Credit in a crisis

It isnt as if the Satyam saga is over. For one,the companys former head,B. Ramalinga Raju,and his brother B. Rama Raju are still in jail; the Rajus are yet to have the law pronounce on their actions,and on Wednesday their judicial remand was extended for another two weeks. For another,the promised reform of accountancy standards and oversight is still in the works; there is still a tendency to sit back and wait for the April 1,2012 deadline to embrace international accounting standards,rather than to fix things now. The chapter wont close till these things are settled; but one welcome move is that the government appears to have recognised that it need no longer have a major say in the companys affairs. Our job is done, said Corporate Affairs Minister Salman Khursheed.

And it was a good job,too. On Tuesday,Satyam put out unaudited results showing that it made a profit in the December quarter. Its share price soared in response; in this case more than most that could be seen as an indicator that the government aided the process of value discovery. Even on the New York Stock Exchange,in a jurisdiction where it is still facing class action lawsuits it said last week it would vigorously defend itself against,the share price rose 25 per cent. We can take credit for what we have done and we will give credit to them for what they have done, said Khursheed,in reference to the independent directors that,after pleas from the government,took over Satyams board on January 11 and January 15,mere days after the Raju scandal broke. Indeed,those men deserve thanks: former Nasscom chairman Kiran Karnik,CIIs Tarun Das,HDFCs Deepak Parekh and the former ICAI president T.M. Manoharan,as well as the former SEBI member C. Achuthan. None of them had to take the job. It was a great responsibility and a tough task; the downside could have been damage to their reputations and the personal upside was8230; well,non-existent. Yet they took it on,and they deserve thanks now that it appears done.

We should pause for a moment to put this in context. Post-crisis,around the world,governments have had to wrestle with questions about how much to intervene,how publicly to intervene,and when to get out. And worldwide,companies have been shown to be fragile,banks have collapsed. But not in India. That is something for which the government can legitimately take credit.