Ramalinga Raju - The no-frown man
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A couple of years ago, I met Ramalinga Raju for an interview at a time when the company was going through a period of stress. The numbers were not too good as his costs had gone up in an attempt to try to bring Satyam’s wages in line with industry standards. Through all the questions in the press conference, and subsequently in the one-on-one interaction in his office, I was intrigued to see that he did not frown even once. Not once did he struggle for the right word. He had a measured way of speaking, and he stuck to it no matter how loud or rude the questioner was. I asked him how he managed to have no stress, and never to frown (he does not have a single frown line on his forhead) when I met him later. His response: “I meditate”. Today, as I read his shocking letter to the stock exchanges, admitting to inflated profits over the last several years, I wonder what it was that he meditated on….and about. I wonder now if I can believe him when he says that “neither me nor the managing director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results.” If he could lie with such a straight face earlier, what is the guarantee that he is not doing it now!
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(17 votes, average: 4 out of 5)
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January 9th, 2009 at 4:12 pm
After this Scandalam, only the very trusted business houses will benefit from investor confidence. It is easy now to predict a massive flight to safety in the Indian capital markets, with money exiting all “sexy” stocks and going into solid well-trusted companies that have well-earned reputations for corporate governance and ethical standards. It is time to be old fashioned and safe again. We have lost patience with these rockstar businessmen.
January 9th, 2009 at 2:40 pm
Thank you for the feedback. I very much appreciate your comments on this blog. Keep them coming.
January 9th, 2009 at 2:34 pm
Long Live Forbes Fortune 100!
Mukesh Ambani present a jet to his wife on here 44th B’day.
Anil Ambani gift Tina Ambani a yaught named “Tian”
All these are great story for the television watching and literate Indians.
More and More Indians are aspiring to reach “Forbes 100″
What it all means - The fortune made by the so called aspiring Indian middle-class is getting transferred to the Fortune 100 guys at jet speed.
Raju tried to speed up his Fortune by diverting Satyam funds to real estate… hands and legs burned… and finally this cover up came out.
Had he succeeded in buying “Maytas”, the whole story would not have come out and Raju would have won best Earnest & Young outstanding businessman of Year 2009.
I always trust the words of my “Father of Nation” - “There is everything for our need, but not for our greed”.
January 9th, 2009 at 12:36 pm
From Satyam saga it is clear that there are no systems in place to control economic frauds in India. Our Govt only set up organisations like SEBI to spend crores of Rupees. 7000 crores is not a small amount to be manipulated by any single Company. I am sure even now SEBI can unearth few more Styams if they work hard and verify figures regularly submitted by Listed Companies.
January 9th, 2009 at 7:37 am
You have a point. Looks are often deceptive, in this case it certainly seems so.
January 8th, 2009 at 11:14 pm
Mr. Raju and others like him are saints. Their moto is “Never lie but never go near the truth. Live it up and stockholder are dime a dozen. They will come and go. I can put my expenses on company expense even if I own 1% of the outstanding shares.”
How is this for a theory. PWC made me do it as I was sleeping with IBM. IBM owns PWC.
January 8th, 2009 at 9:22 pm
Guys
As a former auditor, I can tell u that the easiest area to ensure correctness is the Cash and Bank section as you rely on a statement from an independent third party (the bank) and not on management. I am absolutely sure that a firm like PwC has taken such confirmations from the bankers. I am not too sure if they could have done anything else if the bank confirmation provided is false of forged or misstated.
January 8th, 2009 at 7:03 pm
The irony for me, how A’SATYAM’ smartly won the coveted Golden Peacock Global Award for Excellence in Corporate Governance for 2008. The organization was named the winner by The World Council for Corporate Governance (WCFCG)…dunno, how much stake it holds to confer such a prestigious award to such a fraud governance!
January 8th, 2009 at 3:00 pm
Good point. PWC is part of the gamble. Definetly there should be investigation on modus operandi. But one point intrigues me, their philonthrophy and recent one like Emergency Management stuff they had done. Fraud and Philonthrophy , hand in hand. one to coverup for the other one????
January 8th, 2009 at 1:22 pm
All of this while i was reading comments, I couldn’t see anything written on the Auditors’ role!! Without their blind support, this unprecedented scam would have never had happened and Indian IT sector would have never become a reason to bog-down the India Inc. image at the world-stage. The big drop in Indian companies ADR (with Satyam ADR down by 91% for obvious reasons),clearly signifies the -ve sentiment towards Indian IT companies, thanks to Mr. Raju’s meditation!!
PwC operations in India(atleast their Auditing arm) should be totally banned.
Is this not the high time to rate such Big Fishes as well which have always been trusted with closed eyes???
January 8th, 2009 at 12:29 pm
I read R Raju’s letter a couple of times to see whether there was any remorse that came across in his letter. Even after the third reading, I didn’t get a feel that the man realizes what he has done. I think right through the Maytas deal till the sharing of this letter, he has surrounded himself with the belief that whatever it is that he is doing he is doing it for the shareholder. The way he described that he was buying Maytas to protect the Satyam shareholders was truly revolting. How can he not realize that by paying for Maytas with the “fictitious money”, he was now defrauding the Maytas shareholders as well???
I really feel bad for Satyam shareholders and employees that they were led all this while by what can only be described as a petty crook whose greed got way ahead of himself. The lack of remorse just goes to show how shallow this man really is. God alone knows how many skeletons will be unearthed during the course of the various investigations which I’m sure will bring to light other such really shoddy deals that Mr. Raju & his cronies have manufactured over the years.
Indeed a very sad day for India Inc…:(
January 8th, 2009 at 11:58 am
With maytas deal raju was trying to convert satyams fictitious assets into real one. Probably that was the last choice he had to save his company and betterment of his investors, unfortunately whole incident turned into a havoc.
January 8th, 2009 at 10:35 am
because of all this scam,the fresher like myself who will be passing out this year in may-09 has created problem for jobs,satyam scam will leads to cut more 10k jobs this year
its very bad for the it industry as well as for the engineers who will be passing out this year
January 8th, 2009 at 8:14 am
One should not buy the Indian Industry’s argument that the Satyam Raju’s Fraud is a stand alone case. I think that it is symptomatic of the greed that Corporate India represents and their tendency to rip off the shareholders - both individual and institutional. The Corporate Honchos appear to have lifestyle that does not respect sanity in a developing country like India. They seem to believe that they have much bigger needs, much bigger bellies to fill, and a rush to preserve money for their next “eighty four births”. Their compensation levels that they decide for themselves at shareholders’ cost are, to say the least, filthy.
I am a small shareholder of ICICI Bank. The Bank triggers sheer revulsion by its “irresponsible adventurism” in the market with the shareholder losing nearly 45 percent of his capital. I have just been sent a request for ballot in absentia to support KV Kamath’s appointment as Non-Executive Chairman at a salary of Rs. 20,00,000 lakhs per month. How much does that man need to eat? Similarly, your newspaper enlightened me by stating that Ms. Chanda Kochhar will get a salary of Rs. 13.75 lakhs per month as Managing Director. It is a rip-off. These honchos need to shed a bit of their filth from their lives and learna to grow up to live with a measure of frugality so that the shareholders can be given a bit more for thereal risk that they are subjected to day-in and day-out by their sheer adventurism with someone else’s money.
For God sake up, shed your flab and learn to live like modest human beings. You will save yourself from many lifestyle diseases.
Sugan Bhatia
98112 25103
January 8th, 2009 at 3:56 am
Vandana,
I am a former employee who has met Raju and Ramu his younger brother many times. In hindsight, I get the feeling that their initial intentions may have been honorable. But, they did surround themselves with the sorriest bunch of incompetents I have ever seen.
Many of these top executives based in Hyderabad and Chennai did little work. They were considered by most US and UK-based client executives as “clueless” about IT and the industry they were supposed to be knowledgeable about.
The most hilarious experience I had was attending one of their “strategy meets”. What I witnessed was ass-kissing and sucking up on a truly mammoth scale by satyam executives who flew in from all over the world for a 4-day vacation. The speeches from Chief Strategists like Shailesh & Prabhat can be described kindly as idiotic.
Led by fools like this, how do you expect the company to bring in revenues consistently? Remember the margin Raju confessed to a measly 3%. My local grocery store can do better.
January 8th, 2009 at 12:15 am
The indian industrialists are as corrupt as our politicians. It is in our genes.
January 7th, 2009 at 11:33 pm
Indeed its a Black chapter in the history of the Indian IT industry. How can we believe him ?
January 7th, 2009 at 6:54 pm
so what is the true story? if that isnt, where is the 5000 crores of cash?
January 7th, 2009 at 6:45 pm
Would anyone believe this Robin Hood story of trying to protect the Satyam shareholders while taking the hit himself? Would anyone now believe anything he says?
January 7th, 2009 at 6:39 pm
Looking into the details of his letter, he now claims that the maytas deal was used to inflate back satyam’s assets to ensure that the public would not figure out the accounting fraud at satyam. additionally, the payment for maytas would have been staggered over time (given satyam actually did not have the cash it claimed to have had to acquire it). so technically he was transferring the assets into satyam at no immediate value, in which case the maytas transaction was protecting his satyam shareholders more than scamming them.
seems like there is more to this than meets the eye. would like to hear the real story if someone had it.
my new thesis is that he probably moved the 5000 cr out of the satyam right now and has used an accounting scam as an excuse to avoid it.
January 7th, 2009 at 5:15 pm
Well, IT companies have been known to diversify into real estate (think Infosys). Telecom companies have diversified into agriculture and insurance (think Bharti)….oil companies ahve diversified into agri retail (Reliance Fresh). The key question is if it is a bona fide move….or not…
Vandana
January 7th, 2009 at 4:55 pm
Hi,
To add to this, one should not forget how he tried to justify the Maytas acquisition and tried to convince the people that the deal was good for the company in terms of diversification. How the hell on this world can someone take this comment that a IT company diversifying in Real Estate.
I guess the reason was that, he must have realized that its not long before his scam would be unearthed and he conveniently tried to take out the Satyam shareholder money to buy maytas which would have ultimately benefited him as the Raju family has a significant stake in the Real Estate company.
I guess all this while Mr. Raju must have been meditating to learn how to lie to the world with a straight face !
Cheers,
Ritesh