Site Loader
Rock Street, San Francisco

‘Satyam ‘ means ‘Truth ‘ and the truth was revealed really tardily in instance of India ‘s one of the largest IT company, Satyam Computers Services Limited. By the clip, Satyam fraud came to public visible radiation, Ramalinga Raju, the president of the company, had already committed India ‘s largest corporate fraud of all time. The first subdivision of essay will discourse the grounds behind the largest corporate dirt of India. It will discourse why people with one million millions in Bankss go corrupt. In this subdivision, it will reason on the carelessness and misdemeanor of responsibility by assorted elements involved in the error. Then, the following subdivision of essay will province some recommendations to avoid farther frauds or cozenages.

In the first subdivision, we will discourse why large business communities or rich people who are really celebrated and known to the universe, sometimes, step out of line of honestness. By making this, they break the trust of people and lose all their reputation and name that they had gained by working hard in their lives. The first ground for their divergency from honestness to dishonesty is sense of ownership. If a individual is the lone proprietor or laminitis of the company, so he finds it easy to make what he wants with his concern. He thinks that it is his concern and money. Security of acquiring off with any error makes him comfy. He becomes incognizant of the effects and supports on making incorrect things once more and once more.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

The proprietors and laminitiss of companies, sometimes, do n’t wish outer intervention in their concern and they do merely what, they think is best in their involvement. Hence, this sense of ownership, someway, leads to greed. They do n’t believe of other people who put their money in concern. They justify themselves that they are permitted to make what they want with that money because it is their concern. They merely ignore the rights of other stakeholders who are involved in concern excessively ( Kaur and Mishra, 2010 ) . Hence their unethical behavior cost them a batch at the terminal because one twenty-four hours everybody comes to cognize about offense.

In Satyam instance, ownership construction of Indian companies is besides responsible to some extent. The popularity of household owned concerns in India led to concentrated concern control. In this system, independent managers agree to move in involvement of household group. They merely ignore the involvements of the company and minority stockholders and act in the manner that is best for their benefit.

Some corporations are by and large structured in a pyramid construction. The pyramid construction comprises of some separate concern lines. Different concerns are considered as one entity and are controlled by one group at the top. Therefore, they can reassign money from one entity to another as required ( Winkler, 2010 ) . Hence, it can take to ‘tunneling ‘ . Tunneling is a procedure in which a control group moves money from one company to another company, where they possess bigger portion. Besides, in pyramid construction, it is difficult for outside stockholders to look into interior public presentation of concern entities ( Winkler, 2010 ) .

Because of pyramid construction and amalgamate control of the concern, board of managers of Satyam did n’t make their responsibility independently. They approved the purchase of household owned company of Chairman Mr. Raju, Maytas belongingss and Maytas Infrastructure. It was non an IT company and Mr. Raju had larger portions in Maytas than in Satyam. Thus, ownership construction of concern impacted the public presentation of managers in another manner ( Winkler, 2010 ) .

Another ground for the professional misconduct of billionaire business communities is the desire to make something different. Sometimes they think that they have achieved everything in their life, so what is following exciting occupation for them. Therefore, the bang of danger involved gives them the thrust to make something unusual. So, they tend to seek new things in their occupations to derive more advantage out of their concern. Thus, bit by bit, this inclination leads to their divergence from right to wrong and they ca n’t step back because they merge themselves in the offense to that extent that they fear to acquire exposed to the populace. So they keep on making that without anticipating to acquire caught one twenty-four hours.

Sometimes, people start their offense with little misconduct. To acquire benefit, they merely seek a mischievousness by pull stringsing the history books by small difference. They think that is really easy as they did n’t acquire caught. So, following twelvemonth they once more do that to cover last twelvemonth ‘s spread. Then, they feel uneasy to halt that as they do n’t cognize how to acquire out of this. Hence, they commit that error once more and once more until that mistake gets transformed to a blooper and so to a largest fraud. In instance of Satyam, Ramalinga Raju had to exaggerate the income every one-fourth to cover the last spreads. When he eventually disclosed the fraud, he mentioned, “ It was like siting a tiger, non cognizing how to acquire off without being eaten ” ( Winkler, 2010 pg 5 ) . Therefore, a little error led him to the border, where he did n’t cognize how to acquire back and he became convicted of the cozenage of one million millions.

In a competitory corporate universe, billionaires become prone to be more successful than their challengers. They become accustomed of winning. So, when they perceive that following state of affairs is non traveling to be in their favor, it hurts their sense of pride. Therefore, they become ready to make anything to keep their position and reputation. They merely bury that by taking incorrect manner to success, their pride will prolong for short term. For the long term, they will hold to pay for every incorrect title.

Therefore, all the above mentioned grounds together give an illustration of weak corporate administration of India. Personal greed of the president and carelessness of responsibility by board of managers and the audit commission resulted in a worst dirt in Indian history.

Now, the 2nd subdivision of essay will supply some deductions to forestall these types of corporate frauds in future. After Satyam dirt, Indian regulators started working for the betterment in corporate administration of India. The Securities and Exchange Board of India ( SEBI ) is a chief regulative authorization for India ‘s stock market ( Afsharipour, 2009 ) . It proposed some ordinances that should be purely followed by all companies to keep good administration criterions. But, still it is hard for the corporate authorities of India to do alterations in their criterions in short period of clip to forestall farther frauds. Still, it can be achieved by easing rigorous enforcement of their regulations.

First of all, authorities should take enterprise by being rigorous in its Torahs and ordinances. Government can originate this from the roots of offense, that is, graft. They should penalize the payoff givers and payoff takers. The individuals, who give or take payoff for their ain involvements and catch the rights of other people involved in the concern, merit penalty. It will assist to forestall farther corruptness as people will avoid it for the fright of rigorous penalty. If still any individual is involved in any sort of fraud or cozenage, they should be sent to prison and their assets should be seized. They should do endure difficult so that in future cipher will experience secure or easy to acquire away with a offense.

Besides, there are some responsibilities of companies towards their employees. Employees should be encouraged to whistle blowing. Whistleblowing helps to avoid and extinguish immoralities and to diminish the chance of misconduct and dishonesty in an administration ( Grace & A ; Cohen 2010 ) . All the employees should be cognizant of the agencies that how can they unwrap unethical behavior of board member or any other individual in the company without acquiring affected. This would make a rigorous and honest environment in the companies as everybody will be afraid of acquiring caught if they would take to be corrupt. Besides, to do this measure successful, whistle blowers should foremost, supply full protection. That will promote them to follow the moral behavior and base against immorality. This pattern will play an of import function in the bar of corruptness and frauds. Furthermore, to acquire best out of their work force companies can promote employees to purchase some portions from the company. If employees have some portions in the company, they are working ; they will work for the best involvement of the company. They will non favor any graft and base against immorality in house. Hence, it will take to outdo corporate consequences.

To avoid unethical behaviors in companies, concern should be run on the construct of Corporate Social Responsibility. Under this construct, concerns become committed to act ethically. In the companies, responsibilities are performed morally towards part to economic development, while sing the involvements of employees, all stakeholders and society as a whole ( Ferrar, 2008 ) . CSR works in long term involvement of the company and it besides increases company ‘s repute. Hence, a company working on the construct of CSR will hold good quality work force who will concentrate on the involvements of all the people attached to the concern.

In corporations, there are two audit commissions. First is internal audit commission that is comprised of independent managers of the company. They scan all the operations in the house including income statements. They make certain that no undependable and false information sing fiscal study would be given to the stockholders ( Solomon, 2007 ) . They are responsible for the internal audit system. Hence they guarantee the truth of all the operations inside the house. External hearers are the hearers from outside the company. They review the public presentation of internal hearers, that is, they check internal audit maps. They scan company ‘s whole fiscal coverage procedure ( Afsharipour, 2009 ) .

In India, there is demand for more clear maps of audit commissions. There is demand for more independency and better composing of internal hearers. More frequent meetings of audit commissions should be encouraged. It will assist in more effectual internal control. Besides, more meetings will assist in effectual opinion and determination devising ( Al-Mudhaki and Joshi, 2004 ) . Furthermore, an audit commission should non work with a company for more than five old ages. They should be changed after every five old ages, otherwise, they will acquire lazy working with same company and they might acquire involved with some people of company. That can impact their public presentation as hearers because their occupation demands entire unbiasedness. Final cheque of the fiscal studies should be done by anon. external hearers so that managers will non happen any chance to corrupt them. Hence, effectual function of hearers is really necessary to avoid corporate failures.

In India, corporate administration has been put into pattern through clauses of Companies ‘ act 1956 ( Farias, 2001 ) . Companies Act in India has been drawn a batch from UK Companies Act 1948 ( Afsharipour, 2009 ) . But, still Indian Companies Act does n’t set more emphasis on the independency and making of board of managers and investor protection. In India, deficiency of independent and qualified managers leads to weak corporate administration. Most independent managers are the university professors or authorities functionaries. They show least involvement in their responsibilities and supervising the public presentation of direction. Harmonizing to Zhang and Rajagopalan ( 2008 ) , to guarantee unbiasedness and quality of council chamber, foreign managers can be appointed. Besides, India can open its market for foreign investors. Hence, independency of managers will guarantee right and indifferent determination devising and turning away of any influence from anybody.

India corporate administration needs to set great accent on transparence and revelation. Transparency and revelation are really necessary to extinguish corruptness and to guarantee preciseness of all the operations performed in a concern ( Zhang and Rajagopalan ( 2008 ) . Corporations should non conceal anything from the populace. They should be crystalline and clear in their operations and unwrap their one-year dockets every twelvemonth. They should province clearly in the beginning of fiscal twelvemonth what they are traveling to make and how they are traveling to utilize the stockholders ‘ money. Companies should work in favor of more voluntary revelation. They should unwrap their balance sheet place more than one time a twelvemonth, possibly twice. This will assist to avoid misdirection of history books. If there would any disproof in the statements of balance sheet so it will be prevented on clip. Hence, transparence and revelation in concern adds up to the value and quality of operations in the concern. Companies will be more honorable and true in their attacks taking to accomplishment of good corporate administration criterions.

Chemical reaction of American authorities to Enron dirt resulted in Sarbanes-Oxley Act ( SOA ) in 1992 which holds tonss of reforms in corporate administration in America. SOA put great accent on enfranchisement system in corporations. Harmonizing to this act, each quarterly and one-year study must be certified by CEO and CFO of the company ( Pinto & A ; Branson, 2009 ) . They should reexamine the fiscal studies themselves and should take duty. This jurisprudence has been adopted by Indian Companies Act in Clause 49 but it does n’t set condemnable liability in instance of sham or incorrect statement ( Afsharipour, 2009 ) . So, absence of condemnable liability means at that place will non be any fright of jurisprudence in people and they can easy change the fiscal statements. There is no benefit in implementing a ordinance with no rigorous condemnable jurisprudence on the misdemeanor of that ordinance. Hence, if any jurisprudence is implemented by the regulators, it should be strengthened with punishments, in instance if person dares to interrupt those Torahs. It will assist to put in fright of jurisprudence in heads of people so that they wo n’t even believe to travel against Torahs in a corporation.

Failure of Indian Judicial System to settle corporate struggles is another ground for weak corporate administration in India ( Afsharipour, 2009 ) . Delays in doing determinations in judiciary procedure frequently led to ignorance of issues. Hence, judiciary procedures in India are strongly criticised because of their carelessness of judicial system. Therefore, more stairss should be taken towards the reforms in Judiciary System. This will assist in timely resolution of corporate differences and guarantee the effectual corporate administration criterions.

Ministry of Company Affairs ( MCA ) is authorities regulative organic structure and Securities Exchange Board of India ( SEBI ) is independent securities regulator. Since creative activity of SEBI in 1992, there have been uninterrupted struggles between SEBI and MCA. ( Afsharipour,2009 ) . Coincident exercising of all legislative duties by both regulative organic structures is increasing tenseness between SEBI and MCA. This struggle and competition between two groups is seting hinderance on the manner of corporate administration reforms. SEBI adopted most of the legislative ordinances but implemented few of them. Both of the groups have least focal point on corporate administration ordinances and more focal point on sabotaging each other. So, mandate of SEBI and MCA on the ordinances in the companies should be managed efficaciously so as to decide struggle between both groups. Both of the groups should work in harmoniousness for the rigorous execution of all the ordinances and therefore, it will farther assist to accomplish better criterions for the corporate administration.

Apart from these reforms, one thing that builds the foundation of the corporate administration is the moralss of people. So, it should be reformed from the roots. That is, pupils should be taught moralss in schools ( Kaur and Mishra, 2010 ) . Particularly in a state like India, there is demand for the honest and ethical people. Introduction of ethical instruction in schools would beef up the roots of corporate administration.

In decision, there is an pressing demand to take radical stairss for the administration reforms to forestall corporate failures due to dirts. Hence, as no concern can run in a vacuity, managers have some fiducial duties towards stakeholders. If managers step out of line of honestness, they should be punished. The first portion of essay identified some grounds for convergence in behavior of billionaires that leads to big corporate frauds. The 2nd portion of essay provided some recommendations for corporate administration reforms which would assist to forestall frauds in companies. After analyzing all the points, this essay puts great accent on the execution of rigorous Torahs against corruptness. This would tag the bar of fiascos like Satyam for a longer clip in the hereafter.

Word count: 2650

Post Author: admin

x

Hi!
I'm Gloria!

Would you like to get a custom essay? How about receiving a customized one?

Check it out