“India’s Satyam chief resigns, says profits inflated” BANGALORE (Reuters) - The chairman of India’s embattled Satyam Computer Services (Bombay:SATY.BO - News) resigned on Wednesday and said the company’s profits had been inflated over the last several years, sending the stock down 60 percent. The shocking revelation comes after India’s fourth-largest outsourcer’s botched attempt last month to buy two construction firms in which the company’s founders held stakes and key customer World Bank dropping its ties with the outsourcing company. “The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years,” Satyam Chairman Ramalinga Raju said in a statement to stock exchanges on Wednesday. Satyam’s woes make it one of India’s most high-profile company scandals in recent years. The comments from Satyam sent Indian equity markets in a tailspin, with Bombay’s main benchmark index (Bombay:^BSESN - News) falling 3.9 percent. Satyam, which specializes in business software and back-office services for clients such as General Electric (NYSE:GE - News), and Nestle (VTX:NESN.VX - News), was due to hold a board meeting on January 10 to consider a buyback following a rash of broker downgrades even after the acquisitions were called off. “I think there is no future for this stock. This case for India is similar to what happened to Enron in the U.S.,” said Jigar Shah, senior vice-president at Kim Eng Securities. “It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected.”
This does not bode well for investor confidence in emerging economies. Anyone think we’ll see a broad emerging market pull-back as a result? Or is this just a blip on the radar?
Hard to say what the impact will be. Depends how widespread this kind of fraud turns out to be. The story beggars belief though. $1bn of ficticious cash and a reported OPM of 24% versus a real figure of 3%. How is that even possible?
THIS IS RIDICULOUS India is going to get hit pretty bad for this. Satyam was one of the Top-10 companies. The NYSE today de-listed the company for Fraud. Full text of Raju’s letter to the Board =========================== Satyam Computers Services Ltd. From B. Ramalinga Raju Chairman, Satyam Computer Servcies Ltd Dear Board Members, It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: 1. The balance sheet carries as of September 30, 2008 a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books) b) An accured interest of Rs 376 crore which is non-existent c) An understated liability of Rs 1,230 crore on account of funds arranged by me d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books) 2. For the September quarter (Q2) we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 per cent of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone. The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter, 2008 and official reserves of Rs 8.392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations – thereby significantly increasing the costs. Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas payments can be delayed. But that was not to be. What followed in the last several days is common knowledge. . That neither myself, not the Managing Director(including our spouses) sold any shares in the last eight years-excepting for a small proportion declared and sold for philanthropic purposes. 2. That in the last two years a net amount of Rs 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from know sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers. 3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results. 4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as Ram Mynampati, Subu D T R Anand, Kesab Panda, Virender Agarwal, A S Murthy, Hari T, S V Krishnan, Vijay Prasad, Manish Mehta, Murali V, Sriram Papani, Kiran Kavale, Joe Lagioia. Ravindra Penu Metsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or managing directors immediate or extended family members has any ideas about these issues.
Wow that’s pretty crazy…I find it hard to believe that no one else knew about the situation. I always wonder how auditors miss these things, isn’t that what their job?
Interesting to contrast recent scandals (this one, Madoff) with Enron. This time, the head boss said it’s all his fault, no one else knew anything. Last time, the head boss didn’t know anything.
so now who will answer my telephone calls?
Anyone know anything about the accounting standards in India? Do they follow IFRS or have anyplans to converge?
India has plans to adopt IFRS sometime in 2010, but it’s highly wishful thinking given the way things move in this part of the world.
Convergence of IFRS, US GAAP AND INDIAN GAAP and its impact on Indian companies listing in U.S and American companies listing in India By SUNIL KEWALRAMANI November 4, 2008 Consistent, comparable and understandable financial information is the lifeblood of commerce and investing. Presently, there are two sets of accounting standards that are accepted for international use–the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) issued by the London-based International Accounting Standards Board (IASB). Foreign subsidiaries of U.S. multinationals use U.S. GAAP. Many foreign companies, attracted to listing in the U.S. have to confront various problems like compliance with U.S. GAAP and the onerous Sarbanes-Oxley Act. In search of a new financial order: one global standard for financial reporting makes sense. Accounting Standards in India will undergo significant change from 1st April 2011, when the IFRS (International Financial Reporting Standards) come into force as per the recent proposal of The Institute of Chartered Accountants of India. Countries of the European Union, Australia, New Zealand and Russia have already adopted IFRSs for listed enterprises. China has decided to adopt IFRS from 2008 and Canada from 2011. If 2011 is the year when we would be totally aligning our standards with the IFRS, then what would happen in terms of inter-period comparisons because the numbers that would emerge after convergence to IFRS would be based on different accounting principles than those based on Indian GAAP ?. In order to breathe meaning in the numbers and enable inter-period comparison, it is essential that similar accounting principles should have been used from one period to another. Besides, you would need IFRS-trained professionals in India for which the Institute of Chartered Accountants of India would need to impart special training to its students and members alike. In India, the accounting standards or accounting-related requirements are issued not only by the ICAI(Institute of Chartered Accountants of India) but also by various other regulatory bodies, such as SEBI (Securities and Exchange Board of India), RBI (Reserve Bank of India) and the IRDA (Insurance Regulatory and Development Authority). They now not only need to be consistent with each other but also with the IFRS. The Central Government in pursuance of Section 211 of the Companies Act 1956 has issued a notification prescribing accounting standards for companies, and these standards direct us to the Accounting Standards issued by the ICAI. Since ICAI is now leaning on implementing IFRS with effect from 1st April 2011, the Government would find it essential to treat complying with IFRS as satisfactory compliance with Section 211 of the Companies Act 1956. Closing the GAAP The demise of U.S. GAAP has accelerated this decade. While the SEC currently looks to FASB to set U.S. GAAP, it is the SEC that retains ultimate responsibility. U.S. GAAP has been extensively used since the 1930s, and until recently was widely used around the world. However, its shortcomings are also well known, including approximately 200 pieces of fragmented U.S. GAAP on revenue recognition, some of which are not based on consistent concepts. U.S. GAAP has evolved over the years to become overly complex and onerous as evidenced by the large number of countries and companies abandoning it. One recent example is NEC Corporation, the Japanese electronics giant. NEC announced on September 21, 2007, “that it was not able to complete a U.S. GAAP-required analysis relating to software, maintenance, and service revenues.” In essence, the company said it simply cannot figure out U.S. GAAP revenue recognition rules and will stop trying, resulting in suspended trading on the NASDAQ. It is possible that companies listed in the U.S. could be allowed to report their financial results using standards set by IASB instead. Giving companies a choice of accounting standards might create an opportunity for forum shopping. In India, one of the big impediments to implementation of IFRS in India is in the case of Mergers and Acquisitions where the High Court approval is required. The High Court has got the authority to stay application of accounting standards or to prescribe accounting requirements in the case of merger and amalgamation situations. All this would deter smooth transition to IFRS in India. Besides, deferral of VRS cost or ESOP accounting being based on intrinsic method, though a departure from IFRS is essential bearing in mind the needs and requirements of the Indian economy. In addition, Schedule VI of the Companies Act, 1956 is also not in complete compliance with the IFRS and they need to be reconciled as well. The RBI also prescribes accounting requirements for banks, such as accounting for derivatives or provision for non-performing assets, and these requirements of the RBI are currently at variance with the IFRS. Managements compensation, stock options, debt covenants, tax liability and distributable profits are all based on Indian GAAP and AS (Accounting Standards) at present. Now all the salary structure, compensation structure will have to be renegotiated by most senior employees who have variable methods of compensation. For example, the variable pay component of most TCS employees is about 30 % of the total compensation package and this variable pay being based on items of Profit/Loss Account which will be defined differently under IFRS, the entire compensation package will need to be revised. Recently, the SEC (Securities and Exchange Commission) of the US eliminated the GAAP reconciliation requirement as a part of Form 20-F for foreign issuers. Almost simultaneously, the Commission issued a Concept Release that would enable U.S. issuers to drop GAAP and use International Financial Reporting Standards. Statements of financial position, comprehensive income and cash flows Perhaps the biggest potential change is a different look to financial statements. Although nothing has been decided, the IASB and FASB are striving to create a cohesive presentation of financial information that will likely do away with a single net income number, or “bottom-line.” Instead, the working proposal would require three separate statements: a statement of financial position, a statement of comprehensive income, and a statement of cash flows. Companies would need to breakout in each financial statement information for business activities (including operating and investing activities), discontinued operations, financing activities, income taxes, and equity. This would result in a company classifying its assets, liabilities, and equity items into one of the prescribed categories or sections in the statement of financial position and then similarly classifying changes in assets, liabilities, and equity items in the statement of comprehensive income and the statement of cash flows. It is anticipated that the resulting standard will apply to all business entities (public and nonpublic), but not to not-for-profit organizations or defined benefit plans. There are substantial differences between IFRS and U.S. GAAP. U.S. GAAP is largely rules-based meaning long and complex standards attempting to deal with all scenarios. Financial Accounting Standard No. 133 on derivatives is a fine example with over 800 pages of the standard and implementation issues. On the other hand, IFRS is a principles-based accounting system, meaning it is objective-oriented allowing for more presentation freedom. Financial Accounting Standard No. 123R on share-based payments and the SEC executive compensation disclosure requirements are attempts to move toward principles-based standards. One of the obvious benefits of accounting standards and particularly those that are adopted globally is comparability. We are heading towards, what we, in common parlance, call ‘apple-for-apple’ comparison, and not ‘apple-for-oranges’ comparison. Presumably, users of financial statements are in a better position to assess the prospects of one company versus another provided both the companies use the same set of rules to report similar transactions and events. The comparability issue was the prime reason for requiring the foreign issuers in the US to reconcile their statements to US GAAP. SEC’S REASONS FOR ELIMINATING GAAP : It is ironical that although the purpose of adopting IFRS is ensuring greater comparability, how does eliminating requirement of reconciliation help when most issuers in the US come there because of greater liquidity, visibility and marketing in the American capital markets. These foreign issuers would be competing with the US entities who adopt US GAAP and it would be unrealistic to expect that these foreign issuers would forego the US GAAP. In fact, they will continue to use the US GAAP because this way, they can compare their financials with the listed US entities and show how they can fetch similar market capitalization for their entities. To circumvent this problem, if the SEC allows US issuers to adopt IFRS, there will be little need for convergence, and the concept of comparability would be highlighted. The proposed move is said to be primarily intended to make it easier and cheaper for foreign companies to list on U.S. exchanges. There has been increasing concern that the competitiveness of the U.S. capital markets has been impaired by the onerous laws and additional compliance requirements put in place in the past five years – with the logical example being the Sarbanes-Oxley Act of 2002 and its Section 404 Internal Control Certification requirement. A popular example - regulators, lawmakers and other interested parties in the U.S. are concerned that domestic exchanges are losing market share in IPO listings to foreign exchanges that have “less cumbersome” listing requirements. Is proposed elimination of U.S. GAAP reconciliation for foreign filers premature ? Due to a variety of reasons – some of which have only gained broad attention in recent weeks – it appears the proposed elimination of the U.S. GAAP reconciliation for foreign filers may be premature. One of the main reasons regularly cited – despite the progress in recent years by the FASB and IASB on its “convergence” project – there are still too many differences between the two sets of standards and still have considerable room to converge further. A classic example of this can be found with GlaxoSmithKline plc – a foreign filer with the SEC which prepares its financial statements using IFRS. Note 41 from GSK’s 2006 Form 20-F filing provides details on the company’s reconciliation to U.S. GAAP. The footnote is a whopping 13 pages long and discloses a long list of differences in reconciling shareholders’ equity under IFRS (£9.4 billion) to shareholders’ equity under U.S. GAAP (£34.7 billion). Although GSK may be an extreme example, I believe the U.S. GAAP reconciliation provides important visibility to investors on the material differences in a foreign company’s financial results between IFRS and U.S. GAAP. Eliminating the reconciliation would prevent investors from adequately assessing a company’s performance and performing peer comparisons. A paper titled “Principles-based accounting standards” was issued by some of the world’s largest accounting firms including Deloitte, Ernst & Young, Pricewaterhouse Coopers, KPMG, Grand Thorton and BDO Seidman giving their overwhelming support for moving to single set of global accounting standards and specifically IFRS. They argued in the above paper that IFRS are more principles-based and in particular allow for “reasonable judgment”. Many accounting experts argue that IFRS is of a lower quality and needs significant improvement. Certainly, the disclosures under IFRS are far less detailed than those required under US GAAP. Also, the moot point is does it make sense to allow companies to revalue property, plant and equipment considering that it is not for sale ? In addition, IFRS bans the use of LIFO flow of cost assumption as it relates to inventory. While the arguments for and against the various flow of cost assumptions are numerous, one has to submit that LIFO provides the users with information that is a better predictor of future results. Similarly, under IFRS 8, on Segment Reporting, a company can define a segment using its own discretion. Items such as segment revenue, segment asset, segment segment expense and current liabilities are left undefined. My question is how can differing definitions of what a segment is bring about comparable information for the users of financial statements. Or for that matter, useful information ? Even in India, as per AS 17, if the case of a vertically integrated segment meets the quantitative norms for being a reportable segment, the relevant disclosures are to be made. However, IAS 14 of IFRS encourages, but does not require, the reporting of vertically integrated activities as separate segments. According to the same IAS 14, a segment identified as a reportable segment in the immediately preceding period on satisfying the relevant 10 % threshold, shall be reportable segment in the current period also if the management judges it to be of continuing significance. (Note : The IASB has recently issued IFRS 8 on ‘Operating Segments’ which would supersede IAS 14 with effect from January 2009). Besides, the IASB has not yet addressed important issues such as revenue recognition and lease accounting. Should we presume that revenue recognition is to be left to the auditor’s “reasonable judgment” and “to the best of his knowledge and belief” ? Just like conversion to US GAAP, gave different lists; so has conversion to IFRS. Under European Union Law, 2007 was the first year that many foreign firms listed on U.S. exchanges were required to begin using IFRS. They have experienced varied results. For example, Diamler Chrysler’ first report using IFRS increased the automaker’s tax earnings by 819 Million to 5.2 Billion, while EPS (Earnings Per Share) increased by 68 cents. Operating Profit, or Earnings before interest and taxes, dropped by 38 Million to 7.5 Billion under IFRS. The switch also reduced the loss suffered by the company’s Chrysler division—the only unit to show a loss—from 1.5 Billion to 682 Million. The company attributed most of the above variation to the way pension obligations are booked under the IFRS. For example, retroactive pension-plan adjustments are immediately entered into the income statement under IFRS; whereas, under US GAAP, the adjustments are distributed over the remaining service period. Fair value accounting of IFRS One common criticism about IFRS is that it is heavily loaded in favour of fair valuation principles and these principles are very subjective and would result in significant volatility in periodic results. IFRS is fair-value driven and this often produces unrealized gains and losses. How will income tax treat these unrealized gains and losses ? Besides, can unrealized gains be distributed as dividends within the contours of Companies Act 1956 is the debatable point. China Construction Bank, The Bank of China and The Industrial and Commercial Bank of China have launched mega-IPOs in the last couple of years. But after decades of rapid loan growth; they, along with other Chinese banks, state investment companies, credit co-operatives, are now sitting on record Non-Performing Loans (NPLs). The Chinese NPL market is one of the largest in the world with, according to one estimate, a total outstanding principal balance of over a trillion dollars, which is about 40% of China’s GDP. How are these NPLs to be reflected at fair value and at what point of time their diminution in value is to be recognized ? In India, State Bank of India (SBI), ICICI Bank, Bank of Baroda (BOB) and Bank of India (BOI) are all set to book mark-to-market losses from 5 -10%. The exposure of these banks are 1 Billion, 1.5 Billion, 150 Million and 300 Million respectively to subprime loans. Here also, at what point of time these subprime losses are to be recorded as having crystallized ? Are we going to allow some time for these subprime losses to recover ? Or do we recognize them immediately on fair value principles as soon as it appears they are going sour ? And who’s call is this finally—that of the auditor, that of the management, or of both ? Markets in complex pieces of paper such as CDOs (Collateralized Debt Obligations) and CDSs (Credit Default Swaps) are in disarray. If assets can be priced realistically, trading can resume. Yet in practice, fair value accounting, appears not to be delivering on its promise to help mitigate systemic risk. The problem seems to be arising over illiquid assets. The US Financial Accounting Standards Board (FASB) has introduced a “three bucket” taxonomy to categorize marks to market. Bucket # 1 is for assets that have observable market prices. Bucket # 2 is for less frequently traded securities that can be priced by reference to similar assets. Bucket # 3 is for assets with unobservable inputs where value is based on management assumptions. This where the CDS (Credit Default Swaps), CDOs (Collateralized Debt Obligations) and other exotic credit market instruments would lie. There will always be scope for friction here because company auditors, worried about their professional liability and using conservative accounting principles, may coerce management into adopting valuations close to fire sale valuations. This will lead to a vicious circle. Because, if you mark down assets excessively, the solvency of the financial system could be eroded. An unusual situation could arise where although on a fair value basis or mark-to-market basis, there could be loss but if the loss is expected to reverse itself over the life of the insured credit derivatives, as happened in the case of the monoliner MBIA which although threw up a pre-tax loss of 3.5 Billion on mark-to-market basis, expected to actually incur loss of only 200 Million. If my loan accounts are marked-to-market under fair value accounting, it runs a predatory risk because by means of an hostile takeover, the predator can launch an assault on my firm. During the Latin American debt crisis of the 1980s, the world’s biggest banks would have been insolvent if their loan books had been valued realistically. But to stave off runs on banks by uninsured wholesale depositors in the protracted period needed to rebuild bank capital, the authorities allowed loans to remain at book value on the bank balance sheets. The ICAI (Institute of Chartered Accountants of India) should make sure that it is neither behind of the curve nor ahead of the curve. In the days of the Latin American debt crisis, provisioning against loans was progressive, permitting capital ratios to be maintained. This policy of regulatory forbearance would theoretically be possible today. Illiquid assets that are now flowing into the accountants’ third bucket could be kept on bank balance sheets at book value until maturity. But forbearance carries the risk of moral hazard. Hard look needs to be given to all these issues. The ICAI has always been very conservative in its accounting policies and this has stood it in good stead, and should be careful in adopting fair value method of accounting across-the-board and in situations. At the end of the day, in the interests of globalization, convergence to IFRS is essential for India to align itself with the rest of the world; however the transition will not be smooth and we as members of the Chartered Accountancy profession need to put our heads together to ensure that foreign investors in our country do not get deterred by inconsistent policies and rules and regulations, which may get even more apparent as we move into the IFRS era
satyam’s auditors -PWC needs to be investigated as well. it seems to have a colorful history of class action suits and out of court settlements worldwide over the last few years.something’s wrong with the firm’s moral fiber. not to nitpick, it is more like the Worldcom incident than Enron.dont see and SPVs here.just fictitious revenues,cash,debt-free status etc. corporate governance in india should have been more geared to its own problems:especially the conflict between majority(promoter) and minority shareholders.there is no such mention of conflict of interests even in the CFAI corp governance texts.aping western corp governance model of ‘independent’ directors hasnt worked out well at all. i wonder what Harvard professor and ‘independent’ director Krishna Palepu has gotta say considering he teaches/preaches corp governance.was he naive ,stupid or plain corrupt?
there is an entry of 3319 crore rupees in the bs and another for 1841 crore as the deposits in banks, I fail to understand how PWC can sign on it. Out of 8800 crore BS, 5000 crore is cash which we found out is non existent. It is not that they have overvalued some land or property or inventory, to verify cash should be fairly straight forward. I think banks are hand in glove.
I would not say that this is a problem of emerging economies - the US is the mother of all corporate scandals(Enron, Tyco, Worldcom - and Madoff, though its funny how the western press reports such issues from emerging economies). There is no way such financial statements could be prepared without the collusion of the auditors(I am even embarassed that my former employer PwC was the auditor) - but we have seen it before. That is why we need convergence on accounting standards.
Breaking news - Gopalakrishnan from Infosys, Ramadorai from TCS, Premji from Wipro were all caught at a private Jacuzzi in Panvel for having solicited 50% of Satyam’s customers after the debacle. AajTak reports that they car-pooled in a hybrid, with the trio driving for 8 hr turnwise with a only halt at GOA at Vijay Mallya’s villa (Crib) for back massage. It was heard on the dalal street that Lakshmi Narayanan of Cognizant could not make it for this orgy celebration because he was at the Apple store headquaters, Central park for a deal to distribute IPhones (3G) to every employee after a $10B mark.
The modus operandi could have been something like this: Inflate revenues leading to commensurate increase in profit. Inflated revenues give rise increase in debtors by the same amount (in case of credit sales). Regarding the inflated cash balance, the company might have shown ‘cheques deposited but not cleared’ on the B/S date leading to conversion of debtors into cash in bank. The cash balance in balance sheet is then calculated through a BRS (Bank Reconciliation Statement) where you add “cheques deposited but not cleared” to the balance as per bank statement. This has been repeated every quarter for several years. Surprisingly, the watchdog or bloodhound or whatever (auditors) have failed to perform a basic check to see whether cheques appearing in the BRS in the previous quarter/month were cleared & credited or not.
If it was becoming so difficult for Satyam to maintain their operating margins, what makes the players so special? After all, they all faced the same problems of rising salaries and huge attrition. I think there will be more fallout…
Interesting observation - I hadn’t thought about that. I find it strange how in the CEOs letter he takes the blame for the situation, but at the same time makes in seem like it was something that he needed to do like it was in the best interest of the company - like we should be sympathetic.
JOE2010 Wrote: ------------------------------------------------------- > I would not say that this is a problem of emerging > economies - the US is the mother of all corporate > scandals(Enron, Tyco, Worldcom - and Madoff, > though its funny how the western press reports > such issues from emerging economies). > > There is no way such financial statements could be > prepared without the collusion of the auditors(I > am even embarassed that my former employer PwC was > the auditor) - but we have seen it before. > > That is why we need convergence on accounting > standards. I’m not saying that the developed world is perfect, but to say that the US, as compared to emerging economies, is “is the mother of all corporate scandals” is absurd. Yeah- the big ones are here- but its not due to inherently weaker regulation or more corruption. Its like concluding that Americans are worse drivers and doctors because we have more vehicular deaths than say… Malawi. Its expected that the biggest accounting scandals come out of the nation with the biggest corporations. There is also the whole discovery aspect of it- it does take a developed system to diagnose these instances. I’ve seen how business is done in latin america and eastern europe and if you seriously think there is more collusion/corruption here then then you are (IMHO) seriously mistaken.
Poor 50k+ employees, who might get screwed for fault of a man who was ‘afraid to get down from the tiger because he was afraid to be eaten up’. I’ve heard within hours of the news, the IT job market was flooded with CVs. On another note, IFRS has a onerous clause that states that if in a ABS the originator has provided Credit Enhancement, it cannot derecognize the assets from BS. This might result in huge losses for banks active in securitization business.
Why is anybody surprised? The whole ‘India is an upcoming economic super power’ is a myth and an illusion. Have you ever called a support center in india with a technical question? Alas, the business world comprises of decpetion and outward appearances and marketing your country/company a certain way. We all inflated our resumes to look good to each other when none of us really knew what we were talking about.