Opinion | Editorials
From blue chip to worthless entity
Satyam collapse deals blow to investor confidence and the guilty must be punished.
- Gulf News
- Published: 23:38 January 8, 2009
Another day, another international financial scandal - and yet more investors fall victim to con artists and criminals who operate as legitimate businessmen.
Satyam, an Indian information technology company, effectively collapsed after its chairman B. Ramalinga Raju admitted he had falsified accounts and assets - and then resigned. The company that was worth $7 billion earlier this year was valued at a nominal $550 million yesterday, leaving many investors out of pocket. The Satyam debacle comes shortly after former financial adviser Bernard Madoff admitted running a scam - disguised as an investment scheme - worth as much as $50 billion.
The international financial crisis has its roots in complex schemes in the US to make loans available to people who could not afford them. While all these obtuse financial instruments may not have been illegal, they were clearly a result of lax monitoring and enforcement of good financial regulations.
Investor confidence - as well as that of ordinary people - in the regulation of the international financial system, has been almost irretrievably damaged. The authorities must punish the guilty to the full extent of the law - including the auditors, directors and others who failed in their duties - to restore investor confidence in the free market.
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