Redefining Politics...

India is in need of a revolution. There were situations where Politics were in the hands of eminent persons but today the scenario turns out to be exactly the opposite.The recent happenings in the politics have forced me to write a post on this. I certainly have some questions, which has been pricking my mind for a long time.

Why, no politician in the ruling party has been convicted of any criminal/civil proceeding till date?

We know that politicians commit most of the unlawful acts but why aren’t we not able to stop them?

If the Govt is trying to bring a casteless community why is that every application for Govt jobs carries a column to specify our caste?

Why aren’t we able to change the face politics? Is it because of our attitude that Indians generally have?

If it possible for the Tamilnadu politicians to provide rice at a price of Rs.2/- then does it mean the Govt was making profits by selling price at higher prices?

Lawmakers are the lawbreakers in our country. The very definition of Democracy roots to “of the people, by the people and for the people”. But in today’s context it is “of the politicians, by the politicians and for the politicians”.

It is a shame for Indian Democracy that even after more than 50 years of its existence we neither have matured politicians who talk about guiding the country to a bright future during their election campaign nor have matured voters who vote for free colour tv’s instead look forward to elect a leader who can create avenues for the voters to participate in the development of the country and proudly EARN their decent living.

Coming to Resevations, admitting students of backward community through reservations in prestigious and premier institutions like IIT and IIM is not a welcoming trend, who don’t even manage to pass their entrance exams.This would have two major implications.They would stick to the BC community tag for generations and would enjoy the perquisites given to them Secondly,only few from the BC community would be able to do well and the rest would lag behind. This is does not imply that Backward Community people are less equipped, only that people coming with the comfort of Reservation at various stages are definitely less equipped. This would force the govt to carry out the reservations in the field of employment helping them to land up in pivotal posts in both the public and as well as private sector.If the Govt stops talking about the caste, there would be no such thing called Backward Community in another decade.

The historical parliamentary session which happened in the parliament few days back showed how money determines the leader of a country.How the politicians managed to bring such rupee bundles into the parliament?.It was clearly evident as how the public money is being EFFECTIVELY utilized.Shame on the part of the politicians.

Coming to the politics of Tamilnadu,the recent trend over here is the actors turning into politicians.The actors who portray themselves as a socialistic person,a man with high decorum on the silver screen, is not their image that they hold in their real life.They just choose politics as an avenue for their investment.Many of the poor and uneducated believe them to revolutionize the politics turn out to be scapegoat at the end.

We, the educated should indulge in politics replacing the existing ones who know nothing, but Politics.The very face of politics cant be changed unless the attitude of the people changes.

Satyam Scandal!!!!!

Satyam has been topping the media charts for the last few weeks and have been rattled by a series of shocks. The whole mayhem started with the announcement & subsequent cancellation of Maytas(Reverse of the name 'Satyam') acquisition, it was followed by World Bank contract termination & allegation of bribery by Satyam and then came the resignation of 4 independent directors from its board. Then the Satyam CEO Ramalinga Raju made a press release that Satyam's books were fudged; that they have been reporting inflated revenue/margins for the last few years and the stated cash reserves of $1.2B are non-existent. The overall revenue impact of this fraud was a whopping Rs.8000 Crores. This is the biggest corporate scandal in Indian history. This whole episode has not only impacted Satyam but this has created lot of negative publicity for Indian IT and Industry as a whole and impacted its corporate reputation.

Here's a summary of the misreported amounts claimed by Raju in his letter to the Satyam Board:

1. The Balance Sheet carries as of September 30, 2008

• Inflated (non-existent) cash and bank balances of Rs.5,040 crore (as against Rs. 5361 crore reflected in the books)
• An accrued interest of Rs. 376 crore which is non-existent
• An understated liability of Rs. 1,230 crore on account of funds arranged by me
• An over stated debtors position of Rs. 490 crore (as against Rs. 2651 [cr.] reflected in the books)

2. For the September quarter (02) we reported a revenue of Rs.2,700 crore and an operating margin of Rs. 649 crore (24% Of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 Crore ( 3% of revenues). This has resulted in artificial, cash and bank balances going up by Rs. 588 crore in Q2 alone.


What annoys me about this whole incident is how can a company with $2B revenue get away with $1B+ mis-reporting/fraud. Here are some questions that pop-out of my mind from this greatest scandal ever made:

• Satyam is a publicly listed company in both India and US and are bound by Indian/US (GAAP) accounting standards.As I am in the field of auditing, I am not in a position to comment on the Indian accounting standards, however US GAAP standards and SoX regulations are very stringent. They need to go through several mandatory 3rd party audits as well. Given this how can Satyam fudge their books?

• This whole mis-reporting has been going on for a few years now. How can the external auditing company(PWC) make a mistake and not find this out all these years. If it has been consistently missing all these quarters then its an 'incident' not an 'accident'.

• I guess most of these inflated amounts have been reported in terms of inflated revenues for each of the quarters. Auditors are required to validate the customer invoice amounts, receivables, outstanding amounts, bank statements etc and tally them with each other? How can a gap of tens of millions dollars each quarter not be noticed by the auditors?

• If a company claims to have $1.2B of cash reserves they need to report and provide proofs of how the amount is invested/maintained to Auditors and also provide it as part of their regulatory filings. How can a company conceal a whopping $1B cash surplus without showing proofs of existence?

• The additional revenue reported will attract Income tax. It will be interesting to see if Satyam paid tax on inflated amounts. Wouldn’t IT department/RBI scrutinize their bank accounts, Forex transactions, annual/quarterly reports to validate the tax collections?

• He has not only inflated the number of employees from 40,000 to 53,000 but he has also inflated the salaries to mint a whooping amount of Rs.20 crores yearly.I still wonder how he had opened such a number of bank accounts in fictitious names.
  

Based on the above thoughts, I feel that the auditing firm has received some kick-backs and is involved in the whole fudging exercise. There is no way this could have been pulled off without involvement of Auditor. I wouldn’t also be surprised if Satyam provided falsified proof for some of these claimed investments (Auditor could infact have guided Satyam on the same so that they are on the safer end).

The obvious fact is that numbers were inflated to drive up the stock price. The whole story of pledging stocks to financial institutions and using that money to run the company (as stated in his letter) sounds very fishy to me. I doubt if that mortgaged money has been used in Satyam's operations,I’m sure that at least a sizeable portion of that is stacked away safely most likely outside India. Here again the question that comes to my mind is when an individual is pledging stocks and borrowing a money of Rs.1,200 crores($250M+) how did it not come under IT purview? There is a possibility that IT dept/political big-wigs could have a hand in this.

I pray for the well being of the 40,000 Satyam Employees whose future has become uncertain because of a single person.L&T (Larsen&Toubro) and few other corporates are in a plan to take over Satyam.May that soon happen and bring happiness in the face of those employees!!!!