New Delhi: Less than a year ago, six men were chosen by the government to save Satyam Computer Services Ltd when the software services firm was reeling under a Rs7,136 crore accounting scam perpetrated by its founder B. Ramalinga Raju.

In an interview, three of the saviours—Housing Development Finance Corp. Ltd chairman Deepak Parekh, C. Achuthan, former head of the Securities Appellate Tribunal, and Kiran Karnik, former president of software lobbying group National Association of Software and Services Companies—share the inside story of the challenges they faced in pulling Satyam back from the brink of disaster.

Solving a crisis: (from left) Kiran Karnik, Deepak Parekh and C. Achuthan.

Parekh: You can frame any amount of rules, regulations and guidelines and laws. But corporate governance must come from within. It has to come from within an organization, the senior management and the board. No amount of legal laws and restrictions you put can get you the right spirit of corporate governance. It has to be voluntary, it should come from the top, and it should percolate down to the entire organisation.

But if it is not part of the DNA, then what do you do in that situation?

Parekh: Then you have to change the management, the board and the promoters; you have to take some drastic steps.

But we don’t have activist shareholders in this country. Most of these companies are promoter-driven as was the case with Satyam. So what really is the solution?

Parekh: There are a number of things we can do. For instance Sebi (Securities and Exchange Board of India) has prescribed clause 49 for all the listed companies. There are many companies who don’t follow the guidelines. But no action is taken because there are far too many companies listed on the exchange and the Sebi staff is too small.

If you have a law and if you have a rule and if you have violated it then there is no punishment. You have to delist those companies; you must force the promoters to pay back the money to the shareholders. You must force half-a-dozen companies to do this ...and then promoters will be extra careful.

Today, everyone goes scot-free if you don’t follow any Sebi rules or any listing requirements....You must close some companies and delist some, and throw some promoters out. You have to give a lesson.

To your mind, what is the biggest lesson as far as the Satyam scandal is concerned that corporate India needs to take note of? We have also seen the ministry of corporate affairs putting in an early warning system to be able to spot issues like this, but to your mind what is the biggest lesson and what is the big imperative at this point in time?

Achuthan: In my view, Satyam is only an aberration...if we were not having a framework on corporate regulations, perhaps the story would have been different. The ground rules have already been prescribed. If somebody is playing foul, we cannot say the rules are bad. How many such cases have happened in the past, there are very few? So from Satyam, please don’t generalize.

This was an example of public-private partnership of a very different kind and the first time a private sector company was being rescued by a government-appointed board. It gave public private partnership a whole new meaning...

Karnik: As Mr. Achuthan just said, that is very exceptional and you need to take exceptional action. I do think that the role of the government has not got its due credit—acting quickly and decisively and making sure that they moved ahead.

In our jobs, if someone asked me, I would say our job was like (that of) a bomb-disposal squad. We were sent there and we knew this is ticking and we didn’t know which wire to cut and yet you had to act quickly.

So, that’s a rare sort of thing and I am glad that we were able to do it. So I think in such exceptional cases—this just proves the point that there are people willing and happy from the industry—corporate professionals are willing to step (in) with the government and work and do such things.

Too many times the government feels it has all the wisdom and all the knowledge and all the patriotism; that everyone else is trying to cheat, mistrust and no one else is there, and for a change the government took a very different approach, and I think that has paid off.