Did the media really have no idea about the dire cash crunch at the Hyderabadbased software giant Satyam Computer Services? Was it plain ignorance or something else at play?
That’s a question some readers have asked me in the wake of the massive fraud that has come to light following the astounding confession by the company’s founder, B Ramalinga Raju, that he massively inflated the firm’s cash and bank balances and fabricated the interest due to the company, among other things.
Readers are justified in asking how such blatant cooking of the books escaped the notice of business journalists who follow India’s muchfêted — some would say hyped — software sector.
It’s true that we have quite a bit of egg on our faces. After all, not so long ago, we used flattering epithets like “entrepreneur par excellence” and “software czar” to describe Raju, who has now been arrested along with his brother.
There is certainly room for newspapers, including HT, to play a more adversarial role vis-à-vis the companies they write about. Sometimes, the business press looks too much like a cheerleading team for the corporate sector.
In the first blush of liberalisation this slightly breathless appreciation was understandable. Indian companies were the underdogs. After decades of doing business with their hands tied behind their backs, they began flowering and realising their potential.
But today, a far more aggressive brand of journalism is called for.
But however aggressive our stance, we have our limitations. Several other organisations with more expertise and access to information, such as the auditor and stock market regulator, also failed to bring to light the flagrant malfeasance at Satyam.
The fact is that financial wrongdoing is difficult to prove. Journalists often know about the shenanigans in various companies and institutions, but how do they prove them beyond doubt?
Obtaining information that is supposed to be in the public domain is itself difficult, despite the Right to Information Act.
But in many instances, we cannot establish fraud merely with documents and information available in the public domain. We need confidential information.
This is a basic fact that even a trainee reporter will figure out, but it bears mentioning because from the outside it might be difficult to appreciate the gap between knowledge and proof.
Crucially, this information need not come from powerful people, but ordinary employees who are disgusted by the wrong-doings in the institutions they work for.
Outstanding investigative journalists such as Greg Palast (who writes for The Guardian and hosts a show on the BBC) and Seymour Hersch (who writes for the New Yorker, among other magazines) have cultivated a large and global network of exactly such whistleblowers — ordinary people who pass on crucial bits of information and copies of vital documents that establish wrong-doing in the organisations they work for beyond the shadow of doubt.
To cite just one example, several years ago, Palast obtained a confidential World Bank memo on a bailout plan for Argentina that Harper’s magazine published.
The memo suggested that the Bank and the IMF may not have had the Latin American country’s best interests in mind. Clearly, an employee at the Bank had passed on the document to Palast.
It is certainly a risky undertaking to pass on confidential information to a journalist; in a strict sense, that act itself may be improper. Finally, it depends on citizens taking a call on the lesser evil.
Even now, has the full extent of the fraud at Satyam been revealed? For instance, why would anyone admit to such wrong-doing when there is no apparent pressure on him to do so?