Satyam highlights emerging market risks

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

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New York: being held to lower standard by their own internal regulators than companies in the West," said Geoffrey Coll, co-head of law firm Dewey & LeBoeuf's India practice group.

It also highlights cultural risks inherent in India's family-owned businesses, which have long battled issues such as nepotism, mismanagement, weak boards and lack of transparency and professionalism.

About half the companies in the Bombay Stock Exchange's benchmark 30-share index are family controlled.

"The people who do this (fraud) are usually egocentric. They have an incredibly high IQ. They generally surround themselves with people that support their opinion about what they are doing," Hand said. "It's almost cult-like."

ONE-OFF SITUATION?

But the scandal should not have come as a total shock to investors, Dewey & LeBoeuf's Coll said.

"If I am an investor who is buying shares of companies from emerging markets, I am already going to have some degree of scepticism," Coll said.

And such scandals have hardly been confined to the developing world, with immense frauds such as Enron, WorldCom, Adelphia and now Madoff rocking the developed world in recent years.

Some investors in Europe said they will wait for signs of widespread malfeasance among Indian companies before deciding whether to change their investment policy on India.

The Bank of New York Mellon's sub index of Indian ADRs slipped 5.2 per cent, but Satyam rival Infosys Technologies Ltd closed up 1.3 per cent on Nasdaq.

"Clearly, corporate governance was a worry, but it doesn't appear, from the level of the ADRs here, that there is that much concern," said John Ploscowe, executive director of Asian cash trading at JPMorgan Chase. "This is probably more a one- off sort of situation."...

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» "Satyam Highlights Emerging Market Risks

Posted by S S Subramanian on 2009-01-08 13:23:29.189018+05:30
This is biased and perverted comment by Reuters. USA, Europe, and UK are worse than the EMerging Markets. If the corporate governance and the oversight of SEC and FED of USA were much better than India the scandals like Enron, World Com, etc and the present crisis of sub prime mortgage and melt down of the Stock markets of the world would not have taken place. The present problem lies in the corporate greed created by American Capitalism and steep fall in personal and corporate ethics and prostitution of prfessionalism for earning more dollars by the persons in charge of companies, persons in charge of oversight and auditing professionals. Let Reuters do not make such racist and unprofessional comments.

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