Coming home to roost

In yet another example of corporate and personal greed, India's fourth largest outsourcer of computer services has fallen. It's CEO, B Ramalinga Raju admitted to cooking the books for years. To the tune of over $1 billion USD. As a result Saytam has lost over 97% of it's share price on NYSE and on the Bombay Exchange.  Many including myself are left wondering how such a blatant fraud could have gone undetected for so many years, especially as Price Waterhouse as it's auditor.

India's security exchange board (SEBI) immediately launched an investigation, but one has to wonder if this is all posturing to stop the bleeding as investors pull back on Asia Pacific. There is lots of criticism about the effectiveness our own SEC. 

Some of my colleagues are employees are Satyam and are some of the most honest, upstanding, intelligent and hard working people I have known. I know they have made family and personal sacrifices to build the reputation of Satyam. The actions of at least one bad apple does not reflect the rest of the 50K employees that are partnered at 30% of the Fortune 500 corporations of which Satyam supports. I wish the best of luck to anyone affected.

Unfortunately, the timing of world events will undoubtedly make it's corporate clients think twice about the risks of association. The reputational risk and the risks to business continuity is too high with a partner whose future is uncertain at best. I cannot see a take over by any of it's competitors like Infosys or IBM, the liability is too high.

As the financial crisis continues, the misdeeds of the likes of Madoff and Raju are coming to light. There will be more to come.  To quote Warren Buffet, "When tide goes out you'll discover whose been swimming naked".