The media will have yet another date with the case on Thursday, April 16, when the matter comes up for hearing before the court. The biggest accounting fraud in India's corporate history, and the high profile nature of it, has, over the years, generated a lot of curiosity among India Inc. as well as the common Indian. And, the media have obliged them with one breaking news after the other, right from the time when the news of the scam broke to the pronouncement of the punishment.
But, what has been the major takeaway for corporate India? There are two key lessons. One, the role of auditors and the need to strengthen the auditing system. And two, the role of a company's highest decision-making body, the board, and the role of its independent directors. After the Satyam scam came to light, the Securities and Exchange Board of India had exercised its rights to tighten the rules in running a company and improving governance. But, apart from going by what the regulator had mandated, have the boards of Indian companies taken steps to ensure the country does not find another Satyam, going ahead?
An industry leader prefers considering the case of Tech Mahindra because of its direct association with Satyam, and the turnaround story it has scripted following the acquisition of the scam-tainted IT major. Like many companies, the Tech Mahindra board, too, is well represented by the big "strategy guys", people who are there to bring great value to a company.
However, the big difference after the Satyam scam has been an equal representation of those who deal in numbers, legal, regulatory and taxation issues. Out of the 10-member Tech Mahindra board four represent the new breed of professionals seeking to ensure clean management and protect the interest of the consumer.
They include M. Damodaran, a former Sebi chairman; T.N. Manoharan, Chairman of the National Committee on Accounting Standards and Taxation; Ravindra Kulkarni, senior partner at a legal firm and member of the Bar Council of Maharashtra and Goa; and M. Rajyalakshmi Rao, who has served as a full-time member of the National Consumer Disputes Redressal Commission.
We are not into an exercise to comparing boards and to pick one over another. Given its history with Satyam, Tech Mahindra might have been overly cautious with its board representation. But, how do the others look? Sample this: One of India's leading companies, Reliance Industries, on its 13-member board has two well-known legal luminaries in Yogendra P. Trivedi, a practicing senior advocate of the Supreme Court and Rajya Sabha member, and Mansingh L. Bhakta, senior partner of a leading firm of advocates and solicitors in Mumbai.
Apart from this, respected individuals from various fields have been inducted into RIL's board, such as marketing guru and academician Dipak C. Jain, noted scientist Raghunath A. Mashelkar, and Adil Zainulbhai, consultant and former chairman of McKinsey.
Indian companies are working out their own solutions to get optimal results under their respective systems, either by involving more experts or having more empowered members, but the key point has clearly been to have members with an eye on compliance. It is also equally important to have short-term appointments. Having the same board members forever could compromise on their ability to be truly independent!