Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Saytam: why government needs to act now

In my last blog post, I briefly stated what the government needed
to do:

  • appoint an interim board/administrator/receiver to take charge of
    the assets of Satyam – whatever little is left of them;
  • initiate a thorough fact finding investigation of what went wrong,
    and how.

What I did not do was to highlight the urgency of the first
step:

  • Today, Satyam has a vacuum at the top. The promoters are gone;
    and the independent directors who would normally take charge in a
    situation like this have no credibility left.
  • Satyam is a large company with global visibility and global
    clients. These clients would expect that they would continue to be
    serviced.
  • Even if Satyam is to be sold, somebody has to run the sale.
  • In the next few days, if nothing is done, both clients and
    employees would leave in droves and there would be nothing to
    sell.

I think this needs action today or at the very least within 24
hours.

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