and the board of directors of Satyam have badly let down the company's 53,000 employees, most of whom might have lost what is euphemistically referred to as sweat equity. The author talked to a lot of insiders in the company as also to the Comptroller & Auditor General of India, the Secretary in the Department of Company Affairs, eminent academicians of the auditing profession including chartered accountant and parliamentarians in putting together the biggest corporate fraud that rocked the country in the first week of 2009.
Book-cooking
The author, Mr Nantoo Banerjee, abstemiously claims that the book merely deals with issues involving only one part of corporate financial corruption i.e., book-cooking in cahoots with auditors, bankers, credit rating agencies and the government who all have a deeply ingrained role in the country's financial system. He has hit the nail on the head when he said the purchase value of two of the family-owned companies to be bought by Satyam Computers for close to $1.6 billion matched the amount of financial fraud at Satyam.
It is small solace to be told by a former President of the Institute of Chartered Accountants of India (ICAI), Mr Ved Jain that thanks to technology and high level of expertise, audit function is capable of detecting any financial fraud or malfeasance by a client. Yet, the accounts of books of Satyam Computers as passed by its auditors with global lineage or linkage have overtly unmasked the myth about the probity of even multinational audit firms and their local coadjutors!
Tragedy of the times
Mr Banerjee contends the power and precision of domestic auditors has been amply demonstrated by India's largest statutory auditor, the CAG, a constitutional body, which has exposed the abuse of 2G spectrum allotment deals with private telcos entailing an estimated loss to the exchequer revenues of a Rs 1.76 lakh crore.
It is rather a tragedy of times that both in 2009 and in 2010, Raju was followed by Raja and the scandal veered around software and telecom industries.
The CAG has pithily told the author that no corporate accounting malpractice could escape the trained eyes of auditors if they discharge their duties diligently. It is time the authorities heeded to the CAG view that the arbitrary power to recruit and appoint auditors must be taken away from corporate board of directors.
The book makes gripping reading in highlighting the hiatus and hollowness of regulatory systems in India in preventing corporate fraud.
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