Enron Comes to India...

Warren Buffett is an extraordinary investor who can spot opportunities when others can only see train wrecks and disasters. That's a well known fact and you really don't need me to tell you that. But a lesser known fact, but one much more entertaining, is that he is also a master of pithy one-liners which are both hilarious and insightful. As Joey Tribiani of Friends would have said, "They're funny, but they also make you think". One such pearl of wisdom  the sage of Omaha gifted us was, "You don't know who's swimming naked until the tide goes out." And boy, "Rambling" Raju, the founder and former-chairman of Satyam and one-time Golden boy of the Indian software landscape, has been skinny-dipping for a while... Seven years to be precise, by his own admission.

Breath-taking as it is, the fact begs the question of what independent auditors, regulators and directors were doing over the last seven years. Clearly, a lot of people fell asleep at the wheel at the same time. A balance sheet gap of a billion dollars is no pocket change by anyone's standards. The number has more zeros than most people can comprehend... and apparently, more zeros than even the aforementioned parties responsible for the requisite checks and balances could comprehend. In the extraordinary letter Raju compiled admitting to malfeasance, he stated that what started as a small balance sheet gap, had ballooned into a gaping hole that threatened to sink the ship... as if what happened was an accident!! In the same letter, he also states that Satyam's operating margin was 3% which the fudged numbers helped boost to 20%+, bringing it in line with the industry average. So, either Satyam's operations were suffering very badly or Raju's clearly lying. Considering that the period between 2001 and 2007, when Raju was his creative best, was also a period of sustained boom for software service providers, I am inclined to believe that Raju was spinning a bit of yarn in his letter. Which brings us to the question "why". My explanation: Raju was siphoning off money from Satyam, most likely into Maytas and other family-run businesses. And instead of saying, "Yes, I am a crook. I stole the money", Raju tried to put an emotional spin on the whole thing by insinuating that he fudged the numbers to hide poor operating margins that would leave the company vulnerable to a hostile takeover. 

By Raju's admission, he was solely responsible for the entire fraud. Let's just try to visualize that for a moment: One man, over a period of seven years, fudges books to the tune of one billion dollars at a firm that has operations and bank accounts across the world, is publicly traded.. not just in India but in the US too, has its accounts audited by external auditors and has a supposedly "independent" board of directors. This would require the brilliant individual in question to be able to modify balance sheets, invent fictitious assets & associated documentation and possibly forge bank statements in multiple geographies. So, Raju is either Jason Bourne in disguise, or clearly has had a LOT of outside help. You decide which is more likely!! Let us also consider statements emanating from some of the other distinguished personalities who have figured in the Satyam saga. The CFO issued a statement to the effect that he was specifically asked not to look at the finances of the company. Maybe the man mis-understood what the acronym CFO stood for. By definition he was responsible for the finances of the company. If all that was required of him was to sign checks and financial statements, Raju could as well have appointed a monkey the CFO and taught him to use a pen. Oh, wait... Raju might just have done that!! Now I get it...

Many commentators have hazarded that the Satyam incident has negatively impacted India's standing in the global business community, and raised serious questions about the state of corporate governance in Indian firms. While all that is true, I believe it is not a crushing  blow that has done irreparable damage. What will determine India's standing in the international community is how the Government and corporate India react to this incident. The Government's initial bone-headed and muddled moves raised serious fears that the damage from the incident would indeed be significant. Things seem to have significantly improved since, with a new board being appointed to oversee operations at Satyam and investigation initiated into the incident. But India's history is littered with instances of fact finding missions never quite finding the facts.. or finding facts that change according to the seasons. So, establishment of facts and dispensation of justice is not a given. Well, I guess the one thing we can do is see how this new drama plays out, and hope that it has a happy ending. Happy for the employees, clients and shareholders of Satyam, that is... not for Raju and his partners in crime. What do you think I am, Mahatma Gandhi? Until later.. cheers

Movies of 2008

Call me Mr. Grinch, but I do believe that 2008 was a terrible movie year. If I tried, I probably could count the number of movies I liked all year on the fingers of my hands. But I think that would be a very ridiculous and totally pointless exercise. So, this post is going to continue the tirade I had started in the previous post, with a bit of a twist. Instead of raving and ranting at bad movies like a rabid critic, I shall be raving and ranting at some of the better movies of the year gone by, not unlike someone who has totally lost it... OK, not exactly that, but I will attempt to dissect some of the better movies of the year...

Let's start with a movie that has received almost universal acclaim: Slumdog Millionaire. The movie has a plot which is both simple and credible. It starts with Jamal Malik, a slum-dwelling urchin, on the verge of greatness at the final question of the Indian version of "Who wants to be a Millionaire". As the police, deeply suspicious of how an uneducated orphan could answer the questions, interrogate Jamal, he takes us through a colorful journey, tracing events in his life.. some light hearted and some, quite tragic.. that helped him answer the questions. A breathtakingly simple premise, which leaves plenty of room to weave intricate stories that help explain how Jamal got to the answers to the questions on the show. But here's where the movie falters a bit. While some of the stories are quite credible, a few others clearly require one to indulge one's imagination a bit... like the one that explains how Jamal got to know whose face appears on the US $100 bill. (I think it is the $100 bill in the question, but I'm too bored to google for the truth). I mean come on!! Also, Jamal who has no formal education seems to have a better command over English than the BPO employees he serves tea to. And finally, the second half of the movie is really quite fantastic and feels a bit like Oliver Twist meets Scarface... a bit "Bollywood-ish" if you will.. But as fare designed to cater to western audiences, the film clearly succeeds on many levels. It is an underdog story, with a clearly likable underdog. It captures the seamier and grittier side of India, far removed from the beautiful, vibrant and Is-that-really-India images that the "Incredible India" ads peddle to potential, unsuspecting tourists. The performances are all adequate and the movie is engaging throughout. So, not bad, all in all!! But as regards calling it a masterpiece, I guess I'm going to hold back on that...

If there was one movie in 2008 which exceeded my expectations, it was The Dark Knight, Chris Nolan's follow-up effort to Batman Begins, the successful re-branding of the jaded Batman franchise. In my opinion, Batman Begins was an exceptionally well made movie, shifting the tone of the franchise from ridiculous garishness and uniformly bad acting to a slower, more deliberate pace and smoldering intensity. TDK continues in the same vein, but is only slower, darker and more intense than its predecessor. Supported by great acting, especially by the Late Heath Ledger who steals the show as the maniacal Joker, and spectacular action sequences, TDK scales the limitations of its genre and delivers an intelligent and gripping journey into the dark and murky depths of human psyche.  Heath Ledger's joker is a villain for the ages, conveying pure, undiluted evil and is frankly, terrifying at times. At 150 odd minutes, the movie is a tad long, but totally edge of the seat stuff that takes your breath away. And ya, Bale's Batman could do without that irritatingly grating voice.. but such minor irritants apart, the movie is top notch stuff. Wish there were more movies like this... Two thumbs up from me!!

Now we get to a move that quite clearly underwhelmed me... Wall-E. Surprising, considering the fact that the movie is a very well made animation movie. Pixar has always pushed he envelope in terms of the subject of its movies... toys, monsters, cars, fish, has-been superheroes and even a rat who appreciates good things in life... and I have always been able to empathize with the characters and enjoy the ride. But somehow, Pixar lost me with its emotional robot love story. I liked the movie alright, but just couldn't connect with it the way I did with Toy Story (I & II) or Finding Nemo. True, the scenes are well thought of and imaginative, the animation is top notch and the humor, good as ever. So, it's just one of those things that one can't really explain rationally... -sigh-

Finally, the honorable mentions... Ironman: The movie was a better than average superhero movie, but what really lifted the movie was the brilliance of Robert Downey Jr. And Ironman was not the only movie RDJ elevated with his brilliance. Tropic Thunder would have been just another comic take on the innumerable Vietnam war era movies, but for RDJ's genius. The man really came alive in 2008!! And I'll probably get roundly panned for saying this, but I quite enjoyed Pineapple Express, in my opinion the best stoner/slacker flick since Harold & Kumar Go To White Castle. But I'll readily admit that the movie will probably not appeal to wide sections of the general populace. Among other movies that generally entertained without hitting the heights are Horton Hears A Who, Bolt and Kung Fu Panda. A couple of eagerly anticipated movies that mildly disappointed were Quantum of Solace and Indiana Jones IV. As regards QoS, Bond might as well have said, "The name is Bourne, Jason Bourne". The movie was not bad, but low on everything one associates with a Bond movie... style, witty one-liners, gadgets... and most importantly, hot Bond babes that invariably try to do Bond in. -sigh- And lastly, the Indy flick - not bad at all, but I guess my expectations from the movie were impossibly high to meet. Plus, the movie suggests that Shia LaBeouf, the same irritating kid from Even Stevens, will step into Indy's shoes... a terrifying prospect!! You know what would really make for a splendid 2009.... A movie in which Shia LaBeouf gets run over by a truck... repeatedly. Ah, now that would be a true masterpiece and the very thought makes me feel better already... Have a great 2009, y'all!! Until later.. cheers 8-)