Will Political Connection Save Satyam & Mr Raju?

SC has finally directed Andhra police to allow SEBI to question Ramlinga Raju. Andhra Police has been scuttling SEBI move to question Mr Raju for almost a month. Mr Raju’s deep connection with both the ruling class and opposition has given him enough time to avoid him falling into the hands of SEBI. Political clout has ensured Mr Raju a breather time, also he is under arrest on complaint filed by a shareholder. Mr Raju has been using this case to avoid falling into hands of central agencies. Andhra Police had raided and seized documents from Satyam’s office. No one really knows what is going to happen to the documents seized. Though, it would be really difficult for Rajus to destroy evidence of money siphoning between Satyam and other Raju owned firms.

Involvement of several Central agencies and state police has further complicated the issue. Several agencies, independent authorities and government ministries are looking into the case, which requires sharing of evidences. India is classic case of right hand not knowing left hand. Considering the fact that Mr Raju would use his political connections to prevent such evidences getting shared by different agencies, chances are there that some cases against him will be weaken in the court of law, the best place for our politicians and Mr Raju himself to absolve himself of some crimes. But, what is yet to be seen as how Mr Raju would evade the US watchdog – SEC.

Taxing IT to Avoid Financial Trouble

Satyam fiasco has brought out a big question on how to check the business models and financial reporting of the Information Technology companies. Most of the technology companies in India have been enjoying tax exemptions over a decade and have also got exemption for a few years more.

As these companies are not taxed, their financial reporting can easily be fudged by anyone. Any IT company, which does not pay any tax on its revenues, can overstate it to mind boggling proportion without even being worried about the consequences. A simple and symbolic tax could be answer to all such malicious activity as ones these companies would be forced to pay tax on revenue and disclose their financial statement it would become tough for companies to continuously over state their revenues for more than a year.

There is also need to check on the business models of the companies, most of them are under tax exemptions and are now pulling themselves under SEZ status, it has become difficult to keep a tab on their functioning. Government needs to bring in regulation for disclosure of forex revenue generated from such units and the banks where they are parked. This measure will effectively keep a check on the financial activities of such IT firms and will also discourage many fly-by-night operators from posing as Information Technology firms to manipulate their IT SEZ status for retail purposes.