15th April

A Quick Bailout

The article, while praising the quick bail out of Satyam as it was bought by Tech Mahindra, argues that the kind of agility government showed to keep Satyam afloat, similar nimbleness must also be shown to punish the perpetrators of the scandal as well as the audit firm.

The buy out of Satyam by Tech Mahindra is the result of alacrity showed by government to keep the company afloat and secure the future of its 48000 employees as well as clients. The IT industry also showed the support by not poaching the Satyam’s clients and employees. The acquisition would place Tech Mahindra at forth position in the IT industry, give readymade access to the clients of Satyam and give an opportunity to diversify from its telecom business. However, the main part of Satyam saga is yet to be concluded i.e. punishing the perpetrators in which government has hardly showed any enthusiasm. It took a court order for SEBI and SFIO to get access to Raju brothers, not to forget the hurdles put by the AP Police earlier. ICAI has, meanwhile, extended the show-cause deadlines for PWC who Okayed Satyam’s fudged accounts. 

It’s fortunate that Satyam didn’t go the Enron way but this does not undermine the need to break the nexus between promoters of the company, audit firms and BODs. For shareholders’ trust to remain intact, an example has to be set by punishing the Satyam perpetrators as soon as possible.

Follow Their Lead

The article urges India to take the lead from the recent US response to the pirates attack from Somalia in the Gulf of Aden region. 

While the situation is worsening in the Gulf region with the pirates of Somalia becoming ever audacious, it is time for all the other countries, including India, to take the lead. Pirates are becoming ever similar to the terrorists as they have an open support from the Somali Islamist insurgents and have declared US as their enemy no.1. It can be safely assumed that the terrorist organizations must be studying these pirates who have exposed the weakest part of nations considered enemies by the pirates. For India, as over $100b of its total sea trade passes through Gulf of Aden, it is a warning signal. Although Navy patrolling has increased, the recent attacks suggest that more needs to be done. The US example also suggest that while brute force is often ineffective in these situations, counterinsurgency tactics used on land can be adopted in naval context using agile specially-tasked forces. 

The learning here should be that if the pirates problem remains unattended, owing to the failed state and economic chaos in Somalia, it may well entangle itself with the terrorism issue and can become a larger issue at a global level.