When the CEO assumes the entire responsibility in a corporate governance fiasco absolving everyone else (family members, board of directors, independent directors, and other top management people), how should the regulatory authorities and the government proceed against the CEO who has confessed and other people who were absolved by him.
Case Study: 2 Satyam Computers’ Corporate Governance Fiasco case study
This case study captures the events that occurred between January 7th,2009, and January 10th 2009. On January 7th, 2009, very surprisingly the CEO, B. Ramalinga Raju released a press statement confessing that the books of accounts were tampered with and the income figures in the last few years were inflated. More interesting, rather amusing, was his admission that no one else was involved in this entire episode and taking the onerous responsibility on himself. And this confession triggered off a series of events resulting in the arrest of B. Ramalinga Raju on January 10th, 2009.
This debacle at Satyam Computers proved that the rewards, recognition, and accolades for following the best practices in corporate governance by themselves are not ultimate proof of corporate governance principles being practiced in letter and spirit. However, one question remains unanswerable. When the CEO assumes the entire responsibility in a corporate governance fiasco absolving everyone else (family members, board of directors, independent directors, and other top management people), how should the regulatory authorities and the government proceed against the CEO who has confessed and other people who were absolved by him. As The Economist observed, “when a liar confesses, can you believe him?”
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