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It's time for Satya
January 12, 2009
Not in his wildest dreams would Minister for Company Affairs Prem Chand Gupta have imagined that the most complex white-collar crime in India's history would be for him to untangle or that he would be responsible for bringing the perpetrators to book.
Not that he can't do it. Gupta began his career at the age of 20, when he left his home town Bhiwani and landed in Hong Kong on September 9, 1969, the last day of the British Colony's liberal visa regime. He had a degree in economics from Hissar University, $100 in his pocket, and a job as a junior clerk in an export firm.
He was responsible for exporting watches - first from Hong Kong and then West Asia and Africa. So he has intimate experience of the instrumentations industry (his son now runs a highly professional unit that produces precision instruments in Haryana) and working with (and around) government laws.
He also understands, better than most, the need to keep a scrupulous paper trail if the intention was to break any of these laws, and will require to translate this knowledge to get to the bottom of the Satyam [Get Quote] affair.
All the analysts watching the Ministry of Company Affairs say that so far the ministry has taken all the right steps, though the general assessment is that Gupta took time to act. Satyam's documents have been seized (one hopes that not just files but electronic documents have also been seized); the Company Law Board has authorised the appointment of government-appointed directors (whose names were announced yesterday); and the Serious Fraud Investigation Office has been asked to investigate.
However, there are structural mines positioned strategically in this minefield. Although SFIO was set up to investigate crimes precisely of the nature the top Satyam management is charged with, at the end of the day, SFIO's investigation will have to end up where all other crimes end up - at the local police station where the Station House Officer will register and file the case in court. Given that the local police station was modernised with donations by Satyam and bears a plaque to that effect, someone - presumably Gupta - will have to monitor a case that will eventually become the charge of the state government.
Former Company Affairs secretary Vinod Dhall says this is a structural lacuna. Instead of arming the SFIO with a cradle-to-grave investigation mandate, its dependence on local police weakens the case. Also, the punishment is laughable. The Companies Act prescribes a punishment (under Section 628) of two years for the kind of crime Satyam is alleged to have committed. The Sarbanes-Oxeley Act prescribes a 20-year jail term for this crime.
No one - neither Gupta, nor corporate India - expected the kind of audacity Satyam seems to have got away with for years on end. Mitigating its effects will now be Gupta's task. Will he push for changes in the Companies Act for a deterrent punishment? And will he seek more powers for the SFIO?
The Satyam case will decide whether he has been a successful minister or not.
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