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The ‘truth’ about our culture

The ‘truth’ about our culture
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First Published: Sun, Jan 11 2009. 08 56 PM IST
Updated: Sun, Jan 11 2009. 08 56 PM IST
The way corporate governance has been advocated during the last decade, it would convey an impression that good corporate governance is self-sustaining (“Lessons from Satyam fraud,” Mint, 8 January). But can companies be insulated from the prevailing social environment of the country, where success at any cost seems to have become the motto? Can corporate governance help create an island of purity in the midst of a cesspool of dirt and filth? The practices prevalent in the corporate sector are nothing but a reflection of the ethics prevailing in society.
Making the law stricter is not the answer to preventing future Satyams. Remember, crooks always manage to beat the law. It is the culture that we need to change.
—S.D. Israni
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Your turn to talk
We thank our readers for some very interesting letters in response to our stories and columns. Do continue to write to us at yourviews@livemint.com
Satyam: What next?”(Quick Edit, Mint, 8 January) raises many issues about ethics in business. What is intriguing here is that Satyam’s auditor
PricewaterhouseCoopers is one of the world’s biggest consulting companies,
employing at least 145,000 people around the world; it is also the auditor for many Fortune 500 companies. Even a novice accountant will not sign and certify the balance sheet of company without verifying it with banks. How a reputable auditor such as PricewaterhouseCoopers could do it is baffling.
—M.M. Gurbaxani
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The Satyam fiasco is only the tip of the iceberg of greater and deeper malaise in the Indian corporate system. Independent auditors, the Securities and Exchange Board of India (Sebi) and the department of company affairs are the mainstay of the corporate management system. But the auditor is at the mercy of promoters, especially in cases where the majority of fees come from a single client. The auditor, thus, has to submit to their whims, else he won’t be appointed in the following year. The much talked about independence remains only a myth.
Past experience shows the same. The department of company affairs enjoys enough powers of inspection and investigation, but these are seldom used. It’s the same with Sebi, which is supposed to be the watchdog body entrusted with the overall supervision of the corporate sector.
The need of the hour is to review and overhaul the whole set-up. In specific, auditors of private sector companies should be appointed on a rotational basis by the Registrar of Companies from a panel of chartered accountants maintained by it, on the lines of the Comptroller and Auditor General and the Reserve Bank of India.
—B.L. Tekriwal
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There are many ways in which episodes such as Satyam can be prevented. This requires vigilance from all stakeholders, not just institutional shareholders. We need more shareholder activism from minority shareholders. Moreover, employees should not be focused narrowly on today’s pay packets; they should have an active dialogue across hierarchies on corporate governance. After all, they are the most affected when such situations occur!
Regulators should be both proactive and reactive. They should increase market intelligence by not only deciphering stock information but also by monitoring numerous formal and informal sources. The next proactive step would be to identify companies in the system which can pose systemic risk, select any one company and do a surprise and extensive verification. Even if one company undergoes such scrutiny, it will put most other companies on alert. As a reactive step, the punishment for such atrocities should be so high that they play a deterrent role for other companies.
—Chandru Badrinarayanan
We thank our readers for some very interesting letters in response to our stories and columns. Do continue to write to us at yourviews@livemint.com
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First Published: Sun, Jan 11 2009. 08 56 PM IST