The Truth Shall Prevail?

The Resurgence of Satyam, The Global IT Giant

Zafar Anjum

Random House India, 2012

pp.268. Price Rs.399

At one level, corporate frauds are difficult to pull off. There are thousands of employees, control systems, auditors, analysts, regulators, and the board. And yet a look at the history of corporate scams, it makes us wonder about the reams written about corporate governance, the golden peacocks, the theory of an independent professional board. In case of Satyam, we also wonder about banks, auditors and more. Reading about scams at the base level titillative and at a cerebral level introspective. A book about scams and frauds comes with huge and diverse expectations.

On the face, by focusing on the resurgence, we believe Zafar Anjum tempers the expectations to the resurgence and reconstruction. But, a large part of the book is dedicated to the background of trying to dissect and reconstruct the modus operandi of the fraud perpetrated by Ramalinga Raju on Satyam. The reconstruction effort gets disproportionately lesser pages. It could have been very interesting if his research understood the homework done by Mahindras in the run up to the acquisition. How does one evaluate a stake in a company that was opaque and fraught with fraud? A company listed on NASDAQ and facing class action suits in the US? How could a clannish company transformed to professional one? Was the deal worth it?

Unfortunately Anjum’s book does not provide fulfillment. It draws heavily on existing literature and in particular from the book “The Satyam Saga” published by Business Standard. While the book is well crafted, simple and straightforward, the narrative is inspired by the chronicling style of Tim Bouquet and Byron Ousey who authored Cold Steel, the saga of the marriage between Mittal Steel and Arcelor. Anjum also seems to be inspired by Kingshuk Nag who wrote The Double Life of Ramalinga Raju both for style and for content. While this style makes the text readable, it does not come across as a rigorous piece of work.

Inane trivia are a part of this style. The prologue subjects the readers to how Anjum stumbled on story of Satyam, the flight [with the number] to Hyderabad, the weather and the menu on board. With action he gets to the chronicle mode: “Karnik could feel a palpable sense of urgency in Goel’s voice. Being a representative of the government, Goel seemed determined to save the situation at Satyam. Karnik gave in and said yes, accepting the ‘responsibility’ in principle.” [p.93]. Unfortunately this style is not followed in the reconstruction phase. It appears that Anjum had access to the Mahindras [the spine sports the Mahindra-Satyam logo], but we get no insights into the minds of Anand Mahindra or CP Gurnani. Except for the fact that Anjum had an interview with Gurnani and visited the Satyam Headquarters to meet a few senior level employees we do not get evidence of extensive interviews and primary field-work, interviews with other stake holders, which would be considered necessary even if we treated this as a journalistic piece of work rather than academic research. Instead, there is a dry rendering of events that followed the take over, the communications strategy, a peek into Gurnani’s blog and the events thereafter. But: What about the tension? What about the dilemma of whom to trust? The problem of what lay within this black box? None of these come out. The resurgence story ends much before it starts. The learnings we have: communication was important; there was internal restructuring; a Shadow Board was set up to make decision-making agile. The content could have been more insightful than a collage of material neatly culled and ordered from secondary sources.

This should have been an important book in management literature. The concept of “too big to fail” so often used in the banking sector was applied to an unlikely sector. The government stepped in, while it could have let go. The Enrons, the Worldcoms and many an Indian company have been allowed to fail. There was something in Satyam that triggered the government to save it. It was saved without a bail-out. A significant share of the credit for holding out must rightly go to the employees, it should also go to the State for handling the IT brand of India so carefully. The competitors in general seem to have acted with maturity promising not to poach. It was a great case of Statesmanship and revival. Anjum touches upon this, but fails to weave these pieces together.

And finally, Satyam tells us a tale of how decorative the boards are and the limited role they have in “governance” if the management decides to cheat. The Boards at best could give strategic inputs and directions, but governance? A question we should probe very deeply.

There was a lot of fun and pun about the name Satyam. The book ends with a note that indicates that ultimately as the truth prevails the name might fully be erased when the company merges with Tech Mahindra. A case where the truth prevailed but not Satyam?