Thursday, December 18, 2008
satyam eva jayate : An issue of corporate governance
Embarrassed by the incongruity of the company's name for doing business, the promoter family (Rajus) of Satyam Computers floated two more companies Maytas Infra and Maytas Realty by name reversal. The family owned a substantially larger share of Maytas companies than of Satyam Computers.Satyam is cash-rich unlike Maytas.Rajus planned to do what many promoter families do.That is, transfer the wealth from Satyam to Maytas or to the family. Satyam's Board adorned by biggies like ISB's Dean, Rammohan Rao, Krishna Palepu and Vinodh Dham "innocently" decided to buy into Maytas companies utilising almost the entire cash holdings. Stated reasons: to develop two more verticals and to derisk business.The illustrious Board was unable to spot any business worthy of purchase in its own industry! This issue has raised hackles on corporate governance front.The Board has since reversed its decision.Isn' t reversing decisions child's play like reversing names? Is corporate governance an oxymoron?