Corporate Governance & Business Ethics Case Study

Satyam Computers Corporate Governance Fiasco (D): Government Intervenes, Perplexity Prevails

Abstract:
This case study, fourth in the Satyam Computers Corporate Governance Fiasco case series, addresses an interesting question: should the Government of India have intervened by disbanding Satyam’s board and constituting an interim board? Presenting a comprehensive look at the previous three cases covering the events leading up to the resignation and arrest of the celebrated CEO of Satyam Computers, B. Ramalinga Raju, this case study focuses mainly on the events that occurred between January 11th 2009 and February 5th 2009.

With the vacuum created by the arrest of the disgraced head of Satyam Computers, B. Ramalinga Raju, government intervened to protect the tottering image of India Inc. It abolished the existing board only to replace it with an independent one having constituents nominated by the government. This case study looks into the working of the new board and examines all the decisions taken by it to save the firm from the present turmoil by restoring confidence among the employees, clients and investors. The case also discusses the prevalence of perplexity over the appointment of new CEO and CFO amid speculations over a possible bailout of the firm and a possible takeover of the company either partial or in full. Raising questions over the timing of governmental intervention, this case study debates the rationale behind the governmental move albeit against the liberalism policy and the efficacy of its interference.

Pedagogical Objectives:

• To have an overview of the events at Satyam Computers that have caused so much trauma and panic within India as well as throughout the world with the arrest of its celebrated CEO, by juxtaposing the previous three cases’ learning
• To understand and debate the decisions taken by the newly appointed (by the Ministry of Company Affairs, Government of India) governing body and analyse the implications of those decisions for Satyam Computers immediate future, in the short- and long term
• To understand the nature of growing perplexity both for the appointment of the new and full-time CEO and also the probable big stake investor which can take over the company

Keywords : Satyam Computer Services, Corporate Governance, Satyam – Maytas Deal, Role of Independent Directors, Shareholder Activism, Corporate Frauds in India, CEO Confession, Ramalinga Raju, Maytas