The Times of India reports of a teacher in a village near Ludhiana losing upto 15 lakhs as a result of the Satyam debacle. Being shocked by the loss, he was about to commit suicide when he was stopped.

Im pretty sure that he is not the only one who has been affected by India’s biggest corporate scandal and that there are millions more who can be placed in his shoes.

I am also told from close friends of mine and Mr. Raju’s family that Ramalinga Raju is not a bad person as he is made out to be by the media. My sympathies are for him if this is true. Maybe its just the greed for money that has compelled him to engage in this seemingly fraudulent transaction.

Going further, newspapers report that the ‘scandal’ re-emphasies the need for independent directors to be appointed to companies. I’d like to correct a lot of these authors in this area. Two years ago, the Securities and Exchange Board of India amended its listing agreement to insert a certain Clause 49. This pertains to corporate governance. One key provision of this amendment is that at least one-third of the board must consist of independent directors. Other measures include stronger audit standards and better financial disclosure norms.

I am told that this amendment comes from the Narayana Murthy Report on the need for independent directors and corporate governance.

Let me get this clear to the readers, Satyam has followed all the guidelines relating to the need for independent directors as prescribed by this clause. Legal compliance with this provision then is not an issue. The problem arises from fraudulent transactions that Mr. Raju has engaged in; as evident from his letter and the aspect of insider trading. The SEBI has flown down a team to investigate this aspect and the Institute for Chartered Accountants of India (ICAI) has given a show cause notice to Price Waterhouse Coopers for forged audit reports.

In light of Mr. Raju’s arrest, It would be better if ways are found to protect the investors rather than focusing on the downfall of Mr. Raju though.

I would like the readers to read India Corporate Law and Law and Other Things on the issue. Both the blogs give detailed insights to the problem at hand and the consequences.