Monday, January 12, 2009

System, Satyam, & the Ashram

[Does one bite the hand that feeds it? It’s a time tested phrase that lies at the very heart of the Satyam scam and the systemic flaws that allow such frauds to be carried out, undetected... All independent directors or auditors are not unscrupulous. But there is an obvious conflict. Perhaps these things aren’t spoken about as it is a system that works mostly, with the odd scam here and there. But for my money, a new system needs to be thought about. Else, you’ll simply be hoping that those you trust are not crooked. And that isn’t good enough. These bodies must get their bread buttered by the people they are trying to protect against fraud. Investors, not company managements or promoters. Is it so difficult to devise a system where auditors and rating agencies are paid by the ‘users’ of the information they dish out? I doubt it. Leaps of faith HT 11 Jan 2009 Udayan Mukherjee is Managing Editor, CNBC TV18]

So the truth is that it is the system -- and not Satyam -- who is to be blamed. Many are clamoring that the Ashram can't be at fault, but should we believe that? It will be in order, therefore, to probe whether any conflict of interest exists. [TNM]

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