Much has been written about the Satyam fiasco, and the prime focus has been on the role of the auditing firm PwC, and the former independent directors who in any organization are actually dependent upon the powers that be, that is the owners of the organization. These powers that be are the ones, who dole out such favours to these distinguished individuals by getting them on board, and by conferring the much misunderstood nomenclature of ‘independent directors’.
Now, the latest twist in this whole episode has been the sensational arrest of two senior partners of the accounting firm PwC, for their alleged role in the scandal, which quite rightly has sent shock waves in the entire auditing community.
There are two ways of looking at the aftermaths of this episode :
1. That the former founder CEO and other powers that be, had the final word in the overall affairs of the organization, and by getting various distinguished individuals as independent directors and a well known auditing firm to audit its books of accounts, these powers that be were only replicating the practise of ‘celebrity endorsements’ in a different way, to boost the overall image of their organization. Of course, as is the case with celebrity endorsements of various products and services, it is a well known fact that the involvement of such celebrities is limited to the extent of photo shoots or ad film shoots, in return for a huge sum of money.
Generally, no one expects any such celebrities to actually believe what they are saying or doing in front of the camera. Now, if such an analogy is drawn between the auditors and the independent directors with such celebrities, then one would be tempted to absolve all the former independent directors and auditors of Satyam, for their acts of omission and commission, which in a way contributed to such a disaster.
Furthermore, like any true professional who is out in the market vending his services, these former independent directors and the auditors, delivered what they were asked to deliver by those who paid a price for the same. Thus, why should they now be held accountable for what has happened ? Let’s think of it , if any product or service endorsed by a celebrity is found to be substandard or not what has been claimed by those celebrities in front of the camera, then would these brand ambassadors be held liable and taken to task, or would the powers that be of those organizations be proceeded against and dealt with appropriately under the law for fraud, perjury, or misleading the public ?
It is worthwhile to recall another scandal involving ‘Home Trade’, which was endorsed by none other than Sachin Tendulkar and Hritik Roshan. While the owner/CEO of Home Trade, Sanjay Agarwal is perhaps cooling his heels behind the bars, his brand ambassadors are busy endorsing other products and services, in return for fancy sums of money. If this is acceptable, then on what grounds have the two senior auditors of PwC been arrested ? After all, they too were simply vending their services, and had to deliver what their paymasters wanted them to deliver in exchange for the price paid to them for the same. Hypothetically, had they refused to play the ball, they would have been replaced by another ‘service vendors’ who would have merrily played along.
According to this line of thought, the two senior partners of PwC could be arrested if any only if, they had doctored the books of accounts of Satyam, by keeping messers Ramalinga Raju and company completely in dark, which as everyone knows is not the case. At the most, the auditing company PwC in general and the relevent auditors in particular should he held accountable with the loss in credibility for not upholding the high ethical standards of their profession, and presenting the books of accounts as deemed appropriate by them in utter disregard to the dictates of their clients. Of course, they should not face any criminal liability for the same,
2. The other way of looking at into this episode is that, the former independent directors of Satyam as well as the auditors were willing accomplice in a crime perpetuated by messers Ramalinga Raju and company. Thus, as in the case of a planned murder, in which the mastermind hires contract killers to carry out the job, which eventually leads to a stringent punishment for both the mastermind as well as the contract killers who were just vending their services for a fee, in this case too all the three parties, that is, messers Ramlinga Raju , former independent directors, and the auditors should be proceeded against for a criminal liability for perpetuating such fraud.
If this line of thinking is adopted, then the arrest of the two senior partners on charges of fraud (Section 420 of the IPC) and criminal conspiracy (Section 120B of the IPC) can be totally justified. But then one wonders, how come the former independent directors have been able to get away by mere criticism, instead of being proceeded against in a similar way?
Now if this line of thinking were to be carried forward and made applicable in other aspects as well, then it would mean –
a) Holding every celebrity personally liable for any misrepresentation of facts in the advertisement featuring him/her,
b) Holding him/her personally responsible for any subsequent drawback in the product/service so endorsed
c) Holding every salesman personally liable for any ‘sales talk’ done for pushing the product/service
d) Every lawyer is to be held personally liable for any act of perjury committed by his /her client in the court of law,
e) Holding every Chartered Accountant personally liable for concealing the real income of his client while preparing and filing the latter’s income tax returns. It is a common knowledge that some clients give a ball park figure to their Chartered Accountants, beyond which their tax liablity should not exceed. Those Chartered Accountants then need to work backwards,
f) And above all, holding every politician personally liable for the overall failure of his/hr political party to fulfil the various promises made in the election manifesto just before the elections.
No matter how desirable or undesirable may be the above, the feasibility of putting the same in practice is very much in doubt.
While the Satyam fiasco has certainly led to a much needed awakening in the various grey areas of our corporate sector, and would certainly lead to the much needed changes for the better in the times to come, the most crucial aspect which is being missed out is :
Can any service provider, be it a lawyer, or a chartered accountant, or even an independent director , be expected to deliver as is currently made out to be, as long as they are at the mercy of the powers that be of those organizations , which give them their bread, butter, jam, besides the a coveted status in society ?
If not, then is it fair to crucify them like this, instead of just baying for the blood of the real powers that be like messers Ramalinga Raju and company, who were the real masterminds of such crime ?
Satisfactory answers to above, would call for a lot of introspection and soul searching.
Wednesday, April 15, 2009
Tuesday, July 1, 2008
Oil crisis
The doubling of crude prices to $ 140 a barrel within a year, and with no signs of easing in the near future has serious ramifications for most of the non OPEC countries, as it threatens to derail their development process
totally. Notwithstanding the pronouncements of the OPEC, regarding the expected price levels of $170 dollars or more in the near future, and its inability or otherwise to firm up an action plan to arrest the price rise, coupled with the escalting tensions between Iran and Isreal, the fact of
the matter remains that there is a reasonable level of optimism for the oil prices to cool down substantially latest by the year end.
For one, OPEC itself would stand to lose if its major customers are forced to cut down the demand of oil, and instead give a fresh impetus to the development of non conventional sources of energy in collaboraton with each other. Certainly, such kind of a development would ultimately be detrimental to OPEC itself in the long run.
And secondly, being an election year in the US, it will ensure that the oil prices are reigned sooner than expected, going by its moves to control the spectulation in oil futures at its commodity exchanges. And most
importantly, all attempts would be made to defuse the tensions with Iran, and certainly, Israel would not be allowed to launch a military offensive as it would only worsen the oil crisis, which in turn would harm the
fortunes of the Republicans in the coming elections. Witness the friendly overtures being made to North Korea by the US, as precusor for such things to come.
totally. Notwithstanding the pronouncements of the OPEC, regarding the expected price levels of $170 dollars or more in the near future, and its inability or otherwise to firm up an action plan to arrest the price rise, coupled with the escalting tensions between Iran and Isreal, the fact of
the matter remains that there is a reasonable level of optimism for the oil prices to cool down substantially latest by the year end.
For one, OPEC itself would stand to lose if its major customers are forced to cut down the demand of oil, and instead give a fresh impetus to the development of non conventional sources of energy in collaboraton with each other. Certainly, such kind of a development would ultimately be detrimental to OPEC itself in the long run.
And secondly, being an election year in the US, it will ensure that the oil prices are reigned sooner than expected, going by its moves to control the spectulation in oil futures at its commodity exchanges. And most
importantly, all attempts would be made to defuse the tensions with Iran, and certainly, Israel would not be allowed to launch a military offensive as it would only worsen the oil crisis, which in turn would harm the
fortunes of the Republicans in the coming elections. Witness the friendly overtures being made to North Korea by the US, as precusor for such things to come.
Sunday, June 8, 2008
Are Indian Communists Really Patriotic ?
In his article "Red Star Over South Bloc" in Times of India dated 9th June, Mr. G. Parthasarthy has excellently portrayed the antinational character of our communists, who have virtually held the UPA government to ransom, besides of course doing an excellent job as the unofficial representative of China, in the Indian establishment. While of late there have been other distinguished writers such as K. Subrahmayam etc., who have very convincingly argued through such columns in Times of India, about the necessity of concluding the Indo-US Nuclear deal, and ignoring all those who are hell bent upon sabotaging our national interests just to please their masters in China, the sad part is that the UPA itself is yet to muster that courage to go ahead and bite the bullet.
Well, given a choice PM Manmohan Singh would like call the bluff of the communists, but the real tragedy is that, he does not have the support of his allies who perhaps do not wish to face the elections earlier than scheduled, thus harming their selfish interests, and in the process to hell with our national interests anyway.
Who could miss the irony of Indian politics, when before the Karnataka election results were declared, messers Mulayam Singh and company began cosying up to the Congress, and even hinted at supporting the nuclear dewal, but after the results were announced, they did a U turn and went back to the communists to 'kiss and make up'?
Thus, God forbid, it would not be unrealistic to imagine that the next government the centre may also have the blessings of our communists, notwitstanding their patriotic credentials.
Navneet Dhawan
New Delhi
Well, given a choice PM Manmohan Singh would like call the bluff of the communists, but the real tragedy is that, he does not have the support of his allies who perhaps do not wish to face the elections earlier than scheduled, thus harming their selfish interests, and in the process to hell with our national interests anyway.
Who could miss the irony of Indian politics, when before the Karnataka election results were declared, messers Mulayam Singh and company began cosying up to the Congress, and even hinted at supporting the nuclear dewal, but after the results were announced, they did a U turn and went back to the communists to 'kiss and make up'?
Thus, God forbid, it would not be unrealistic to imagine that the next government the centre may also have the blessings of our communists, notwitstanding their patriotic credentials.
Navneet Dhawan
New Delhi
Thursday, June 5, 2008
Importance of Caring Attitudes
Hi All,
I wish to share my thoughts with all of you, on a topic which has been a kind of obssesion for me since quite some time:
Please consider the following :
Given a choice, would you like to deal with a government agency, corporate entity, commercial establishment or an individual whom you don't perceive as caring ? In all probability, your answer would be a big NO.
The caring attitude begins with the environment around us in the form of basic amenities, the traffic, transportation systems etc. The courtesies, politeness of the people, work ethics, culture of the people can not only make a world of difference to those who live in that city, but can also positively influence the perceptions of people around the world. These then act as catalysts in the overall progress and development of the community.
A caring attitude is the prerequisite for success in any venture. We may be a government organization, a public sector undertaking, a multinational company, a private enterprise, a practicing professional, or even a common individual striving to make a mark in life. Through a caring attitude, if we are able to make a positive difference to the everyday lives of our fellow citizens and others, we would benefit not only by better social recognition and self esteem, but also through tangible returns. Furthermore, this would lead to the overall progress of our organizations, our communities, and in the ultimate analysis of our nation as a whole.
Our fellow citizens could be our present or prospective employees, customers, shareholders and colleagues who all have a vital role to play in ensuring our success in this fiercely competitive world.
Apart from inculcating and reinforcing the caring attitudes within ourselves, projecting the same effectively to people at large is equally important. Perhaps, it is the realizaton of this fact that not only corporates, but also some of the government agencies and undertakings which were earlier synonymous with indifferent attitudes are now attempting to project a caring image through press releases. This marks a new beginning.
To be cared for, is one of the basic emotional human needs, which unfortunately has become a premium commodity in this fiercely competitive world.
Should we not strive for that comptetive edge in the world, by inculcating and promoting caring attitudes, in each and every aspect of our lives ?
Would love to see your responses.
Best Wishes
Navneet
I wish to share my thoughts with all of you, on a topic which has been a kind of obssesion for me since quite some time:
Please consider the following :
Given a choice, would you like to deal with a government agency, corporate entity, commercial establishment or an individual whom you don't perceive as caring ? In all probability, your answer would be a big NO.
The caring attitude begins with the environment around us in the form of basic amenities, the traffic, transportation systems etc. The courtesies, politeness of the people, work ethics, culture of the people can not only make a world of difference to those who live in that city, but can also positively influence the perceptions of people around the world. These then act as catalysts in the overall progress and development of the community.
A caring attitude is the prerequisite for success in any venture. We may be a government organization, a public sector undertaking, a multinational company, a private enterprise, a practicing professional, or even a common individual striving to make a mark in life. Through a caring attitude, if we are able to make a positive difference to the everyday lives of our fellow citizens and others, we would benefit not only by better social recognition and self esteem, but also through tangible returns. Furthermore, this would lead to the overall progress of our organizations, our communities, and in the ultimate analysis of our nation as a whole.
Our fellow citizens could be our present or prospective employees, customers, shareholders and colleagues who all have a vital role to play in ensuring our success in this fiercely competitive world.
Apart from inculcating and reinforcing the caring attitudes within ourselves, projecting the same effectively to people at large is equally important. Perhaps, it is the realizaton of this fact that not only corporates, but also some of the government agencies and undertakings which were earlier synonymous with indifferent attitudes are now attempting to project a caring image through press releases. This marks a new beginning.
To be cared for, is one of the basic emotional human needs, which unfortunately has become a premium commodity in this fiercely competitive world.
Should we not strive for that comptetive edge in the world, by inculcating and promoting caring attitudes, in each and every aspect of our lives ?
Would love to see your responses.
Best Wishes
Navneet
Wednesday, June 4, 2008
Fuel Price Hike
The hike in the prices of petrol, diesel, and LPG were not unexpected. While this hike is likely to stroke inflation even more, and exert further strain on the monthly budgets of several households, there are two things which merit attention:
a) As this hike was less than what the Oil Marketing Companies require to make decedent profits, and as the government had its hands tide up because of the forthcoming assembly elections, and general election next year (hopefully) , then would it be unreasonable to predict a price of Rs. 100 per litre of petrol by 2010, assuming that the international price of crude remains above $100 per barrel for another year or so? and
b) It is now time to seriously devote our energies into alternate renewable fuel technologies which can power the automobiles of tomorrow. Let the premier engineering institutes like the IITs take over this challenge, and help us reduce the percentage of crude oil imports from over 70% to less than 30% of the total import bill, within the next five years at the most. How come none of our political leaders including those from the left parties, who have been opposed to the fuel price hike, have not thought on these lines ?
Let's ponder on these two points.
Best Wishes
Navneet.
a) As this hike was less than what the Oil Marketing Companies require to make decedent profits, and as the government had its hands tide up because of the forthcoming assembly elections, and general election next year (hopefully) , then would it be unreasonable to predict a price of Rs. 100 per litre of petrol by 2010, assuming that the international price of crude remains above $100 per barrel for another year or so? and
b) It is now time to seriously devote our energies into alternate renewable fuel technologies which can power the automobiles of tomorrow. Let the premier engineering institutes like the IITs take over this challenge, and help us reduce the percentage of crude oil imports from over 70% to less than 30% of the total import bill, within the next five years at the most. How come none of our political leaders including those from the left parties, who have been opposed to the fuel price hike, have not thought on these lines ?
Let's ponder on these two points.
Best Wishes
Navneet.
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