Tamil Nadu - Chennai

L’affaire Satyam leaves IT industry in shock

CHENNAI: Expressing shock over the startling developments at Satyam, the IT industry has called for the government and regulators to get to the bottom of the fraud.

“We are shocked by the recent reports on Satyam, stating alleged multi-year misstatement of revenues,” said Suresh Senapaty, Executive Director and CFO, Wipro Limited. “Wipro strongly condemns any attempt to mislead stakeholders.”

A spokesperson of Infosys echoed these sentiments. “We are shocked and dismayed. The whole incident is deplorable, and the government and regulators must investigate the matter to get to the bottom of this. They should also make necessary changes to the regulations, so that such incidents do not recur.”

Gordon Coburn, Chief Financial and Operating Officer, Cognizant, said: “We are shocked and dismayed by today’s announcement of fraudulent accounting by Satyam. Such a situation reinforces the value and importance of strong corporate governance and the many additional controls imposed on the U.S. companies that are subject to the Sarbanes-Oxley Act.” “Today’s announcement by Satyam reminds us all of the importance … of maintaining the highest ethical standards in business.”

Kaustubh Dhavse, Deputy Director, ICT Practice, Frost & Sullivan, South Asia & Middle East, said: “The biggest shock …is that no one had a clue to what was going on.” The “how could this happen?” question, he said, had an answer. “No one went into the depth of the matter.” In light of the situation, “there has to be introspection on what is the role of a Board and auditors,” he said. The immediate step should be strong and decisive. “First they have to unearth what happened. Facts should come out in the open, and the various parties involved in the fraud should pay a price,” as any soft response could lead to questioning of corporate governance of Indian IT companies, he said.

The event was a stand-alone case and not representative of the industry, the National Association of Software and Services Companies (NASSCOM) said. “This is a stand-alone case of failure of corporate governance and it is critical that it be viewed in this light. We are sure that all the stakeholders will also treat this as an isolated issue. This is not in any manner a reflection on the industry or corporate India. We will ensure that customers and other stakeholders get the right perspective. We will also work with the Satyam Task Force to reach out to the company’s customers and employees and guide them through the transition.”

Mr. Senapaty concurred: “Global standards of corporate transparency are very high, and we are confident that this is an isolated case and not representative of the industry. We think that a detailed investigation is urgently called for.”

It was equally important to ensure the other stakeholders of Satyam, including the 50,000-plus employees, were not affected, Mr. Dhavse said. “Punish those who are guilty, but you cannot allow Satyam to die.”

Tata Consultancy Services did not comment.

© Copyright 2000 - 2009 The Hindu