The government moved swiftly and nominated three directors for the new board of Satyam Computer Services. Satyam’s three new directors are HDFC chairman, Deepak Parekh, a veteran businessman and troubleshooter; Kiran Karnik, Nasscom’s past chairman and CS Achuthan, the former presiding officer of the Securities Appellate Tribunal. These are good choices to inspire confidence.
Their next moves will be closely watched by customers, employees and India Inc, all of whom are yet to recover from the revelation of a massive accounting scam. The new board is scheduled to meet within 24 hours, said PC Gupta, Minister for Corporate Affairs, in a press conference on Sunday afternoon. Monday will most likely see the board meet. As with most aspects of the Satyam episode, this one too raises some questions. The government had initially said 10 directors but has nominated only 3.
Three people seem too few to uncover the truth, work in tandem with investigators, take stock of the business and move ahead. It would have been understandable if the new board had the authority to nominate the rest; choosing your own team always works best. But the minister said emphatically in the press conference that the government will nominate the remaining directors, as and when required.
The chairman will be nominated from among the three directors, since Mr Parekh is already a chairman on the board of HDFC, it’s likely that the chairman will be appointed from the remaining two directors. The press conference conveyed the government’s priorities, of wanting to revive the company’s fortunes. The minister even made a statement in which he praised the company’s work and that it has achieved fame in India and abroad.
Now, the government’s role in this matter is to investigate and punish the fraudsters and form a new board to steer the company. It is doing both. Its role should largely end here and does not have to commit on anything else. The new board should be free to decide the best course of action for the company. If the government gets too involved in the case, it might find itself staring at yet another bailout package.