Satyam

QUESTION 4

Analyze the independence of the board and the ability of the board to exercise independent judgment on the corporate affairs of Satyam. Given the credentials of the non-executive directors, why would they still have missed the fraud perpetrated in the company over a number of years?

There are nine directors in Satyam’s Board of directors, but six of them were considered non-executive and One of six were consider as non-executive with non-independent. Person who has no material or pecuniary relationship or transaction with company or related persons was considering has independent directors. Moreover, three same directors were sat on audit and Remuneration committees. Although, Rao was receive small commission compare to others non-executive directors, Rao was the Dean of the Indian school of business where Raju was a board member and had received generous grant from Satyam.

Krishna Palepu, another non-executive director was a professor of accounting at Harvard and worked as consultant for Satyam. Krishna Palepu received most 10 times higher small meeting fees more higher compare other directors which is Rs9.1 million and 10,000 shares as professional fees for consulting services. Krishna Palepu was person who is receiving complaint for the whistleblower regarding the account has been manipulated.

The scandal was become public after the merger of Satyam and Maytas and the resignation of a few board directors. With the reason of high paid and benefit, the scandal of frauds was uncovered for a years. Even though some of non-directors have been receive complaint regarding manipulated account of the company.