Satyam: What next?

This is actually very personal!

First of all the Satyam episode is shocking. NO doubt about it. However, if you have dealt with corporate India, when I say shocking, I only mean the size. NOt the modus operandi.

Many, many corporates have done it in the past. Lets go back to the start of Satyam. I was offerred these shares at Rs. 30 by a ‘top’ money making merchant banker. I said no – a Raju from Hyderabad is an accident waiting to happen, i felt. It had nothing to do with my knowledge of accounting. I missed the full ride from Rs. 30 to Rs. 3000 and back.

Coming to PWC – funnily it was the first firm which rejected me for doing my ‘articles’ while doing my CA. I luckily did my articles in ‘Sharp & Tannan’ run by a bawa – Mr. H K Bilpodiwala – for whom my respect goes up every time I see a fraud. In 1983 he told us, he had given up doing bank audits (he gave up Bank of Baroda, not less) when they were nationalised – because banks were no longer reconciling inter-branch accounts regularly.

In 1984 he said he will not do management consultancy – because he had to comment on the work done by others. So if he were tempted to instal the ‘internal audit system’ of a client, how could he do that?

Mr. Nani Palkhiwala and Mr. Y H Malegam held Mr. Bilpodiwala in high esteem. Now I know why. Each day Mr. HKB looks bigger to me.

Once when I did the audit of a small, but very prestigious audit of BCCI (Bombay Chamber of Commerce and Industry) I got the bank to send the bank confirmation, latest bank statement, and a ‘no-lien’ certificate to the HO of the auditor. This was routine in a system set by HKB.

If HKB had done the auditĀ  of Satyam, he would have done a detailed ledger scrutiny of the Bank account (come on Rs. 5000 crores did not get built in a day, did it?), he would have got the bank to send the latest statement, balance confirmation letter and a ‘no-lien’ letter to be sent to the Sharp& Tannan office. He thought this was elementary, and routine. He set a culture where we all had to do it. After all cash was > 50% of the assets of the company.

When the Harshad scam broke out, my respect for HKB went up sky high. Now it has gone up even further. Thank you HKB, you taught us the basic right.

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