India will act to prevent corporate fraud: Govt

Reuters
Posted: Thursday, Jan 08, 2009 at 1353 hrs IST
Updated: Thursday, Jan 08, 2009 at 1353 hrs IST

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New Delhi: India's government will do all it can to ensure there is no repeat of the Satyam financial scandal, and will strengthen regulators and company laws to improve corporate governance, the corporate affairs minister said.

The head of Satyam Computer Services, India's fourth-biggest software services exporter, resigned on Wednesday saying profits had been falsely inflated for years, sending the company's shares plunging nearly 80 per cent.

"We are concerned about what has happened in Satyam, and the government will take all necessary action to ensure these types of scandals do not take place again. Whatever steps could be taken will be taken," Prem Chand Gupta said late on Wednesday.

In a resignation letter that stunned India's business world, Ramalinga Raju, who founded Satyam with his brother and brother-in-law more than two decades ago, said about $1 billion, or 94 per cent of the cash and bank balances on the company's books as at end-September, did not exist.

The government has asked the registrar of companies in Hyderabad, where Satyam is based, to file a report. The stock market regulator has ordered an investigation into buying, selling and dealing in the company's shares.

"We will take the strictest steps as soon as possible to protect the interest of shareholders," Gupta said.

He said the government will also strengthen the regulators.

"We have strengthened and we will further strengthen them. The government has already instructed the institutes of company secretaries and chartered accountants to look into the matter and report to us immediately."

Gupta said a new Companies Bill, which is pending in Parliament, would make regulation more stringent for auditors, adding the government will examine the role of auditors in the Satyam case.

The new bill seeks to revamp archaic laws to help India's growing corporate sector adopt international best practice, and make boards and senior management of companies more accountable.

Since opening its economy to the world in the early 1990's, India has seen a proliferation of new companies. Strong economic growth has attracted foreign investors, and analysts say existing laws are inadequate to deal with the surge in corporate activity.

"The type of incident that happened in Satyam does not mean our entire corporate sector is like that. We need to see this type of incident does not happen again," Gupta said.

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Comments

» Service bond fraud 2.5 lakhs

Posted by emplo on 2009-08-09 18:08:36.118314+05:30
A GIS and Engg. Company in Andheri Mumbai, had signed a service bond with its employee of four year for rupees 2.5 lakhs for its inhouse training program. Employee taken loan from bank and given to the company as a bond agreement. And the clause was if employee leave the company he has to pay the bond amount taken by bank. There was no where written what about bond amount of rupees 2.5 lakhs if company terminates the employee. Now the scenario is company trying to change the agreement that if any reason employee seperate from the company, either employee resign or company terminate, employee has to pay the bond amount of 2.5 lakhs rupees. Company is forcing employee to change the Bond agreement as if they want to terminate the employees. The Employees are at very high risk of not only losing the job but also paying the 2.5 lakhs amount, even if they are not breaking there service bond of four years.

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» rolta corporate fruad

Posted by praveen on 2009-01-29 13:11:22.512472+05:30
rolta india ltd and union bank of india combined taking eduction loans for 2.5 laks from each candidate joing in rolta and removing with in a short period and asking to pay the loan amount by candidate it self.please tell me to whom to complain about this satyam like fraud.

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» GOI will act to prevent corporate fraud.

Posted by M.S.Kamath on 2009-01-08 12:03:23.936875+05:30
No government's assurances can be taken on face value. Governments themselves are at the root of wide-spread corruption in the society today. No political party worth its salt wants to curb corruption. Prevention of frauds corporate or other-wise will not be possible, because politicians of all colours are always part of any fraud occuring in the country.

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» corporate fraud

Posted by Tila on 2009-01-08 10:26:49.31468+05:30
This is unfortunate. Recently in the USA there has been a trend by Indian IT professionals to fake experience in the resumes. New graduates are claiming 5 yrs of experience! When they are caught they are being fired! Seems like ethics have been going down in the IT / white collor industry and there is no fear in exporting this behaviour even overseas. It is a shame as an Indian having to face american colleagues when this topic comes up.

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