GE committing fraud

This is neat.
Carry out an accounting fraud.
And then settle it at a price.

See this news from Financial Times: General Electric agreed to pay $50m on Tuesday to settle civil accounting fraud charges by US regulators, calling into question the conglomerate’s legendary ability to deliver consistent earnings growth.

The settlement with the Securities and Exchange Commission – which accused GE of bending the “accounting rules beyond breaking point” – involves a relatively small payment. But it is a blow for Jeffrey Immelt, chief executive, and Keith Sherin, chief financial officer.

Another Satyam / Enron, anyone?

Tech Mahindra has got the Satyam equation all wrong

This is very apparent from the unconfirmed news of the latest round of job cuts at Satyam.
That some jobs are lost in any takeover or merger is expected. Especially if there are overlapping domains. I am not sure the overlap of domains justifies a job loss of the order of 10,000 (this is the number indicated to be on bench - obviously all will not go).

What concerns me more is the attitude of the new management. Management Guru, Peter Drucker, chanted, "Costs are inside, results are outside".

In vain, it seems.
Woes of Satyam will not end till they regain the confidence of the customers. Many have left. Others are deliberating. Getting rid of your most valuable asset (at least in the IT sector) - your people - is not the best way to impress customer.

Did Tech Mahindra bite more than it can chew and now shedding weight to cut losses?
Or was Tech Mahindra interested only in the few domains Satyam were strong in?
Either way they are making a mistake.
Such huge job losses will only lead to flight of other Satyam employees. And remember only those who are good get jobs. Satyam will lose good employees.

What should be done?
Well, I would ask my managers to take all the hands on bench and allocate them to existing projects depending on their existing skill. With these extra hands, I would ask the managers to give me gold-plated zero-defect output, ahead of schedule. This would give a clear signal to the existing customers that Satyam means business. That they will do whatever possible to regain customer trust. Customers should respond accordingly. This will also send loud signals to the employees - you are our main assets; please throw your weight with us. We will turn this damn thing around.

I believe non-technical staff will be first to go. Such as marketing people.
Come on! Do you mean to say, marketing chaps who have cultivated relationship with customers over the years are replaceable commodity?

If you are interested in my other posts on Satyam click on
did-credit-crunch-claim-satyam
three-wise-men-of-satyam
sad-case-of-satyam-employees

Honesty by the road side

She sells tender coconut on the road side in Bangalore. Unable to determine her exact age but definitely beyond 40. And she can teach a lesson or two in honesty to all known and still to be known corporate fraudsters.

Tender coconut is a commodity - unless you package the milk and see as a brand name. But the majority in south India just stop by at one of the many sellers that road the road side in Bangalore. The sellers make a killing at tourist spots but the price never goes beyond Rs 15. In Bangalore it varies from Rs. 10 to 12. One tender coconut seller is as good as the next. So, people stop at whim and on instinct or when convenient.

Last Saturday I needed to take my sons on a long drive to the British Library and then to the Science Museum. So I stop at this lady's so that we are well hydrated. I give her a 50 rupee note but has only Rs 12 so I waived the remainder sum of Rs 2. As I focus on the sweet milk and my children (one of them does not like the taste and I need to goad him into drinking it), I feel a tap on my shoulder. This lady has rummaged her belongings and found a Rs. 2 coin and she wanted to give it to me. As I indicate that this was not necessary, she points to the sky and indicates that God is there and that she cannot take the Rs. 2 that does not belong to her.

Pity! People, like the disgraced former chairman of Satyam Computers, Ramalinga Raju, never stop by to drink the sweet milk of tender coconut on the road side.

Picture courtesy: Manu M

Did Credit Crunch Claim Satyam?

Satyam is imploding as I type out this blog.
The chairman of Satyam Computers has resigned. In his letter to the board of directors he has confessed that the balance sheet was inflated.
Consider this ...
In the September (Q2) 2008, the balance sheet showed an operating margin of 24% as against merely 3% of the revenues. The balance sheet shows an accrued interest of Rs 376 crores, which is non-existent.
In his letter, the chairman says "it was like riding a tiger, not knowing how to get off without being eaten."
Breaking news on all channels indicate that all major clients are washing their hands off Satyam. They are terminating their services.
So, why was this disclosure made now? Is it just because "tremendous burden I am carrying on my conscience" as stated in the letter? Or do you think this is a domino effect of the aborted Maytas deal?
Actually it is nothing of that sort. And this is my understanding ... though I cannot prove it.
Scams operate well when there is plenty of cash around; when banks are more than willing to part with cash where ever they see profit coming in. But when cash is tight and the banks are less than willing to provide loans, the bottom falls off and scams are exposed. Case in point: Madoff and his Ponzi scheme.
And I bet that if every thing was fine and there was no cash crisis this would have gone for a very long time.
Watch out for this space. If the credit crisis prolongs you will see more such skeletons tumbling out.
So in a way such crisis is good. It has a purgatory effect on a system. Rotten apples are exposed and that actually helps the system overall in long run.
And if you see an expert telling you that credit crisis was the reason behind the Satyam implosion, remember you read it here first!

Question: Who are their accountants?

Note: The picture used here belongs to Tory Byrne. To see more pictures, visit her gallery.