The aftermath of the Satyam scandal now seems to be heading down two very distinct paths. On the one hand, there is the very competent rescue effort well under way, and on the other, there is the confused and/or intentionally incompetent investigation. Consider the effort to rescue the stricken firm first. The government reacted quickly by appointing a new board consisting of very credible names. That brought some stability to a firm that was rapidly sinking. The stock price has gone up and there is no significant exodus of Satyams clients thus far. Now, there are apparently a number of firms interested in buying Satyam. At least one, L&T, has upped its stake all the way to 12%. The board now needs to quickly appoint a new CEO and CFO and co-opt board members from the ranks of significant shareholders like L&T. Judging by the processes followed so far, these steps are bound to be taken sooner rather than later.

Now look at the investigation. Arresting the Raju brothers, CFO Srinivas Vadlamani and two senior auditors from Price Waterhouse was the easy bit. Its going to be a lot harder to secure convictions in court. If the case remains in the hands of the Andhra Pradesh police and CID, the chances of gathering enough evidence to prosecute successfully are not very likely. And this is aside from strong worries about political interference. Is it a secret that the Andhra police simply does not have the expertise to investigate corporate fraud That is the expertise of the Serious Fraud Investigation Office and Sebi, both of which continue to be denied access to interrogate or question any of those people arrested. The CID has also reacted very slowly. It took a whole week to seize documents from Satyams auditors after the detailed confession by Ramalinga Raju. In cases such as this, time is of the essence and all evidence must be seized before its destroyed. Someone needs to step in to allow Sebi and SFIO immediate access to the Raju brothers, their CFO and the arrested auditors. After that, there will have to be considerable cooperation between Sebi, SFIO, Andhra police and the public prosecutor when the case actually goes to court. On current form, one has to be pessimistic about this investigation securing convictions.