Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Warren Buffett on Satyam

Posted by Muthu on January 8, 2009

It is very sad to note the latest developments in Satyam Computer Services and to see such a large and a once reputed organization going down under. When such events happens, which keeps happening across the globe periodically, your faith in the whole system gets shaken and it takes some time for the pain to heal and recover. My heart goes out to the  thousands of Satyam employees, their families and Stake holders who face an uncertain future.

 

Life is a Paradox. People who are familiar with Buddhism, Advaita or Psychology would be able to understand and appreciate the paradoxical nature of Life. It is indeed Paradoxical, a company which has been steadily built on lies and ‘Asatya’ (Untruth) is named ‘Satyam’ (Truth).

 

It is also surprising that a global audit firm with a great reputation, PWC would not even verify the bank statement to see the closing balance at the end of every quarter and financial year! Is this believable? How come the internal audit team, audit committee, CFO and key people in Finance team, bankers who do due diligence were not even aware of this? Raju’s letter has brought out only tip of the iceberg. A company cannot create fictious bank balance of Rs.7000 crores without the connivance of so many people, both internal and external. Let us see what investigation reveals.

 

It is also ironical, when I remember about a job offer I received from Satyam after various rounds of discussion in Chennai in 2002 and was asked to fly down to Hyderabad for a final discussion (which was a mere formality as per their HR) and to pick up the offer letter. During the final discussion with HR, as I was candid with their operations team, I shared with them certain truth about my life situation then, which I felt that the organization needs to know. You know what, inspite of the promise of a ‘job offer’ and calling my ‘flying down to Hyderabad’ a mere formality, I was rejected by them for telling the truth. Probably I was too naive then and did not understand then that in Corporate World, you only have to speak what people like to hear, candour is not a virtue and very few people value you for your honesty though they may claim it  as a part of their corporate ethos and mission statement.

 

After this current Satyam episode, our media which is very keen and tirelessly trying to bring accountability for Politicians, Police & Bureaucrats and always putting them under scanner should do the same for our businessmen too. I feel that in many cases both ruling and business class are hand in glove and media should also start focussing and bring under scrutiny business class and their vast empires. This would ensure that our business men become ethical (atleast out of compulsion due to media glare) and held accountable for their activities and follow the highest norms of corporate governance set by companies like ‘Infosys’. Last but not least, there are lot of self proclaimed godmen with ‘Trusts’ having tons of money, the source of which always remains under shrouds of  mystery should also be brought under media scrutiny. Not only their source of money but their ‘activities’ too should be under radar. I’m not talking here about genuine Sadhus, Jnanis and enlightened souls who are only a minority but the vast majority of fraudsters in ‘Spiritual Business’, which is one of the easy ways adopted by many to get money, respect and popularity.

 

Coming to the subject of the mail, you may wonder when Warren Buffet ever spoke about Satyam?.  What has happened to Muthu? Why he choose the title ‘Warren Buffett on Satyam’. I have given below four nuggets of wisdom from Buffett which you would see as to how it is tailor made for ‘Satyam’ in the current situation. That is the reason for my naming this article.

 

“1) We are suspicious of those CEOs who regularly claim they do know the future – and we become downright incredulous if they consistently reach their declared targets. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.” 

 

2) The reaction of weak management to weak operations is often weak accounting.

 

3) We also believe candor benefits us as managers. The CEO who misleads others in public may eventually mislead himself in private.

 

4) It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

    

As I’ve told you before, 9 years ago I took Warren Buffett as one of my role models in life not because he is rich. There are very many people who are rich with questionable means, attitudes and approach. I rarely respect anyone only for their wealth. Warren Buffet proved to the world that one can become rich, not simply rich, but the richest person on the planet by being completely ethical, honest, intelligent, humble, level headed, giving and above all a rare sense of wit and wisdom. I do see many rich people and very few are above questionable means. Infact I also see people who are both rich and religious (which one may think as an excellent blend), but unfair in their business practices, evade taxes, bribe their way in all transactions and still think that they are good guys. They have one face for God and another face for poor mortals like us. Remember the poetry about Abu Ben Adhem which we read in School days. It is not important to be in the list of people who love God, it is more important to be in the small list of people whom God loves. Warren Buffett is an agnostic, some time even bordering on atheism, but I sincerely believe he would definitely in the small list of people whom God loves.

 

One last word, retain a healthy dose of scepticism in your dealings with various category of people like Businessmen, Financial Intermediaries, Medical Professionals, Priests, Godmen , Media etc. It is very difficult to come across professionals with a right blend of ethics, honesty, competence and wisdom in any field and we have to follow the caveat ‘Let the buyer be Aware’. Nothing is a substitute for your own intelligence, discretion and judgement.

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