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From the Executive Editor

In this issue, as in the previous one, we have investigated how some corporate promoters work against the interests of the minority shareholders.

Alam Srinivas        Print Edition: February 19, 2009

After India Inc. was rocked by its biggest scandal, we helped investors spot Satyam-like frauds. In this issue, as in the previous one, we have investigated how some corporate promoters work against the interests of the minority shareholders.

We also advise you to go through the developments in the B. Ramalinga Raju saga carefully. For, they will reveal how the regulatory and legal system are biased against you. If one looks at the decisions taken by the government, market regulators and the newly constituted Satyam board in the past few weeks, it seems that they are not worried about the small investor.

One, due to the legal lacunae, Sebi hasn't been allowed to interrogate Raju. This seems preposterous as Raju's crimes are market-related and he should, therefore, be quizzed by those who understand such issues, not by the state's CID, whose main focus is non-financial crimes. It has been over a month since Raju confessed, and each day's delay increases the chances of the evidence getting destroyed. So, it's logical to ask whether the investigating agencies and courts are interested in convicting Raju or want to give him breathing space to cover his tracks.

Two, there is no clarity on what Raju did. More importantly, no one really knows the truth about Satyam. Does it have 53,000 employees? Does it have those Fortune 500 clients? Can it get the ‘receivables' or does it need cash infusion? Even the new board seems clueless. It still hasn't found a CEO to run the company. Satyam seems to be on cruise control, but no one knows whether it is headed for the safety of the shore or is veering dangerously towards the rocks.

Finally, the new board seems to be acting against the interests of the shareholders. If there are at least three potential buyers for Satyam, why are the new directors urging Sebi to allow the new buyers to pay a lower price, almost a fourth of what it would have to pay as per the existing rules. Let the buyers decide Satyam's true value. They might pay more. Or less. But, in the latter case, one can easily reject the offers. The question is: why is the board setting the purchase price, rather than allowing the market to find it? It might be best if the government stopped interfering and let the new buyers decide what they want to do with the company.

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