Scandals and Corporate Governance

During my recent trip to India, the papers were full of stories about corporate governance triggered by the recent Satyam Scandal. Satyam was one of India’s top 4 IT Companies and the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues, of which it has since been stripped.

The arrest of Satyam’s senior leaders including, Vadlamani Srinivas, Ramalinga Raju, and his brother Rama Raju on charges of false accounting and fraud in what has been described as India’s ‘Enron’, coupled with the Madoff scandal in the US, the largest investor fraud ever committed by a single person, clearly demonstrates the need for system of corporate governance based on values and transparency.

These 2 scandals highlight the danger of putting too much faith in a single person rather than an Organisations as a whole, the leading figures in both scandals took advantage of their positions and reputations to defraud large numbers of people who trusted and entrusted them with their money. While the majority of business leaders are upstanding and trustworthy, there should be no circumstances when a leader should be above their organisation.