India will act to prevent corporate fraud: Govt

“We are concerned about what has happened in Satyam,and the government will take all necessary action to ensure these types of scandals do not take place again. Whatever steps could be taken will be taken,” Prem Chand Gupta said late on Wednesday.

In a resignation letter that stunned India’s business world,Ramalinga Raju,who founded Satyam with his brother and brother-in-law more than two decades ago,said about $1 billion,or 94 per cent of the cash and bank balances on the company’s books as at end-September,did not exist.

The government has asked the registrar of companies in Hyderabad,where Satyam is based,to file a report. The stock market regulator has ordered an investigation into buying,selling and dealing in the company’s shares.

“We will take the strictest steps as soon as possible to protect the interest of shareholders,” Gupta said.

He said the government will also strengthen the regulators.

“We have strengthened and we will further strengthen them. The government has already instructed the institutes of company secretaries and chartered accountants to look into the matter and report to us immediately.”

Gupta said a new Companies Bill,which is pending in Parliament,would make regulation more stringent for auditors,adding the government will examine the role of auditors in the Satyam case.

The new bill seeks to revamp archaic laws to help India’s growing corporate sector adopt international best practice,and make boards and senior management of companies more accountable.

Since opening its economy to the world in the early 1990’s,India has seen a proliferation of new companies. Strong economic growth has attracted foreign investors,and analysts say existing laws are inadequate to deal with the surge in corporate activity.

“The type of incident that happened in Satyam does not mean our entire corporate sector is like that. We need to see this type of incident does not happen again,” Gupta said.