Narayana Murthy on Satyam Computers fraud

Source : CNBC-TV18

Commenting on Ramalinga Raju’s revelation of multi-crore Satyam Computer Services fraud, Narayana Murthy, Non-Executive Chairman, Infosys, said it is important for the Indian regulatory agencies to get to the bottom of this (Satyam scam), to make a thorough investigation and take a swift, decisive action to bring the guilty to book. However, he said, “We have no interest in buying Satyam and we will not touch such tainted company.”

Here is a transcript of the exclusive interview with Narayan Murthy’s on CNBC-TV18.

Q: It’s not been an issue that is been manipulated over a quarter or a couple of quarters. This is something that has been manipulated over several years, that is his candid admission - what does this really do now to the Indian IT space, because we understand that The National Association of Software and Services Companies (NASSCOM) is being galvanized into action to put out or project an image that India Inc is not Satyam and this is clearly and aberrations? What are you doing on your part?

A: I speak as a representative of the industry and not as a representative of Infosys in this. What we have to do is to communicate to all our investors, potential investors and customers that Satyam is indeed an isolated case of mis-governance. Secondly, we must all be prepared to provide additional data, to answer further questions, so that our investors, potential investors and customers get an enhanced level of comfort, that is what we all need to do and I am glad NASSCOM has taken that decision do it.

Q: There is buzz in the market at this point in time - that there is a possibility that Infosys could actually look at some sort of a leadership position at Satyam, not really a bailout, but to bailout the employees and the clients- is that a possibility at all that you would be looking at?

A: I am the Non-Executive Chairman of Infosys, so it’s not right for me to answer that. But, however, we have no such interest in looking at buying Satyam or anything like that. Absolutely no, we will not touch such tainted company.

Q: We hear Vallabh Bhansali earlier saying that Commission should be set up under your leadership and you should come out with a swift response and a solution to the problem that we are currently faced with to reinsure global investors as well as domestic investors – what to your mind is the swifter solution at this point in time?

A: The most important first step is for the regulatory agencies of India to get to the bottom of this, to make a thorough investigation and take a swift and decisive action to bring the guilty to whatever punishment they deserve.

If we did that before Securities and Exchange Commission (SEC) starts looking at Satyam, I have a feeling that we would have raised the confidence of FIIs and most importantly our domestic investors in our government, our regulatory agencies being very tough with anybody, who violates the laws of corporate governance. So, the need of the day is for the regulatory agencies to act quickly and decisively.

Q: Nandan Nilekani was of the opinion that this is not really going to impact the fortunes of the Indian outsourcing industry or Indian tech industrty, but in the short-term, do you actually see a backlash on account of this?

A: Not at all. We must remember one thing that every large company has very close relationships with customers. The CEOs, the senior management of the Indian companies have very close relationship with the senior management of customer companies. We have had lots of transaction, where we have demonstrated trust, quality, and integrity.

So, I don’t think that all of that will be destroyed because there is one bad apple, just because there is one Satyam and I am quite confident that the Indian companies will be able to tide over. However, if you look at a macro level at the Foreign Direct Investment (FDI) into India, at the FIIs and at the portfolio investment, then the need of the day is swift and tough action by the regulatory agencies whoever it is, I don’t know who that is, but once that happens I can assure you that people will understand that this is an isolated case.