WHAT WENT WRONG WITH SATYAM? PROFESSOR J. P. SHARMA J.P Sharma, Professor of Law & Corporate governance , Department of Commerce, Delhi School of Economics, University of Delhi WHAT WENT WRONG WITH SATYAM? INTRODUCTION Till about two decades ago corporate governance was relatively an unknown subject. The subject came into prominence in the late 80’s and early 90’ s when the corporate sector in many countries was surrounded with problems of questionable corpor ate policies or unethical practices. Junk Bond fiasco of USA and failure of Maxwell, BCCI and Poly peck in UK resulted in the beginning of codes and standards on corporate governance. The USA, UK and number of other developed countries reacted strongly to the corporate failures and code s & standards on corporate governance came to the centre stage. Enron debacle in 2001 and number of other scandals involving large US companies such as the Tyco, Quest, Global Crossings , the World.Com and the exposure of auditing lacunae, which led to the collapse of the Andersen, triggered the reform process and resulted in the passing of the Public Accounting Reform and Investo r Protection Act of 2002 known as Sarbanes- Oxley (SOX) Act, 2002 in USA. BACKGROUND On 24th June 1987, Satyam Computer Services Ltd (Po pularly known as Satyam) was incorporated by the two brothers, B Rama Raju and B Ramalinga Ra ju 1 , as a private limited company with just 20 employees for providing software development and co nsultancy services to large corporations (the company got converted into public in 1991). During the year 1996, company promoted four subsidiaries including Satyam Renaissance Consultin g Ltd, Satyam Enterprise Solutions Pvt. Ltd., and Satyam Infoway Pvt. Ltd. Satyam Computer Servic es Ltd in 1997 was selected by the Switzerland-based World Economic Forum and World Li nk Magazine as one of Indias most remarkable and rapidly growing entrepreneurial comp anies. Satyam Infoway (Sify), a wholly owned subsidiary of Satyam Computer Services Ltd, was the first Indian Internet Company listed on NASDAQ. Mr. B. Ramalinga Raju, Chairman of Satyam, was awarded the IT Man of the Year 2000 Award by Dataquest. In 2001, Satyam became world’s first ISO 9001:2000 company to be certified by BVQI. In 2003, Satyam started providing IT servi ces to World Bank and signed up a long term 2 contract with it. IN 2005, Satyam was ranked 3rd in Corporate Governance Survey by Global Institutional Investors. PROBLEMS BEGIN Problems in Satyam begin when on December the 16 th , 2008; its chairman Mr Ramalinga Raju, in a surprise move announced a $1.6 billion bid for two Maytas companies i.e. Maytas Infrastructure Ltd and Maytas Properties Ltd saying he wanted to deplo y the cash available for the benefit of investors. The two companies have been promoted and controlled by Raju’s family. The thumbs down given by investors and the market forced him to retreat with in 12 hours. 2 Share prices plunges by 55% on concerns about Satyam’s corporate governance 3 . In a surprise move, the World Bank announced on December 23, 2008 that Satyam has been barred from business with World Bank 4 for eight years for providing Bank staff with “improper benefits” and c harged with data theft and bribing the staff. 5 Share prices fell another 14% to the lowest in over 4 yea rs. The lone independent director since 1991, US academician Mangalam Srinivasan, announced resignat ion followed by the resignation of three more independent directors on December 28 i.e. Vinod K D ham (famously known as father of the Pentium and an ex Intel employee), M Rammohan Rao (Dean of the renowned Indian School of Business) and Krishna Palepu (professor at Harvard Business S chool) 6 . At last, on January 7, 2009, B. Ramalinga Raju announced confession of over Rs. 780 0 crore financial fraud and he resigned as chairman of Satyam. He revealed in his letter that his attempt to buy Maytas companies was his last attempt to “fill fictitious assets with real ones”. He admitted in his letter, “It was like riding a t iger without knowing how to get off without being eaten” . 7 Satyam’s promoters, two brothers B Ramalinga Raju and B Rama Raju were arrested by the State of Andhra Pradesh police and the Central government took control of the tainted comp any. 8 The Raju brothers were booked for criminal breach of trust, cheating, criminal conspi racy and forgery under the Indian Penal Code. The Central Government reconstituted Satyams board tha t included three-members, HDFC Chairman Deepak Parekh, Ex Nasscom chairman and IT expert Ki ran Karnik and former SEBI member C Achuthan. The Central Government added three more d irectors to the reconstituted Board i.e., CII chief mentor Tarun Das, former president of the Ins titute for Chartered Accountants (ICAI) TN Manoharan and LICs S Balakrishnan. A week after Satyam founder B Ramalinga Raju’s scan dalous confession, Satyam’s auditors Price Waterhouse finally admitted that its audit report w as wrong as it was based on wrong financial statements provided by the Satyam’s management. 9 On January 22, 2009, Satyam’s CFO Srinivas Vadlamani confessed to having inflated the number o f employees by 10,000. He told CID officials interrogating him that this helped in drawing aroun d Rs 20 crore per month from the related but fictitious salary accounts. Andhra Pradesh State CB -CID raided the house of Suryanarayana Raju, 3 the youngest sibling of Ramalinga Raju who owned 4. 3 per cent in Maytas Infra, and recovered 112 sale deeds of different land purchases and developm ent agreements. 10 Senior partners S Gopalakrishnan and Srinivas Talluri of the auditing firm PricewaterhouseCoopers (PwC) were arrested for their alleged role in the Satyam scand al. The State’s CID police booked them, on charges of fraud (Section 420 of the IPC) and crimi nal conspiracy (120B). 11 TECK MAHINDRA ACQUIRED SATYAM, RENAMED IT AS MAHIND RA SATYAM AND REPLACED ITS EXECUTIVE BOARD AND AUDITOR S Merely four months after its founder B. Ramalinga R aju admitted to fudging the books, Satyam’s government appointee six-member board managed to sa lvage the company despite all odds. The board, which kicked off the global competitive bidd ing process 12 in March 2009, selected Venturbay Consultants, a subsidiary of Tech Mahindra, as it e merged as the highest bidder 13 at rupees 58 per share. The deal got the approval of Company Law Boa rd. 14 Consequently, Tech Mahindra (holding 31% stake in Satyam) bought Satyam renaming it on J une 21, 2009, as ‘Mahindra Satyam’ 15 and replaced its executive Board by appointing its (Tec h Mahindra) CEO and MD Vineet Nayyar as Vice Chairman (who in December 2009 was promoted as Chai rman), its international operations head CP Gurnani as CEO and Subramaniyam Durgashankar as CFO . The executive Board appointed Deloitte Haskins & Sells as the company’s statutory auditors to restate its accounts. SWIFT GOVERNMENT ACTION SAVED SATYAM ULTIMATELY On January 7, Ramalinga Raju emailed his resignatio n to market regulator SEBI admitting to financial irregularities, which, in less than two h ours, was forwarded to the Ministry of Corporate Affairs (MCA). The same day, the Ministry asked it s two wings the Institute of Chartered Accountants of India (ICAI) and the Institute of Co mpany Secretaries of India (ICSI) to inquire into the role of auditors and company secretaries for sw ift regulatory action. There was an emergency inter-ministerial meeting next day ie on 8 th although it was a government holiday. Concurrently , the Ministry was drafting the petition to be filed befo re the Company Law Board (CLB) 16 . The very next day, the Ministry got the CLB order superseding the Satyam board with government appointed directors. SEBI relaxed the take-over code per se o n an application by the Satyam board to meet the emergency like Satyam where government suspended th e board of a company and appointed directors who act for the public good without any p ayment or compensation. Clearly, the Ministry of Corporate Affairs (MCA) acted swiftly and thoughtfu lly and saw the issue as much larger than that of an individual company. Satyam could not have been s aved if there was any delay in decision- making at the government level. Investigations also progressed as swiftly as the process of rescuing 4 Satyam. A Satyam like situation in the US would not have allowed the government to act on behalf of the shareholders and appeal to the judicial auth ority concerned. 17 MAHENDRA SATYAM AND TECH MAHINDRA TO MERGE The Mahindra Group, the new owner of Satyam and the largest shareholder in Tech Mahindra, is set to merge the two companies to transform the combine d entity into an Information and Communication Technology (ICT). The merger can happ en any time in the near future since the accounts of Satyam have been re-stated. MAHINDRA SATYAM HAS BRIGHT FUTURE Given that Tech Mahindra has only 25,429 employees, the acquisition of a company bigger than itself may have its own challenges. While combined employee strength 85,167 of Tech Mahindra and Mahindra Satyam may make Tech Mahindra next onl y to India’s third largest IT services provider Wipro, managing the integration may not be easy. CHALLENGES AHEAD A year after Rajus shocking confessions, Satyam (n ow Mahindra Satyam) is back in business, but a host of financial, legal and customer or pricing ch allenges continue to trouble the company that was once the fourth largest IT player in India. In the first few months after the takeover, the new management in Mahindra Satyam spent its energy on t raveling, meeting key customers, and reassuring them that it was business as usual at Sa tyam. A few customers like State Farm Insurance had moved to rivals even before the new o wner and management came on board. Others, shaken by the scam, decided to de-risk and move. On e of the most high-profile losses was that of British Petroleum’s $1-billion contract, which move d to TCS and Wipro. British Petroleum used to outsource projects worth $50m annually to Satyam. A few big names such as GE, a top customer, and GSK stayed on but extracted their pound of fles h. In July last year, GSK signed a five-year multi-million dollar SAP contract with Mahindra Sat yam, and in September, GE extended its multi- million dollar contract for the next three years. T hey asked for 15-20% rate cuts across the vendor base, and Mahindra Satyam was no exception. 18 SFIO INVESTIGATIONS 5 The Serious Fraud Investigation Office (SFIO), 19 a multi-disciplinary investigating arm of the Mini stry of Corporate Affairs, set up in 2003 with officials from various law enforcement agencies, was asked to investigate the fudging of accounts as admitted by B. Ramalinga Raju. It submitted its preliminary report on April 13, 2009 that runs into 29 volumes contained in 14 thousand pages. On November 30, it filed case 20 against Satyam promoter B Ramalinga Raju, his brot her B Rama Raju, ex-CFO Vadlamani Srinivas, senior finance manager D. Venka tapathy Raju and finance manager C. Srisailan, along-with company’s former statutory au ditors S Gopalakrishna and Srinivas Talluri 21 under various provisions of the Indian Penal Code, Companies Act and IT Act. The SFIO report believed the confession was not out of Raju’s call of conscience; rather it was deliberately painting a distressing face to keep the legal and public deali ngs with a light hand. According to SFIO report, Satyam founders B Ramalinga Raju, B Rama Raju and e x-CFO Vadlamani Srinivas, and ex-vice- president (finance) G Ramakrishna, together hatched a conspiracy to artificially increase the revenues and profits in the books. The report highl ights that the falsification was done by deliberate ly leaving loopholes in the Computerized Accounting Sy stem which uses ERP modules. The high-level application landscape of Satyam internal applicatio ns has many links between various systems where either there was no integration or there was weak integration. These loopholes were deliberately left to insert fictitious invoices and fictitious bank statements to balance them without being detected. Very smartly fictitious invoices we re created in the invoice management system using regular login ids, falsely intimating that an y of the employees could be involved in this. In or der to cover up these fictitious entries, the receipts were first accounted with Bank of Baroda, New York branch, and they then were relocated as fixed depos its in other accounts. With such artificial entries started giving a blooming picture of the company, t he management decided to put the surging profits in better investments. Unfortunately, Raju was now forced to make investments from the non- existing investments. As the company was constantly losing money, Raju decided to venture into brand building to avoid bad circumstances. The SFIO probe also takes a call on the account statements of the company with the Bank of Baroda, highlighting jacking up of the books ever since 2001-02. The report also clarifies that the company had booked false fixed deposits and interests in five banks namely, ICICI, HSBC, HDFC, BNP Paribas a nd Citi Bank. On the reconciliation of these statements the company books showed major gaps with the actual existing deposits. The investigation also throws light on the companys pa ying excess taxes on the non-existing assets and also indulging in forging current account balance s tatements. This helped the company forge quarterly details of outstanding balances of fixed deposits and interest earned on them. The report says that by showing a rosy picture of the company, the promoters were jacking up the share price and simultaneously selling off their holdings rakin g in handsome money. The company, apart from this, is also believed to have issued American Depo sitory Shares worth $ 15.2 crore out of which only $ 5.25 crore were brought in to the country. 6 The SFIO investigations also throws light on the co mpanys desperate attempt to acquire Maytas Infrastructure (MIL) and Maytas Properties (MPL), a n act done under the pressure from external investors who were pressing for better use of liqui d asset shown in the balance sheet. The report states that the promoters Ramalinga Raju, Rama Raju and the CFO Srinivas Vadlamani were fully aware of the precarious financial position of the c ompany and the large number of fake fixed deposit and fake bank balances created in the books since 2 000-2001 onwards. “A facade was created in the form of proposed acquisition of MIL and MPL to replace fictitious assets of Satyam with real assets with intent to deceive the shareholders of M IL and MPL and to fraudulently induce them to deliver their shares to Satyam,” the SFIO report st ates. The Report further states “in the meeting tha t took place on December 16, 2008 to discuss the acqu isition of MIL and MPL, B Ramalinga Raju was present, but abstained from discussion and voting o f these proposals. V Srinivasan, ex-CFO informed the members that the evaluation of Maytas Infra was based on SEBI Regulations, and for Maytas Properties, based on evaluation done by Erns t & Young. Further, the consent of the board was unanimously accorded after which Raju proposed the merger of MIL and MPL to the shareholders, which came in for stiff resistant, an d issue of corporate governance was raised.” A couple of weeks later, Ramalinga Raju dropped a bom bshell by sending a letter of admission to SEBI and the board of directors that he had fudged the accounts of Satyam and that the balance sheet as on September 30, 2008 carried an inflated (non-existent) cash and bank balances of Rs 5040 crore, non-existent interest of Rs 376 crore a nd understated liability of Rs 1230 crore 22 as has been highlighted in table 2. Table 2: Two Versions of Satyam’s Accounts (I) SOURCES OF FUNDS (1) Shareholders Funds a) Share capital b) Share application money, pending a llotment c) Reserves and surplus (2) Loan Funds a) Secured loans b) Unsecure d loans- others (I) APPLICATIONOF FUNDS (1) FixedAssets (2) Investment (3) Deferred Tax Assets (net) (4) Current Assets, Loans and Advances a) Sundry debtors b) Cash and bank balances c) Interest accrued on fixe d deposits d) Loans and advance s Less: current liabilities and provisions a) Liabilities b) Provisions Net Current Assets BEFORE CONFESSION 134.70 2.76 8392.23 8529.69 30.49 234.80 8794.98 1381.10 618.64 118.75 2651.36 5312.62 376.34 502.22 8842.54 1669.26 496.79 2166.05 6676.49 8794.98 AFTER CONFESSION 134.70 2.76 (415.47) (278.01) 30.49 1464.80 1217.28 1381.10 618.64 118.75 490.00 272.62 0 502.22 1264.84 1669.26 496.79 2166.05 (901.21) 1217.28 TWO VERSIONS OF SATYAM’S ACCOUNTS Gap of Rs. Gap of Rs. Gap of Rs. Gap of Rs. 5040 crores 5040 crores 5040 crores 5040 crores in cash in cash in cash in cash I II In nn nt tt te ee er rr re ee es ss st tt t n nn no oo ot tt t e ee ex xx xi ii is ss st tt ti ii in nn ng gg g 7 Source: The Business Today, February 8, 2009, p50. CBI INVESTIGATIONS The CBI, investigating diversion of Satyam funds ab road, have identified three suspicious foreign bank accounts in the US, which are held in the name of three different individuals. About rupees 60 crore belonging to Satyam were channelized into the accounts that stand in the name of these three non-Indian persons. The CBI did not find these tran sactions reflected in Satyam’s books. 23 On April 7, 2009, the CBI had filed a charge sheet against Ramalinga Raju and eight others under various sections of the Indian Penal Code for cheat ing and forgery and submitted 1532 original documents of bank transactions and 65,000 pages of other documents, which included the statements of 432 witnesses in the case along with the charge sheet. 24 In a 200 page supplementary charge sheet filed on November 24, CBI charged the accused of forging board resolutions and unauthorisedly obtaining loans worth rupees 1220 cr ore from banks as well as inflating Satyam revenues to the tune of rupees 430 crore by creatin g fake customers and generating fake invoices. The rupees 1220 crore unauthorized loan detailed by the CBI are not reflected in the company’s books and are over and above the rupees 1230 crore that Ramalinga Raju confessed to Satyam having received from various family owned companies including Mytas Infra and Mytas Properties. The charge sheet also identifies 1065 properties wi th a documented value of rupees 350 crore that were acquired by the Rajus with the spoils of the f raud. These include 6000 acres of land, 40,000 sq yd of housing plots and 90,000 sq ft of built up pr operty. The CBI on November 21 arrested Satyam’s internal audit head VS Prabhakar Gupta mak ing him the 10 th accused. 25 The CBI on January 7, 2010 filed a 3 rd charge-sheet against six persons in the Satyam sca m. The charges were filed before the Additional Chief Metr opolitan Magistrate, Nampally, Hyderabad after completion of investigations. Besides Satyam’s form er chairman B Ramalinga Raju, the others who have been charged are then managing director and Ra jus brother B Rama Raju, then chief financial officer (CFO) Vadlamani Srinivas, then vice-preside nt (finance) G Ramakrishna and two auditors of Bangalore based private company PriceWaterhouse Coo pers (PwC) S Gopalakrishnan and Srinivas Talluri. A whistleblower (Hyderabadi origin UK National set tled in London) who contacted CBI at his own has told the investigating agency that six bank acc ounts and fictitious firms that the founder Ramalinga Raju had floated in London had served the ir purpose and were liquidated long before the scam came to light. The six companies and bank acco unts which were operated from London were started in 1999 and closed down just before the lis ting of Satyam’s ADRs on New York Stock 8 Exchange in May 2001.These accounts and fictitous f irms were clearly part of Raju‘s modus operandi to divert Satyam‘s funds. 26 ENFORCEMENT DIRECTORATE PROBE Enforcement Directorate (ED) has attached in all 34 7 properties so far worth over Rs. 1000 crore of Ramalinga Raju, his relatives and others on the cha rge of money laundering. In August 2010 ED has taken possession of 4000 acres belonging to Raju fa mily in Loyapalli village near Ibrahimpatnam of Ranga Reddy district in the State of Andhra Pradesh . SEC INVESTIGATIONS A team of American capital market regulator Securit ies & Exchange Commission (SEC) came to India following filling of a dozen of class action lawsuits 27 in US against promoters and management of Satyam on behalf of investors who purchased ADRs of the Co. The SEC has completed its probe in India into the multi-crore rupee Satyam fraud, e specially the role of external auditors. The SEC team has conducted detailed discussions with CBI an d other investigating agencies. 28 Since the renamed company Mahindra Satyam has now settled mos t of the claims filed in US, SEC has not much role to play now. SUPREME COURT CANCELS RAMALINGA RAJU’S BAIL Prime accused Ramalinga Raju moved the Supreme Cour t for bail in March, 2010 on health ground. But, the apex court rejected his bail application o n the apprehensions that he might influence the witnesses. GOVERNANCE FLAWS NOTICED Following are the common governance problems, which have been noticed in the collapse of Satyam: UNETHICAL CONDUCT In Satyam’s case, for its founder B.Ramalinga Raju, honesty was not something that he wanted to pursue as hard as profits. He wanted to make money any which way by avoiding paying taxes, cooking books, and pay offs. He on January 7, 2009 revealed some alarming truths that he was 9 concealing for a long period by confessing to a fra ud of Rs 7800 crores ($1.47 billion) on Satyam’s balance sheet. He and his brother B. Rama Raju who was Satyam’s managing director, had disguised all this from the company’s board, senior managers and auditors for several years. There was no explicit or implicit code of ethics su rrounding Satyam’s corporate culture; bribery, corruption, and exchange of favors, within and outs ide the company, appear to have occurred with frequency at various levels. It was too late when W orld Bank in the 3 rd week of December, 2008 publicized Satyam’s unethical work culture by annou ncing Satyam being imposed with charges of data theft and bribing the staff and was barred fro m business with World Bank for eight years for providing Bank staff with “improper benefits”. Ethi cal standards thus in the company were poor. Both the CEO and CFO have been charged putting self -interests ahead of the companys interests. They were actively selling large portions of their shareholdings in the company a few months before the confession of scandalous fraud. The company’s m ost senior executives behaved unethically and there was no evidence of basic moral conduct or beh avior at the top executives’ level that exploited the companys resources for personal gain for sever al years. The internal controls appear not to have detected the fraudulent activities for an exte nded period of time. A CASE OF INSIDER TRADING Investigations into Satyam scam by the Crime Invest igation Department (CID) of the State Police and Central agencies have established that the prom oters indulged in nastiest kind of insider trading of the company’s shares to raise money for building a large land bank. The funds collected by the former chairman B. Ramalinga Raju, his brother Rama Raju and their relatives were used to purchase lands in the names of 330 companies and ab out 30 individuals. According to the SFIO findings, promoters of Satyam and their family memb ers during April 2000 to January 7, 2009 sold almost 3.9 crore shares collecting in Rs 3029.67 cr ore The promoters on the basis of the inflated books posed a healthy financial state of the compan y in the market. As the brand built strong amongst the peers, the share price started shooting up. During this course of time, the promoters kept their objective straight of offloading their s hares at frequent intervals. Thus, the promoters no t only manipulated share prices to make personal gain s but also cheated the other shareholders and investors. During this course, the founder ex-chair man Ramalinga Raju sold 98 lakh shares collecting in Rs 773.42 crores, whereas, his brothe r Rama Raju, sold 1.1 crore shares pocketing Rs 894.32 crores. It was in February 2000 that the Satyam scrip saw a high of Rs 7081 with the software boom and as the markets plunged in 2001 it touched a low of Rs1 14 (September 2001). With the scrip keeping a low in the markets, it was in October 2006 that the company came up with a bonus issue to boost 10 the sentiments. It was only after this that the scr ip started surging between Rs 400 and Rs 520 till September 2008. The SFIO findings clears that all t he promoters except the Raju brothers along with their wives Nandani Raju and Radha Raju exhaus ted all their shareholding by September 2005. Satyam’s senior executives’ en-cashed employee stoc k options (Esops) shares in the December quarter when the scrip was trading at Rs 264-150. P robing agencies are baffled as these deals were struck when the scrip was ruling far below its May peak of Rs 500. Soon after Raju’s confession, the price fell to an all-time low of Rs 6.30. 29 Although the positions of chairman and CEO/CFO in Satyam were separated but the findings of SFIO reveals tha t the chairman (Ramalinga Raju) and the CFO (Srinivas Vadlamani) were working in collusion to d efraud the stakeholders for their personal gain. In the first half of September 2008, four months prior to the scandalous confession made by Raju, Srinivas Vadlamani 30 suddenly offloaded 92,358 shares of Satyam in the s tock market. A CASE OF FALSE BOOKS AND BOGUS ACCOUNTING According to the findings of SFIO, Satyam’s balance sheet as on September 7, 2008 carried an accrued interest of Rs. 376 crore, which was non-ex istent. These figures of accrued interest were shown in balance sheets in order to suppress the de tection of such non-existent fixed deposits on account of inflated profits. The investigations als o detailed that the company had deliberately paid taxes of about 186.91 crores on account of the non- existent accrued interests of Rs 376 crores, which was a considerable loss for the company. SFIO report clearly states that the company had created a false impression about its fixed deposits summing to be about Rs 3318.37 crore while they actually held FDRs of just about Rs 9.96 crores The SFIO report affirmed that the falsification of current account deposits was done mainly through Bank of Baroda, New York Branch and various other b anks in India, namely Citi Bank, HDFC and HSBC. While Bank of Baroda, New York Branch in a re ply to the investigative team said that the closing balance as on September 30, 2008 was $1.08 crore as against $37.9 crore stated by Satyam. The bank also said the stationary used by S atyam for the account statement, was not sent by their branch. They also used to generate confirm ations of bank balances at the end of every quarter against non-existent fixed deposit and inte rest thereon. The SFIO report clarifies that Satyam has shown huge amount of current account balances f or several years. According to the Report, from August 20, 2007 till May 2, 2008, Satyam also received Rs 1425 crore from various front companies in its current account without reporting in the books of accounts. However, it is highlighted that from October 6, 200 8 to November 25, 2008, a sum of Rs 194.60 crore were paid to these companies through high val ue cheques of Citibank and HDFC bank signed by Ramalinga Raju and his brother Rama Raju. Thus, a net sum of Rs 1230.40 crore came to the 11 account of Satyam which was not accounted for in th eir book of accounts. “On examination of fixed deposit statements obtained from the various schedu led banks and those stated by Satyam, it was found that a large number of fixed deposits did not exist as per the bank records,” the report added. Falsification of fixed deposit was done, by mainly using five banks, namely, ICICI bank, HDFC bank, HSBC bank, BNP Paribas Bank and Citi bank. One of t he biggest sources of defalcation at Satyam was the inflation of the number of employees. Found er chairman Raju claimed that the company had 53,000 employees on its payroll. But according to t he Criminal Investigation Department of the Andhra Pradesh police, the real number was just ove r 40,000. This closely matches the number of Satyam employees registered for provident fund paym ents, a little over 43,000. 31 The fictitious number could be fabricated only because payment to the remaining 10,000 employees was faked year after year - an operation that evidently invol ved the creation of bogus companies with a large number of employees. LAX BOARD The Satyam Board was composed of ‘chairman-friendly ’ directors who failed to question managements strategy and use of leverage in recast ing the company; they were also extremely slow to act when it was already clear that the comp any was in financial distress. The Board ignored, or failed to act on, critical information related t o financial wrongdoings before the company ultimate ly collapsed. It was only when Ramalinga Raju in the D ecember, 2008 announced a $1.6 billion bid for two Maytas companies 32 i.e. Maytas Infra and Maytas Properties, and while the share market reacted very strongly against the bid and prices pl unged by 55 % on concerns about Satyam’s corporate governance, that some of the independent directors came into action by announcing their withdrawal from the Board, by than it was too late. Satyam board’s investment decision to invest 1.6 billion dollars to acquire a 100 percent stake in M aytas Properties and in 51 percent stake in Maytas Infrastructure, the two real estate firms promoted by Rajus sons, was in gross violation of the Companies Act 1956, under which no company is allow ed without shareholder’s approval to acquire directly or indirectly any other corporate entity t hat is valued at over 60 percent of its paid-up capital. Yet, Satyams directors went along with th e decision, raising only technical and procedural questions about SEBIs guidelines and the valuation of the Maytas companies. They did not even refer to the conflict of interest in buying compani es in a completely unrelated business, floated by t he chairmans relatives. Indeed, one of the independen t directors, Krishna Palepu, a professor at Harvard Business School, praised the merits of real estate investment on Satyams part. Palepu was earlier an independent director on the Global Trust Bank, which collapsed in 2003. 12 UNCONVINCED ROLE OF INDEPENDENT DIRECTORS The Satyam episode has brought out the failure of t he present corporate governance structure that hinges on the independent directors, 33 who are supposed to bring objectivity to the overs ight function of the board and improve its effectiveness. They se rve as watchdogs over management, which involves keeping their eyes and ears open at Board deliberations with critical eye raising queries when decisions scent wrong. Stakeholders place high expectations on them but the Satyam’s case reveals such expectations are misplaced. Six of the nine directors on Satyam’s Board were independent directors including US academician Mang alam Srinivasan (the independent director since 1991), Vinod K. Dham (famously known as fathe r of the Pentium and an ex Intel employee), M Rammohan Rao (Dean of Indian School of Business), U S Raju (former director of IIT Delhi), T.R. Prasad (former Cabinet Secretary) and Krishna Palep u (professor at Harvard Business School). They were men of standing & reputation. It is amazing that seven out of the nine directors were present at the board meeting where the unanimous decision to acquire Maytas Infra and Mayt as Properties was taken. To avoid any controversy, the two founder directors did not part icipate in the decision making process for the reason that the provisions of the Companies Act and SEBI regulations mandate presence of only disinterested directors in board meeting where the agenda of such a nature is discussed. This naturally causes suspicion on the role performed by the independent directors present in that meeting. What concerns everyone is that those indep endent directors allowed themselves to be party to the mysterious designs of the promoter dir ectors. It is hard to believe that such eminent and experienced personalities could not discover the we ll-planned massive fraud and manipulations. The independent directors should have questioned wh y the company was sitting on such a huge pile of cash (as shown in the cooked books). The facts o f the Satyam’s case make it clear in spite of knowing the truth they did not raise their voice ag ainst such malpractices. They kept watching the wrongdoing for so many years even when it was detri mental to the interest of shareholders and other stakeholders. They although met the standards set by the NYSE 34 (on which Satyam’s securities were listed) and Clause 49 of SEBI, but they did not ask hard questions. QUESTIONABLE ROLE OF AUDIT COMMITTEE The true role of audit committee in précis is to en sure transparency in the company, that financial disclosures and financial statements provide a corr ect, sufficient and creditable picture and that, cases of frauds, irregularities, failure of interna l control system within the organization, were minimized, which the committee failed to carry out. The timely action on the information supplied by 13 a whistleblower to the chairman and members of the audit committee (an e-mail dated December 18, 2008 by Jose Abraham), could serve as an SOS to the company, but, they chose to keep silent and did not report the matter to the shareholders o r the regulatory authorities. The Board members on audit committee who failed to perform their duti es alertly be therefore tried out under the provisions of the Securities Contracts (Regulation) Act, 1956. DUBIOUS ROLE OF RATING AGENCIES Credit rating agencies have been consistently accus ed of their lax attitude in assessing issuers and giving misleading ratings without thorough analysis , as has been the case of Enron and now in Satyam, they failed to warn market participants abo ut the deteriorating condition of company. On December 2, 2001, Enron Corporation, the USA’s 7th largest corporation declared bankruptcy when it was rated investment grade by all the credit rat ing agencies even four days before its bankruptcy. None of the watchdogs barked, including the credit rating agencies, which had greater access to Enron’s books. 35 In the case of Satyam, credit rating agencies have been heavily criticized as regards their role and for the accuracy of their ra tings. The rating agencies were allowed to look int o company’s books for making assessments but they nev er investigated the financial condition of Satyam. The rating agencies displayed lack of due d iligence in their coverage and assessment of Satyam. They based their analysis on fraudulently p repared and audited financial statements and thereby failed to warn investors about Satyam’s det eriorating condition. QUESTIONABLE ROLE OF BANKS The ICAI Probe Panel has hit out at banks for not d oing due diligence on Satyam Software Services Ltd before giving it loans. While sanctioning shor t term loans why not the banks posed any question as to why the company which was supposedly cash ric h as per the financial statements was taking loans from them. The Panel wondered why the governm ent put Deepak Parikh on its Board despite his HDFC group being a major creditor to the compan y. The banks that gave loans to Satyam during 2000-08 despite the company claiming huze surpluses were HDFC Bank (Rs 530 Crore, Citibank (223.87 Crore), Citicorp Finance (Rs222.28 Crore), ICICI Bank (Rs 40 Crore), and BNP Paribas (Rs 20 Crore) totaling Rs 122.161 Crore. 36 FAKE AUDIT 14 PricewaterhouseCoopers (PwC)’s audit firm, Price Wa terhouse, was in the auditor for Satyam and have been auditing their accounts since 2000-01. Th e fraudulent role played by the PricewaterhouseCoopers (PwC) in the failure of Saty am matches the role played by Arthur Anderson in the collapse of Enron. S Goplakrishnan and S Talluri, partners of PwC according to the SFIO findings, had admitted they did not come acros s any case or instance of fraud by the company. However, Ramalinga Raju admission of having fudged the accounts for several years put the role of these statutory auditors on the dock. The SFIO repo rt stated that the statutory auditors instead of using an independent testing mechanism used Satyam’ s investigative tools and thereby compromised on reporting standards. The last straw of deficiencies in statutory standards was despite having observed control deficiencies in the Information Systems and the risk of exposure to frauds, PwC chose to keep silent and did not report the matter to the shareholders. In an admission before the SFIO, VSP Gupta, Global Head Internal au dit had said that even though the coverage and resources of internal audit was not commensurat e with the size of the business, PwC ignored this fact and certified the company. PwC did not ch eck even one per cent of the invoices, neither did they pay enough attention to verification of sundry debtors, which according to Ramalinga Raju’s confession was overstated by 23 per cent (SFIO repo rt says it was overstated by almost 50 per cent). 37 The Statutory auditors also failed in discharging their duty when it came to independently verifying cash and bank balances, both current acco unt and fixed deposits. Ideally, if the company claims it has cash on its hand, that should be enou gh signal for auditors to check whether that cash in hand is available or not; whether bank balance h as been invested properly of not; whether internal control mechanisms are in place. There needs to be a physical verification of assets owned by the company rather than simply relying on the books pre pared by the company. Hence, it was required that the auditors (PwC) independently checked with the banks on the existence of fixed deposits, but this was not done for as large as a sum of Rs. 5040 crore. Thus, the statutory auditors on whom the general public relied on for accurate information n ot only failed in their job but themselves played a part in perpetrating fraud by preparing a clean aud it report for fudged, manipulated and cooked books. Another development that came under investig ators lens was that between 2003- 2008, audit fee from Satyam had increased three times. Price Wa terhouse received an annual fee of 4.3 crore for financial year 2007-2008, which is almost twice as what Satyam peers i.e. TCS, Infosys, Wipro, on an average pay their auditors. This shows that t he auditors were being lured by a monetary incentive to certify the cooked and manipulated fin ancial statements. Events of such nature raise doubts about statutory auditors’ discharging their duty independently and consequently on 24 th January 2009, senior partners of PwC, S Gopalakrish na (was due for retirement by March 09) and Srinivas Talluri were booked by Andhra Pradesh CID police on charges of fraud (section 420 of IPC) and criminal conspiracy (120B). 38 The PwC has suspended the two partners, who signed on Satyam’s balance sheet and are currently in prison. The SFIO report also states that PwC 15 outsourced the audit function to some audit firm, L ovelock and Lewis, without the approval of Satyam. FALSE DISCLOSURES The SFIO findings reveal that the company was also involved in making false disclosures to the Stock Exchanges. The company used the name of Chint alapati Srinivasa amongst its directors, friends and relatives list till December 31, 2008 a t the Stock Exchanges, who in fact was a director from 1990 till Jan 23, 2003 and held the post of ex ecutive director only till 31 August 2000. Further, the company, in its annual reports for the year 200 2-03, had reported certain extra ordinary items, which on a deduction would have brought the company under losses. Additionally, Satyam preferring to indulge in the fraudulent activities displayed a n EPS of Rs 9.77 per share, which on correction stands at (-) 1.93 per share. As EPS is one of the major factors leading the prices of the company in the stock markets, the false fundamentals kept the scrip moving in tandem with the market sentiments. NO ACTION ON WHISTLEBLOWER’S INFORMATION According to the SFIO findings, it was in December 2008 that one Jose Abraham, an ex-senior executive of the company, blew the whistle on the S atyam scam. In an e-mail dated December 18, 2008, Jose Abraham sent his findings to KG Palepu, an independent director in the company, who then forwarded the mail to M Rammohan Rao, the chai rman of the audit committee of the company. M Rammohan in turn forwarded the same to other memb ers of the audit committee, the statutory auditor S Gopalakrishna, and also to B Ramalinga Ra ju, the chairman. Realising that the beans were already spilt, Raju, fearing regulatory action s, confessed the fraud ultimately. 39 PROMOTER’S PLEDGING OF SHARES According to the SFIO findings, when the company st arted feeling a credit crunch, they had to resort to share pledging to raise funds. To cover such an act, the promoters transferred their individual shareholding to SRSR Holdings Private Limited (SRSR HP) and pledged shares as a security for the loans obtained from various Private limited entitie s. These were later transferred to it by the founde r B. Ramalinga Raju and his wife and the money for th e same were brought to Satyam as a liability which was not recorded in the books of account of S atyam. It was in September 2008 that the global crises made the existence of the company further st ringent. Due to a drop in the valuation of the shares the promoters had to additionally pledge 3.6 1 crore shares of Maytas Infra Ltd to meet the 16 margins. In the last attempt to cover up the frauds , Raju tried to make an acquisition of Maytas Properties and Maytas Infra Ltd, which led to the e ntire fall out. 40 FLAWED OWNERSHIP MODEL Satyam ownership model was flawed from the perspect ive of good corporate governance. There may be three factors responsible for this. The fact ors are not the causes of global and colossal fraud, but they provide an enabling environment for abuse and delusion. 1. First, being a publicly owned company, Satyam co uld raise capital inexpensively if its existing shareholders assigned it a high value. Hen ce, in order to attract capital from public, it was under pressure to overstate profits to keep the company’s bonds and equities in high esteem. 2. Second, the promoter of the company, Mr. B. Rama linga Raju, owned a very small fraction of the ownership stock. He diluted his holding from 25.6 % in 2001 to 3.6 % in 2009. He could overstate profits with the objective of influ encing other shareholders. The overstatement never hurt him because his own share of the real profits remained very small. Consider, Wipro, a peer of Satyam, where its founde r and principal owner, Mr Azim Premji, owns a very large part of its equity. The compulsio n to overstate profits does not arise since Mr. Premji would be deluding himself. 3. Third important factor for flawed ownership mode l may be, Satyam could preserve its fictitious profits without having to pay big taxes because its profits were protected significantly from the normal tax laws. They do not pay taxes on fictitious revenues and profits. There are no penalties. The belief that ex empting firms such as Satyam from service tax and corporate income tax will make them competi tive is a little ridiculous. Satyam would not have overstated its revenues and profits if it had to back both with real cash. A big part of the blame for the colossal fraud thus belongs to India’s trade and fiscal policy makers 41 . UNWARRANTED ACQUISITIONS PROVED HEAVY What started as a marginal gap between actual opera ting profit and the one reflected in the books of accounts continued to grow over the years. It attai ned unmanageable proportions as the size of company’s operations grew significantly leading to depiction of huge cash and bank balances in the balance sheets published over the years before the scam of falsification of accounts came to purview. Due to the pressures proffer by the invest ors to invest the surplus money shown in balance sheet, the company resorted to various acquisitions in India and abroad. Most of the acquisitions were not carefully planned and executed and hence t urned out to be losing propositions in the long run, the SFIO report stated. Some major acquisition s so done were; Securities Subscription 17 Agreement (SSA) having Satyam and its subsidiary Ni puna Service Ltd. on one end and Olympus BPO Holding Ltd. and Intel Capital on the other; in corporation of the Satyam Infoways Ltd.; Acquisition of S&V; purchase of SAP license, to nam e a few. In the tie up of Satyam BPO with Olympus BPO Holding Ltd and Intel Capital, Satyam r eceived a sum of Rs. 91.10 crores in lieu of which it had to make a payment of Rs.233.26 crore t o the same either through redemption of shares or purchase of shares either through Satyam or thro ugh its subsidiary, thus the management incurred losses to the tune of over Rs.142 crores. Satyam Infoways Ltd. proved to be yet another fruitless attempt in the chronology of acquisitions done by Satyam. Initially, the company had gross investments of over Rs. 749.65 crores and Rs. 763.4 7 crores as in March 2001 and March 2002, respectively. Investments were majorly plunked in t hree firms viz M\s Indiaworld Communications Pvt. Ltd. (Rs.501 crores), M\s India Plaza Inc (Rs.35.76 crores) and M\s Cricinfo Ltd (Rs.168.25 crores), which turned to zero in March 2004, March 2002 and March 2003, respectively. Even after earning heavy losses in above ventures, Satyam went for acquiring S&V consultancy through Nitor Global Solutions Ltd. at a consideration of Rs.141. 50 crores on April 21, 2008, Bridge Strategy Group LLC, a strategy and general management consul ting firm, Citisoft, a highly specialized European business and systems consulting firm; and Knowledge Dynamics, a high-end consulting solutions provider in Business Intelligence. For SA P license, Satyam invested Rs.44 crores knowing the fact that company was in financial crunch and t he expenditure required for implementation of the SAP-ERP package (meant for learning solutions, e-re cruiting etc.) would be huge. Thus, B Ramalinga Raju (ex-chairman) and B. Rama Raju (ex-M .D.) who were legally bound to protect the interests of the stakeholders and the company alleg edly concealed the true financial position of the Company and hoodwinked the attention of stakeholder s and close associates by its acquisitions. 42 DESIRED POLICY ACTIONS TO PREVENT ANOTHER SATYAM Some of the steps which could be taken to strengthe n corporate governance are: have in all listed companies a code on ethics; independent regulatory body on the lines of the Public Company Accounting Oversight Board (PCAOB) of USA; rotation of external auditors in non-financial institutions; Reform Audit Education; split offices of chairman and CEO; encourage competent directors; abolish practice of nominating independe nt directors, exempt independent directors from vicarious liability; provide insurance cover to the m; review the definition of independent director given in clause 49 of listing agreement; close supe rvision of rating agencies; superior Board practices, improve remuneration policy; legislative sanction to insider trading laws; introduce new audit standards; make audit committee strictly inde pendent; prohibit political funding; install whistleblower system; introduce class action suit & compensation; make CSR compliance a 18 mandatory provision; have in place permanent PPP sy stem, and enhance criminal and civil penalties. CONCLUSION The Satyam fraud has shattered the dreams of differ ent categories of investors, shocked the government and regulators alike and led to question ing the accounting practices of statutory auditors and corporate governance norms in India. Severe cor porate governance problems emerge out of the above-mentioned corporate wreckage. Corporate scand als especially in the United States triggered reforms in corporate governance, accounting practic es and disclosures the world over. Enron debacle in 2001 and number of other scandals involv ing large US companies around that period set in motion the corporate governance reform process a nd resulted in the passing of the Sarbanes- Oxley Act, 2002. The main objective of the Oxley Ac t is to repose investor’s confidence by preventing corporate frauds and ensuring transparen cy and disclosures. Similar kinds of corporate governance reforms are needed in India too. There i s need to reform corporate governance in India by taking harsh policy measures. Even though corpor ate governance mechanisms cannot prevent unethical activity by top management completely, bu t they can at least act as a means of detecting such activity before it is too late. End Notes 1 India Today (New Delhi), January 26, 2009, p 43 2 The Pioneer (New Delhi), January 11, 2009, p1 3 India Today (New Delhi), January 26, 2009, p 43 4 The World Bank is now having a relook at the ban i mposed on the Mahindra Satyam when it was under the Rajus family. Mahindra Satyam requested for lifting the ban. (Economic Tim es, New Delhi, May 06, 2010, Page 21). 5 Economic Times (New Delhi) , December 24, 2009, p1 6 Economic Times (New Delhi), December 30, 2009, p1 7 Economic Times (New Delhi), January 8, 2009, p1. 8 economictimes.indiatimes/Satyams_Raju_br others_arrested_by_AP_Police/rssarticleshow/3957655 .cms 9 Times of India (New Delhi), January 25, 2009, p1 10 economictimes.indiatimes/articleshow/40 84919.cms 11 Times Of India (Delhi), January 25, 2009, p1 12 On February 19, 2009, the Company Law Board (CLB) had given nod to Satyam board to get a new owner th rough the process of open auction and authorized it to make a preferenti al allotment of shares at par or at premium without the need of calling an AGM. (Pioneer, February 20, 2009, p 10) 13 The marquee list of bidders included engineering f irm L&T, billionaire investor Wilbur Ross, IT servi ces firm Tech Mahindra, B.K.Modi promoted Spice Group and IT services firm Cognizant Technologies. (Economic Times (New Delhi), August 31, 2009, p 6) 14 India Today, April 27, 2009, p 46 15 Mahindra Satyam is the new name given to Satyam Co mputer Services Ltd having its registered office at 1 st floor Mayfair Centre, S.P. Road, Secunderabad, Hyderabad, India. 16 Central Government U/S 388 B to E has power to re move board members on the recommendation of CLB/Tri bunal, if satisfied that board members are: 1. Guilty of fraud, misfeasance or breach of trust, or 2. Business not conducted with sound principles, or 3. Conducted in a manner, likely to cause serious i njury or damage to the interest of trade, industry or business, or 4. Conducted to defraud creditors, members, or for fraudulent purposes 5. As a consequences of this action removed person shall not hold office of a director in the company for 5 years, and no compensation is payable to the removed director, Ce ntral Government may appoint another person/s to t hat office. 17 Interview of the Secretary in the Ministry of Corp orate Affairs Mr Anurag Goyal given to Mr KG Narend ranath carried by the Economic Times (Ne;w Delhi), May 5, 2009, p 13 18 ‘Its baby steps still, but in right direction’, E conomic Times (New Delhi), December 14, 2009, p 17 19 19 A 31 member Parliamentary Standing Committee on Fi nance, the report of which was tabled in the Parlia ment in December 2009, has recommended that the Ministry of Corporate Affairs should take steps to implement the suggestions of t he Vepa Kamesan Committee that has recommended granting statutory status to S FIO. Vepa Kamesan Committee was constituted in 2006 to provide suggestions to the Government to review and decide on future cours e of action of the SFIO. (Economic Times (New Delhi ), December 7, 2009, p 10) 20 Economic Times (New Delhi), December 01, 2009, p 5 21 Almost a year after it was rattled by the Satyam s cam, auditing firm PricewaterhouseCoopers (PwC) on December 07, announced a sudden change of leadership of India operations as its chairman Ramesh Rajan stepped down prematurely to make way for Gautam Banerjee, who has taken over from Singapore. Rajan, who has been at the helm of PwC India since 2007, was also summoned by CBI to Hyderabad for questioning after the scam broke. (Ti mes of India (New Delhi), December 8, 2009, p 21) 22 The Pioneer (New Delhi), May 4, 2009, p 10 dai lypioneer 23 Times of India (New Delhi), June 25, 2009, p 17 24 Times of India (New Delhi), October 19, 2009, p 17 25 Times of India (New Delhi), November 25, 2009, p 2 7 26 Times of India (New Delhi), March 28, 2010, p 8 27 With lessons from the Satyam fraud, government has included the concept of class action suits in the new Companies Bill, 2009 to help retail and small investors in fighting for the ir rights. Class action suit is one brought by on e party on behalf of a group of individuals to file for claims against erring companies in a co urt of law, mainly because it would be too expensiv e for each individual shareholder to launch her/his own law suit and claim damages. Foll owing the confession of Raju, US based law firms, o n behalf of Satyam’s ADR holders and securities and anti-trust firms, filed class action suits against the IT company in Americ a. 12 such class action suits in US courts were filed for which Mahindra Satyam (earlie r Satyam) appointed Wachtell, Lipton, Rosen & Katz as lawyers to contest the cases. (The Pioneer (New Delhi), July 10, 2009) 28 Economic Times (New Delhi), August 31, p 6 29 Economic Times (New Delhi), February 5, 2009, fron t page. 30 Though not on the board of Satyam, Vadlamani used to exercise tremendous clout in the company matters and had total grip on the finance function. So he was one man who knew the in sides of the company. 31 timesofidia 32 CLB approved ouster of Raju Family from Maytas. IL &FS group on January 13, 2011 acquired a controllin g stake in Mytas Properties by holding 80% of the total equity in it. Rest 20% will be held by Raju family through their Rs 5 lakh equity. Mytas Properties is a privately held real estate company promoted by Raju family. The board of Mytas Properties have been reconstitu ted with the IL&FS Group appointing its directors, while those from Raju fam ily Rama Raju, D. Gopal Krishnana Raju, and D. Ven kata Satya Raju submitting their resignations ending their representations. IL&FS wi ll appoint four new directors to the board, while g overnment will continue to have its nominee directors for two years. The CLB has grante d new directors immunity from any act of omission o r commission in respect of past acts of erstwhile promoters/directors. IL&FS had al ready taken over Mytas Infra (another company of Ra ju family) 33 The expression ‘independent director’ as per the c lause 49 of the listing agreement means a non-execu tive director of the company who: a) Apart from receiving director’s remuneratio n, does not have any material pecuniary relationshi ps or transactions with the company, its promoters, its directors, its senior m anagement or its holding company, its subsidiaries and associates which may affect independence of the director; b) Is not related to promoters or persons occupying management positions at the board level or at one level below the board; c) Has not been an executive of th e company in the immediately preceding three financ ial years; d) Is not a partner or an executive or was not partner or an executive dur ing the preceding three years, of any of the follow ing: The statutory audit firm or the internal audit firm that is associated with the com pany, and The legal firm(s) and consulting firm(s) that have a material association with the company; e) Is not a material supplier, service provider or customer or a lesser or lessee of the company, which may affect independence of the director; and f) Is not a subst antial shareholder of the company i.e. owning two p ercent or more of the block of voting shares?. 34 NYSE Listed Company Manual’s criteria for independ ence of directors is similar to those specified in the SEBI Clause 49 save that SEBI Clause 49 does not place any numerical limit o n independence director’s remuneration. In the NYSE Listed Company Manual, 120,000 US dollar is annual compensation limit for independent directors. 35 “Rating the raters, Enron and the Credit Rating Ag encies”, Hearings before the Senate Committee on Go vernment al Affairs, 107 th Congress, March 2002, available at acces s.gpo.gov/congress/senate/senate12sh107.html=4 36 Times of India (New Delhi), April 5, 2010, p 20 37 The Pioneer (New Delhi), May 4, 2009, p 10 38 Times of India (New Delhi), January 25, 2009, p 1 39 The Pioneer (New Delhi), May 4, 2009, front page 40 The Pioneer (New Delhi), May 4, 2009, p 10 41 The Hindu Business Line, January 9, 2009, p8 42 The Pioneer (New Delhi), May 4, 2009, p 10
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