Satyam Fraud - Ethical Corporate Governance

A Research Paper on

Satyam Fraud: Ethical Corporate Governance

By Niharika Swaroop 11IP60033 LLB Semester I

A paper submitted in partial fulfilment of course requirement Jurisprudence Rajiv Gandhi School of Intellectual Intellectual Property Law Indian Institute of Technology, Kharagpur 11 November 2011

1.CONTENTS 1. CONTENTS 1.

CONTENTS ............................................................................................................................................................... 2

2.

ABSTRACT ABSTRAC T ........................ ........................... .................................................... ................................................... .................................................... .................................................... ................................ ...... 3

3.

INTRODUCTION INTRODU CTION ........................ .......................... .................................................... ................................................... .................................................... .................................................. ....................... 4

4.

WHAT HAPPENED AT SATYAM? SATY AM? ........................... .................................................... .................................................. ................................................... .................................................. ........................ 4

5.

IS CORPORATION A MORAL AGENT?........................... AGENT?............................................ .................................. .................................. ........................................... .......................................6 .............6

6.

ETHICAL CORPORATE GOVERNANCE ................................................................................................................ 10-15

7.

CONCLUSION……………………………………………………………………………………………………………………………….……………….16 -17

8.

BIBLIOGRAPHY………………………………………………………………………………………………………………………………………………….18

8.1

Books .................................................. ....................... .................................................... .................................................. .................................................... ..................................................... ...............................17 .....17

8.2

Articles……………………………………………………………………………………………………………………………………………………………18

© Niharika Swaroop RGSOIPL, IIT Kharagpur

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Abstract 1

“Reputation is an idle and most false imposition: oft got without merit, and lost without deserving” Failed

institutions, including Lehman Brothers, Enron, and Satyam, would stand a testimony to this affray in a postmortem analysis. This paper discusses corporate ethical issues from a compliance perspective. It makes a distinction between legal and ethical compliance mechanisms and also shows that the legal compliance mechanism has clearly proven to be inadequate as it lacks the moral firepower to restore confidence and the ability to build trust. The concepts of freedom freedom of indifference and freedom for excellence provide a theoretical basis for explaining why legal compliance mechanisms are insufficient in dealing with fraudulent practices and may not be addressing the real and fundamental issues that inspire ethical behaviour. An attempt to substitute “accountability” for “responsibility” can result in an attempt to legislate morality. The focus of the virtues in governance is to establish a series of practical responses which depend on the consistent application of core values and principles as well as commitment to ethical business practice. In my opinion, No one makes it to the top ranks of corporate management without a healthy amount of self-assurance. Confidence underlies decisive, strong leadership, but does overconfidence lead managers to cross the line and commit fraud? Some frauds evolve, not out of pure self-interest, but because executives are overly optimistic that they can turn their firms around before fraudulent behavior catches up with them. This paper focuses generally on academic business ethics, more particularly on the philosophically-informed part of business ethics, and most particularly on the constellation of philosophically-relevant questions that inform the main conversation and ongoing disagreement d isagreement among academic business ethicists.

Key words: Corporate Governance, Business Ethics, Natural Law Ethics, Compliance Mechanisms, Cardinal

Virtues.

1

William Shakespeare, Othello, Act 2, Scene 3


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Introduction The persecutors, heretics acting with the support of the Ro man Emperor, disagreed with St Athanasius religious teachings and so wanted him dead. Athanasius saved his life by deceiving them. With the stakes so high, for reasons of conscience, he chose to deceive by misleading rather than by lying. As Peter Geach tells the story

St. Athanasius was rowing on a river when the persecutors came rowing in the opposite direction. “Where is the traitor Athanasius?” “Not far away,” the Saint gaily replied, and rowed past them unsuspected”2

Now in this case Athanasius did nothing not hing wrong because while verbally crafting cra fting the impression impression he was not Athanasius. The wrong in deception must be understood in terms of the burden on o n choice it imposes, I have argued that lying imposes a more onerous burden on an audience than does misleading.

What Happened at Satyam? "The truth is as old as the hills" opined Mahatma Gandhi, christened the Father of the Nation by Indians. So a company named "Satyam" (Truth, in Sanskrit) is supposed to inspire trust. Satyam Computer Services was one of the largest and was the one listed on the Indian and US Stock Exchange. On 7 January 2009, the Chairman of Satyam, Mr. B. B. Ramalinga Raju Raju issued a letter letter (the 7 January

letter) to the Board of Satyam and the Indian Indian

stock exchanges and confessed that the books of Satyam reflected non-existent cash and bank balances, fictitious accrued interest, an overstated debtor position and understated liability in an aggregate amount of Rs.71,360 million (approximately US$1.5 billion). The September 2008 quarterly accounts did not reflect the true position of the company’s revenues and operating margins and resulted in artificial cash and bank balances of Rs.5,880 million (approximately $120 million). million). Mr. Raju stated that the financial financial statements showed inflated profits profits over a period of several years. Satyam’s stock price had been under pressure since mid-December 2008, when its Board announced the proposed acquisition of two companies owned a nd controlled by Mr. Raju’s sons, Maytas Infra Limited (a listed

company) and Maytas Properties Limited, for an aggregate purchase price of approximately US$1.6 billion. These two companies were in the infrastructure infrastructure and real estate sectors and the proposed acquisition was of

2

(Geach 1977, p. 114


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secondary shares held by the existing existing shareholders. The acquisition acquisition proposal was withdrawn after adverse investor reaction and four four independent directors on the Board resigned resigned subsequently. subseque ntly. In the 7 January letter, Mr. Raju admitted that the proposed acquisition of the Maytas companies was an attempt to hide the gap in Satyam’s balance sheet by acquiring real assets. The stock market reaction to the 7 January letter was

immediate. The share price fell from a high of Rs.188 to a closing closing price of approximately Rs.30 during the day. On 7 January 2009, the Indian stock market regulator, the Securities and Exchange Board of India (SEBI) commenced investigations under various various SEBI regulations. The Ministry of Corporate Affairs of the the Central Government separately initiated initiated a fraud investigation through its Serious Fraud Fraud Investigation Office (SFIO). In addition, the Ministry of Corporate Affairs filed a petition before the Company Law Board (CLB) to prevent the existing directors from from acting on the Board and to appoint new directors. On 9 January January 2009, the CLB suspended the current directors of Satyam and allowed the Government to appoint up to 10 new nominee directors. Subsequently, the new, six-member six-member Board has appointed a Chief Executive Officer Officer and external advisors, including the accounting firms KPMG and De loitte to restate the accounts of Satyam. Following the 7 January letter and in accordance with the requirements under the Indian and the United States accounting standards, PricewaterhouseCoopers (PwC), Satyam’s auditors, issued a letter stating that the audit

reports

and

the

opinion

prepared

by

them

for

Satyam

should

not

be

relied

upon.

Government agencies including the Income Tax Department (for income tax violations), the Enforcement Directorate (foreign exchange violations) and the Provident Fund authorities (non-payment of compulsory contributory pension and insurance dues) also investigated Satyam. As the details of one of the biggest accounting frauds in India came to light, heads began to roll. Ramalinga Raju and his brother were fleetly arrested on various criminal charges and an investigation was initiated by the CID. Merrill Lynch and Credit Suisse terminated their engagements with the company. The New York Stock Exchange halted trading in Satyam stock on the same day. India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-share index on January 12. The scrip fell faster than a divebomber on steroids and Satyam investors lost clumps of money in the ensuing bloodbath. The credibility of Satyam’s statutory auditors, Price Water house Coopers (PWC) took a severe beating. PWC partners in charge

of the Satyam account were suspended. SEBI initiated an inquiry into its audit process and threatened cancellation of its India license.


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Mr. Raju, his brother (who was the Managing Director on the Board of Satyam) and the former Chief Financial Officer (CFO) were arrested. Two PwC partners were also arrested in connection with the fraud. fraud. Their bail applications have been refused by the Metropolitan Magistrate’s court in Hyderabad and they continue to

remain in police custody. custody. The employees of Satyam Computer Services were shocked to learn that the founder and chairman of their company, Ramalinga Raju, had resigned after confessing to a massive accounting scandal that had been percolating for years. In Raju's words, "It was like riding a tiger, not knowing how to get off without being eaten." The company was soon dubbed "India's Enron3". Stock markets reeled and trading of Satyam's shares was suspended. And for the 53,000 employees employees of Satyam, life would never be be the same again.

3

Riding the Tiger , By Ed Cohen and Priscilla Nelson


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How did the scam matter to the Nation? 1. Jobs of over 53,000 technocrats t echnocrats was at risk. 2. Country’s booming economy feared slight risk as country’s GDP fell by 0.4%. 3. India’s IT Sector suffered downturn as its image was tarnished globally. 4. The share prices of Satyam saw a sharp fall after Raju’s Confessio n. The sharp prices fell down from 190 to 30 (approx) in a day. The scam affected a ffected the image of Indian Companies among foreign investors portfolio. portfolio.

Shareholders

Directors

SATYAM

Public

Customers

Competitors

Employees


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Action Taken by the Indian Government The Ministry of Corporate Affairs Affairs took a primary role in the Satyam case. Under Section 388B of the Companies Act, the Central Government is permitted to petition the Company Law Board (CLB) if there are circumstances suggesting, inter alia, that the persons conducting the management and affairs of a company are guilty of fraud or default in carrying out their business or breach of trust, or the business of the company has not been conducted by such persons with sound business principles/ethics or prudent commercial practice. Section 388C of the Companies Act permits the CLB, if it it is in the public pu blic interest, to issue interim orders and direct a person not to discharge his or her duties duties and appoint a suitable person in lieu thereof. Under Section 388C, the replacement person shall be deemed a “public servant” for purposes of the Indian Penal Code. Section 408 of the Companies Act permits the Central Government to take action against a company when there is an act of oppression against the minority shareholders under Section 397 of the Companies Act or an action of mismanagement of the company under Section 398 of the Companies Act. Section 403 permits the CLB to issue interim orders for for any proceeding under Sections 397 or 398. 398. Accordingly, Accordingly, the CLB invoked these provisions provisions of the Companies Act to suspend the Satyam board & appoint new directors proposed by the Central Government. In a separate investigation, the SEBI initiatied proceedings under the SEBI Act, the FUTP Regulations, the Insider Trading Regulations, the Merchant Bankers Regulations the Takeover Regulations, the SCRA and the SCRR. The CBI, the Central Government’s principal criminal investigation agency (distinct from the local police), registered a complaint (a first information report) against Mr. Raju, the directors and the auditors of Satyam and certain others under Sections 120-B (punishment for conspiracy) read with Sections 409 (criminal breach of trust), 420 (cheating), 467 and 468 (forgery), 471 (use of forged documents) and 477A (falsification of accounts) of the Indian Penal Code. Mr. Raju, his brother (who was the Managing Director on the Board of Satyam) and the former Chief Financial Officer (CFO) were arrested. On January 2009, Government nominated noted banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam’s Board. In India, this

moment was full of pride for the manner and speed with which the re-constituted board of Satyam computer services found a strategic investor. Tech Mahindra paid Rs. 1752 crore for a 31% stake in the company, at Rs 58 per share. Satyam Computer Services zoomed 15% to Rs 54.20 ahead of the announcement of the highest bidder for the company on April 13,2009.


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Post Satyam Corporate Governance: An Ethical Et hical Perspective According to me in case of Satyam, the issue is not just of money but also of Business Ethics. India has so many anti-corruption and anti-fraud laws like the Prevention of Corruption Act, the Prevention of Money Laundering Act and Rules there under, as well as various checks under the SEBI Prohibition of Fraudulent and Unfair Practices Regulations, 2003. Yet the Satyam fraud happened and became public knowledge, not because of any stringent checks, but on the promoter’s confession confession. Ethical Corporate Governance seems to be the buzz word these days and almost every company promises to

follow it, but how exactly we can know that a company is practicing what it is preaches? We have seen that in the past many companies have exploited their market positions to inhibit competition or threaten local populations, ethical corporate governance prevents this from happening. The intention of a company to make maximum profit should not cross the line to enter into the realms of unethical behaviour.

Factors

Legal

Ethical

Ethos

Regards ethics as a set of limits and

Defines ethics as a set of principles

something that has to be done.

to guide choices.

Objectives

Geared

towards

preventing Geared

unlawful conduct. Method

Emphasizes

rules

towards

achieving

responsible conduct. and

uses Treats ethics as infused in Business

increased monitoring and penalties practice (leadership, core systems, to enforce these rules. Behavioral Assumptions

decision making etc.)

Rooted in deterrence theory (how Rooted in individual and common to prevent people from doing bad values (both material and spiritual) things by manipulating the costs of misconduct)


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There are two conceptions of freedom that engender two types of morality: freedom of indifference is the source of moralities of obligation and freedom for excellence inspires moralities of happiness and virtue. Under freedom of indifference one loses sight or is no longer concerned for the bigger picture (the common good or happiness) that would unite all acts in one same intention since each act is viewed as independently governed by obedience to the law. It reduces ethical behaviour to cases of conscience (the act of judgment) and presupposes a freedom that can be limited only in its external expression. In this th is case, virtue loses its formative role & simply becomes a habit of submission to the law. Freedom for excellence, on the other hand, encompasses a morality that regards happiness as decisive for the integral ordering of one’s life and the formation of one’s character. Central to this, are the cardinal virtues which strengthen freedom and refine

human actions. Freedom for excellence can be compared with an acquired skill in an art or profession as it is the capacity to produce our o ur acts when and how we wish, like high-quality works that are perfect in their domain.

Corporate governance covers a large number of distinct concepts and phenomenon as we can see from the definition adopted by Organization for Economic Cooperation and Development (OECD) – “Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions in corporate affairs. By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance”

4

Is the Corporation a Moral Agent? According to law, the corporation is a person, distinct in its personality from the persons who bear ownership shares in it (its shareholders) or conduct activities on its behalf (its directors, officers, and other employees). There are many manifestations of the corporati co rporation's on's separate legal personality (i) Distributions of dividends from the corporation to its shareholders are subjected to income taxation in the same way that gifts between persons are subjected to income taxation. If the corporation were not a separate legal person (as, for example, in U.S. and English law a partnership is not a separate legal person from the partners who compose it) the distribution of dividends would not be a taxable event (because money would not be changing hands).

4

OECD April 1999. Please see http://www.encycogov.com/WhatIsGorpGov.asp. (Last Assessed : 4th Nov,2011 : 5PM)


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(ii) Corporations are subject to civil liability that is distinct from that of its owners. Indeed, one of the principal motivations for organizing business activities in the corporate form is that corporate assets are legally separate from the personal assets of the corporation's shareholders. Shareholder liability for corporate debts is limited to whatever assets owners have contributed to the corporation in return for their ownership stakes. (iii) Corporations are subject to criminal liability that is distinct from that of its owners, directors, officers, or employees. If the corporation is a legal person, is it also a moral person? Anglo-American law takes no explicit position on this, although the corporate personality is frequently described there as a legal fiction, suggesting that the corporation's legally recognized personality is not also an ontological fact. Business ethicists have taken a variety of positions on the question whether the corporation is a moral person or a moral agent. According to the present scenario, Organizations should concentrate on acquiring those virtues which are most useful in the business world, in order to attain great material progress along with improving employees who, in turn, will help the institution to be more profitable. Virtues are traits of character that make a person a happy person, a company a productive and profitable one, a nation a great and fine nation. Virtues are acquired by habituation or repetitive practice. Sporadic bursts of effort do not lead to the attainment of virtue. Also, virtue is attained through continuity of effort, the constancy of trying each day. People who habitually act well continue to do so even when t hey are confronted with difficulties since virtues sustain them. Raju was compelled to act in the way he did by the circumstances prevailing around him. Had he sustained to his virtues, he would never have showcase inflated balance sheets which led to one of the largest scams in history of corporate India. The success of both (personal and professional) depends on the increase in virtues.

Virtues are good habits that are acquired by repetition which must follow the rule of right reason ( prudence).

For example, for a person to acquire the virtue of self-mastery, he or she must follow the rules laid down by right reason for the proper use of, for example, food, drink or sex, for the preservation of oneself and the human species. To be virtuous, we must acquire the habit of choosing to act well in a variety of contexts. The moral virtues also work according to what Aristotle called the “ golden mean” of human reason, which is the middle

path that reason indicates between two other paths that lead to excess or deficit (this “ middle” or “mesortes” is the summit or peak between the two extremes or vices).


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Apart from the virtue of justice, every moral virtue has these two opposites: courage (cowardice – foolhardy), acqu isition tion or development of virtues can generosity (stinginess – extravagance), humility (vanity – pride). The acquisi be compared to that of becoming a good athlete - performance is habitual or consistent, superior performance depends upon the ability to avoid too much or too little, and no one reaches the highest level of athletic performance without intensive practice. Leaders play a significant role in the development or erosion of virtue in employees and other persons. Crisp and Slote (1998), MacIntyre (1984), and Statman (1997) provide excellent and comprehensive discussions on virtue ethics. There are fundamental virtues that are essential for any (ethical) decision-making agent. These are the four cardinal virtues (from the Latin “cardo” which means hinge): prudence, justice, courage, and self-mastery. These cardinal virtues are the roots from which all other human virtues grow because the former perfects all a person’s natural powers in their functions in pursuit of

good.

Prudence (also called wisdom, good judgment, competence, practical reasoning) is the habit of recognizing

good ends and choosing the most effective and efficient means of achieving them. The wise or prudent professional knows what is worth pursuing and chooses the good (legitimate) means. The imprudent person can see what the goals should be but he or she cannot consistently find a good way of accomplishing these goals. There is a vice of what can be termed a “ false prudence” which leads people to seek only what is useful to their

own material well-being; examples of these are deceit, hypocrisy, and self-interested calculation. Prudence is the most important among the cardinal virtues since it is necessary in order to practice the others. Prudence can be equated to good judgment and right reasoning about people and action. The prudent manager has a grasp of the complexity of the business environment and instantiates the other virtues in a concrete situation. Going too fast means concentrating excessive risk or abusing one’s power (ma nagers are not paid to take risk, they are

paid to know which risks are worth taking) corporate world, prudence is the virtue necessary to select the most appropriate and effective means to attain the desired outcomes through making the “right calls”. Prudence in business is fostered by developing a great familiarity, beyond mere intellectual comprehension, with the

different elements of business decisions which must be known not only in their principles, but also in their concrete aspects. Gomez (1992) points out that prudence requires an optimization of the past (studying precedents, In the weighing previous experience, consultation, retaining what is positive and rejecting what is negative), diagnosis of the present (look out for details, circumspection, understanding of the present, capacity to draw conclusions), and foreseeing the future (reducing risk).


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Justice (commonly referred to as fairness) describes a situation or a habit in which one constantly gives others

what is their due so that they can fulfill their duties and exercise their rights, and at the same time, one tries to see that others do likewise. For instance, the market requires justice in exchange (for example, the payment of a just wage which ought not to be solely determined by the market) and it is a criterion under which we can judge the whole socio-economic system. Justice does not lead us to jump to conclusions or form hasty judgments of others. To live justice is to respect another person’s privacy which we need to protect from the curious gaze of

outsiders and not divulge in public what ought to remain within the domain of the organization. Many injustices are committed by pronouncing irresponsible judgments; every person and institution has a right to a good name. Calumny, slander, malicious gossip constitute serious unjust unjust assaults against persons and organizations.

Courage (formerly referred to as fortitude) is the habit moderating the emotions of fear or boldness to achieve

a rational goal. It is the ability to face and to overcome difficult situations and the power to act even when we are afraid. In a business situation, courage may be required to enable a person to overcome fear consistently and stand up for the rights of others, to venture unpopular criticisms, to relocate incompetent employees, to proceed in difficult downsizing or rightsizing exercises, to participate in politically charged labor-management negotiations, or to take action in worthwhile projects in spite of the risks involved. The courageous person should be contrasted with both the cowardly and the foolhardy or reckless. Cowardly persons exaggerate the risk or danger of a situation/circumstance. Foolhardy persons may be insensitive to the risks and dangers, and also suffer from the consequences. Being courageous does not mean that person might never retreat from danger or never assume a risk, but rather that this t his person’s judgment about such situations is co nsistently sound. sound.

It leads one to be patient when unpleasant things happen or in dealing with obstacles, to overcome own whims, selfishness, laziness to face up to the normal obstacles of everyday life, to bear sickness patiently, and to avoid outer display of bitterness, bad temper, gloominess.

Self-mastery (also known as temperance or discipline) is the ability to have control over our tendencies to

laziness, anger, complacency, procrastination, and reluctance to fulfill our responsibility. It can be defined as the virtue of moderating the disordered emotions of enjoyment. It is required in business, for example, to overcome pressures to play favorites, to be excessively frugal, or to waste money on luxuries.


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If someone always acts cowardly, he or she cannot be a prudent person. On the other hand, if someone is imprudent, then he or she may not be able to make proper decisions that are based on the virtues of courage or justice. There is an interdependent relationship among the cardinal virtues. More so, all other moral virtues hinge on these four fundamental virtues: prudence (hinged to understanding, docility, shrewdness, etc), justice (hinged to order, truthfulness, loyalty, mercy, etc), temperance (hinged to sobriety, continence, abstinence, modesty, etc) and courage (hinged to patience, perseverance, constancy, etc). Because of the interconnectedness of the virtues, growth in one reflects a growth gro wth in all, while a fall in one results in a decrease in the virtuous life.

Moral lessons to be learnt – 

Humility helps while at the same time Ego hurts.



Think of a Rainy day, aalways. lways.



Distinguish between opportunities & temptations. t emptations.



Build quality teams & enable succession.



Adapt with technology/knowledge changes at the same time stay static on fundamentals.



Listen to your mind in complyi co mplying ng with law and to your heart in dealing with peop le.



Many good things done get washed away in one bad conduct.



To live beyond your age - Love people and use wealth.



Ability may take you to the top but it takes Character Charact er to stay there.



Nothing is impossible, if attempted with nobility.


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Conclusion Failure in corporate governance is actually actua lly a real threat to the future of any an y corporation/organisation. With effective corporate governance based on co re values of integrity and trust (reputational value) w ho was an companies will have competitive advantage in attracting and retaining talent and generating positive reactions in the marketplace – if you have a reputation for ethical behaviour in today’s marketplace it engenders not only customer loyalty but employee loyalty. Effective corporate governance can be achieved by adopting a set of principles and best practices. A great deal depends upon fairness, honesty, integrity and the manner in which companies conduct their t heir affairs.

Companies must make a profit in order to survive and grow, however, the pursuit of profits must stay within ethical bounds. Companies should adopt policies that include environmental protection, whistle blowing, ethical training programs and so on. Such compliance mechanisms help develop and build corporate image and reputation, gain loyalty and trust from consumers and heightens commitment to employees. Ethical compliance mechanisms contribute to stability and growth since it instills confidence; management, leadership, and administration are essentially ethical tasks. The focus of the virtues in governance is to establish a series of practical responses which depend on the consistent application of core values and principles as well as commitment to ethical business practice. Virtues are powerful means to personal betterment and bring about social reform Because of its strong appeal to reason, it diffuses passion, prejudice, pride and self-interest and is a civilizing force in bringing about justice. Ethics is truly an essential ingredient for business success and it will continue to serve as the blueprint for success in the 21st century. Many of our traditional role models have fallen, and so it is more important for us to set a strong ethical example for future generations. Some answers to the following questions can serve as a basis for future research endeavours. Were the recent scandals in the US and India are the result of corporate greed and collusion, or were companies driven by market forces which they were unable or unwilling to resist? Do we need a radical overhaul of corporate governance and codes or can companies be relied upon to regulate themselves?


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The Satyam incident, though unfortunate, exposed some big loopholes in the system. Just as the United States needed the Enron Scandal to clean up its act, perhaps India needed the Satyam fiasco to introduce sweeping changes in its own financial reporting system. It cannot be denied that the Satyam episode was a stark failure of the code of Corporate Governance in India. Corporate governance refers to an economic, legal and institutional environment that allows companies diversify, grow, restructure and exit, and do everything necessary to

maximise long term shareholder value. It is not something which can be enforced by mere legislation; it is a way of life and has to imbibe itself into the very business culture the company operates in. Ultimately, following practices of good governance leads to all round benefits for all the parties concerned. The company’s

reputation is boosted, the shareholders and creditors are empowered due to the transparency Corporate Governance brings in, the employees enjoy the improved systems of management and the community at large enjoys the fruits of better economic growth in a responsible way. The loyalty of a typical Indian investor is far greater than his counterparts in the USA or Britain. Britain . But, our companies must not make the mistake of taking such loyalty as a given. To nurture and strengthen this loyalty, our companies need to give a clear-cut signal that the words “your company” have real meaning. That requires well functioning boards, greater disclosure,

better management practices, and a more open, interactive and dynamic corporate governance environment. Quite simply, shareholders’ and creditors’ support are vital for the survival, growth and competitiveness of

to day. India’s companies. Such support requires us to tone up our act today.


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Bibliography Books 1. Janet Dine “The Governance of Corporate Groups”, (First Edition, Cambridge University Press, 2000)

Articles 1. Ambrosia M. and W. Tott (1998), “ A Natural Law Perspective of Corporate Governance”, paper presented at the Second International Symposium on Catholic Social Thought and Management Education, Antwerp, Belgium. Belgium. 2. Anderson G. and M. Orsagh (2004), “The Corporate Governance Risk”, Electric Perspectives, 29(1), pp68. 3. Andrews K. ed, (1989), “ Ethics in Practice: Managing the Moral Corporation”, Harvard Business School Press, Boston, Massachusetts. 4. Arjoon S. and J. Gopaul (2003), “Ethical Orientation of Future Managers: The Case of Trinidad”, Social and Economic Studies, 52(1), pp 99-117.

5. Badaracco T. and A. Webb (1995), “Business Ethics: A View from the Trenches”, California Management Review, 37(2), pp 8-28.

6. Brief, Arthur, Dukerich, Janet, Brown, Paul, and Brett, Joan. (1996). “What 's wrong with the Treadway Commission Commission Report?” Journal of Business Ethics, 15(2), 183-192.

7. Collins J. (2001), “Good “Good to Great: Why Some Companies Make the Leap … and Others Don’t ” HarperCollins Publishers, New York. 8. Hansen J. (2004), “Business Ethics: Platitude or Commitment?” Ethics Matters, February, Center for Business Ethics, Bentley College, MA. 9. Harshbarger S. and T. Holden (2004), “The New Realities of Corporate Governance”, Ethics Matters, February, Center for Business Ethics, Bentley College, MA.


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Satyam Fraud - Ethical Corporate Governance

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