Plug loopholes in corporate governance: Nasscom

Corporates on Wednesday expressed deep shock over the financial fraud in one of India’s leading information technology firms, Satyam Computer Services, and asked the Government to plug loopholes in corporate governance so that the confidence of companies and investors, particularly global, could be restored in the Indian corporate sector.

Terming it as a ‘stand-alone’ case of corporate governance failure, the apex body of IT and BPO industry, the National Association of Software and Service Companies (Nasscom), said: “This is not in any manner a reflection on the industry or corporate India. We will ensure that customers and other stakeholders get the right perspective. We will also work with the Satyam taskforce to reach out to their customers and employees and guide them through the transition.”

“This incident is particularly unfortunate as the Indian IT-BPO industry had set high standards of ethics and corporate governance. Nasscom advocates the highest standards of ethics for the industry and we will work with our membership to re-commit to maintaining the highest standards of governance and transparency,” it said, adding that the law will take its course (in the matter). Satyam’s Chairman and Founder B. Ramalinga Raju has once been Nasscom Chairman.

Chambers’ reaction


Similarly, top apex chambers have also expressed their disappointment over the entire episode and urged government and regulatory authorities to take immediate corrective measures. “Satyam was always seen as one of the top Indian IT companies and often represented as shining example of Indian liberalisation and entrepreneurship. This fraud on the investors and employees of the company shows a systemic breakdown in audit and board’s oversight of the company,” said Rajeev Chandrasekhar, MP and President, Federation of Indian Chambers of Commerce and Industry (FICCI).

Mr. Chandrasekhar stressed the need for regulators to move quickly to demonstrate that this was an exceptional case amongst corporates and that investors need not worry about Indian corporate governance and accounting standards. “This is critical to revive and rebuild the confidence and trust in India Inc amongst investors,” he added.

The Confederation of Indian Industry (CII) also called for immediate examination of the loopholes in regulation, accounting, audit and governance that allowed such lapses to occurThe Associated Chambers of Commerce and Industry of India (Assocham) demanded a special committee to be set up to investigate the entire Satyam issue so that culprits are identified and brought to book.

source: http://www.hindu.com/2009/01/08/stories/2009010854251600.htm