Daily Lesson from Life 23 December 2008

"December 23, 2008, 8.18 pm (Singapore time)
Satyam barred from World Bank business

MUMBAI - India's Satyam Computer Services has been barred from business with the World Bank, a spokesman for the World Bank said on Tuesday, confirming a report by Fox News.

Fox News said in a report on its website the World Bank had banned Satyam from all World Bank-related business for a period of eight years from September.

It said the ban was due to 'improper benefits to bank staff' and 'lack of documentation on invoices' and cited Robert Van Pulley, a top World Bank information technology official.


'The information is true,' Sudip Mozumder, a spokesman for the World Bank in New Delhi, said by telephone.

A spokesman for Satyam said the company did not comment on individual clients.

Shares in the Hyderabad-based software firm, which is also listed in New York, closed down 13.55 per cent at 140.40 rupees on Tuesday in a Mumbai market that ended down 2.4 per cent.


Satyam, India's fourth-biggest software services exporter, shocked the market last week with a proposed deal to buy two firms which management had a stake in.

Although it bowed to investor outrage and cancelled the plans to buy two builders just 12 hours after the deals were announced, a slew of brokerages have downgraded the stock saying it would be difficult for the firm to restore investor and client confidence. -- REUTERS"

This is a shock to the business world for sure is Satyam has established a fairly good reputation as a prudent, ethical and responsible company in the world!

It will be interesting to learn what happened and what caused this slippage and if it is just an individual acting in his or her own or a deeper issue of the 'culture of: if no one raise an issue we can just do it'!

I could have attached another news clipping on the giant Siemen Group settling with the laws enforcement offices in the USA and Germany by paying almost US$1B without admitting wrong doing for Anti-Curruption charges over the years recently, but I won't as it was well publicised.

Lessons for me are:

1. a painstakingly built reputation for integrity can be destroyed with just one incident! If anyone still harbour the thought that 'maybe I will not be caught if I do something unethical', they should be put on notice. That you can fool someone sometimes but you cannot fool everyone all the time! Should DO NOT do it if you are not sure if you can pass the ethical test!;

2. the cost of being fought out often far outweighed the so-called gain from the business won using that unethical mean! This has been proven time and again when companies were fined and/or banned from participating in further business with an established client or clients! The Satyam's case will have far reaching implication for it's future contracts with other clients now that World Bank has banned it from doing business with it for 8 long years!!;

3. each time such unfortunate incident is discovered, the leaders need to dig into the root cause to prevent it from happening again. Often it is revealed that pressure to make deals and make quota is the key driver. Other possible reason could be the incentive is tied solely to making the deals or quota when the going got very tough. IF leaders were at fault for pushing people beyond the 'breaking point' then they should take responsibilities too, partly at least. Of course there is absolutely no excuse for breaking ethical ground and the anti-corruption laws.

May Satyam recover from this scandal and win back it's play as one of the most admired companies in India, if not the world!

p/s: as for the decision to buy the 2 builders and then withdrew the offer within hours, it is puzzling and further damaged the leadership credibilities. So, maybe the innocent is not so innocent? Of course we must wait for the fair trail and judgement thereafter.