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Satyam: moral hazard

Satyam: moral hazard
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First Published: Wed, Jan 14 2009. 12 41 AM IST
Updated: Wed, Jan 14 2009. 12 41 AM IST
The government has moved well to avert a further crisis in Satyam Computer Services Ltd. In deciding to do away with the old board and getting three respected professionals—Deepak Parekh, Kiran Karnik and C. Achuthan—to oversee the troubled company, the government has averted a further crisis of confidence.
The next step, too, is welcome. Commerce and industry minister Kamal Nath has suggested that money will be provided to the company that still has good clients and a qualified workforce. It’s best that a consortium of banks gives a short-term line of credit to help Satyam tide over its current liquidity problems, rather than put taxpayer money on the table.
But the next steps have to be taken more carefully. There is a chance that Satyam could now be the victim of political overreach, as state and national politicians start meddling with longer-term strategic issues—including the question of ownership. These are questions that are best left to the new board—which should decide how to run Satyam or sell it.
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First Published: Wed, Jan 14 2009. 12 41 AM IST