The responsibility of dissent

The word “satyam” in Sanskrit means truth. On December 16, 2008, the sky above the IT sector that prided itself on its corporate governance went dark.

On this day, Satyam Computers, the country’s fourth largest software exporter, had declared it would buy two companies owned by the chairman’s sons for an astounding $1.6 billion. The chairman, Ra-malinga Raju, and his family owned a meagre 8.6 per cent of the listed company. The two companies Satyam was intending to buy were not only managed by Raju’s own family members and largely owned by them, they were in the real estate business — an area that had absolutely nothing to do with the software business.

The board of directors that consisted of several independent directors of international standing simply agreed to an unrelated business acquisition with an interested party. Who were these men and women around the table...?

First, a look at the members of the board. Dr Mendu Rammohan Rao was dean and director of IIM, Bangalore, prior to joining the ISB at Hyderabad as dean. He had also been a tenured professor in operations research at the famed Stern School in New York. Dr Krishna Pale-pu is a professor at Harvard University. His area of specialization is strategy and governance! He teaches courses on making corporate boards and audit committees more effective in a new era of governance. He coled Harvard’s Corporate Gove-rnance, Leadership and Values initiative.

Mangalam Srinivasan, the first to own moral responsibility, is an adviser to the John F. Kennedy School of Governance at Harvard.

Vinod Dham is the man who programme-managed the Pentium chip at Intel… and is a well-regarded Silicon Valley serial entrepreneur and investor.

In addition, there was V.S. Raju, an ex-dean of IIT, Delhi, and T.R. Prasad who was India’s senior most bureaucrat as cabinet secretary at one time. Eminent people all, but they individually and collectively failed the shareholders, 53,000 employees and their families, and the entire industry by their bizarre approval of the deal. While Raju was the entrepreneur behind Sa-tyam, he was not its owner. In taking many such decisions, he did not know the difference between entrepreneurship and ownership.

But the focus of the Satyam falsehood is not Ramalinga Raju. Your focus should be on the professionals who knew all along that the company was taking one wrong step after the other but chose to go along and earn their salaries and bonuses. These people were failing the unwritten code of conduct for any professional — the responsibility of dissent.

(Published with the author’s permission, excerpts from his book, ‘The Professional’)