We in India are justly proud to have once discovered the Zero, which arose, as far as I recall, from a philosophical notion of possible Nothingness (Shunya), though of course there is a long history that came to follow in Indian mathematics.
The Government of India’s Company Law Board (and the pompous honchos they have gone about appointing here and there) may need to be reminded that by any system of mathematics, 51% of Zero still remains, uhmmmm, Zero.
Bankrupt companies get sold for nominal prices like Rs 100 or perhaps $2. But of course it is not impossible a notorious Government contractor or two will pump money in as a backdoor public subsidy aimed at creating a zombie.
Life imitates art or rather Hollywood again as young Kasab, the misguided primary-school dropout Pakistani mass-murdering terrorist caught by Indian police after the Mumbai massacres, becomes a kind of Jason-Bourne/Enemy-of-the-State character who is said to be being targeted now by Pakistan’s terrorist masterminds for not being dead already! There have been all kinds of weird assassinations by and of government agents using poisoned umbrellas and radioactive pills etc in real life, and who is to say that young Kasab is not going to be given a small cyanide capsule along with a letter of farewell from his parents when His Excellency the High Commissioner’s consular agents receive access to him?
Shortly after Kasab’s remorseful confessions (which flowed from his natural gratitude at having survived and having been treated humanely by Mumbai’s police), I said here that if I was the judge trying him, I would send him to an Indian prison for 20 or 30 years (given his 20 or 30 murder victims), but I would add that he should be occasionally, say once a year, permitted to offer namaz at India’s grandest mosques. He could become a model prisoner, possibly a potent weapon against Pakistan’s terrorist masterminds who have ruined his life and now wish him dead.
(Message to Matt Damon, Will Smith and assorted Hollywood cinematic personalities: there is a confessed, remorseful mass-murdering 20-year old Pakistani terrorist in an Indian prison who is being targeted by the very people who sent him on his vile mission.)
In present circumstances, young Kasab needs to seek political asylum in the Indian Republic as his life in his own Pakistan Republic is as good as over for political reasons. He would become the first person ever in history to receive political asylum in a country that he attacked despite being a confessed terrorist mass-murderer. But Mahatma Gandhi would have approved and smiled at the irony of it all! Ahimsa paramo dharmaha in practice.
Satyam may be able to summarily solve the problems caused by its high-level corporate fraud by transforming itself into a “Labour-Managed Firm”.
One of the new Government-appointed board members has stated publicly today that the company has little or no debt. If this is true it would be interesting because not only were the vast cash-assets non-existent, the liabilities-side of the balance-sheet also may be small, which could mean the company was simply far smaller in terms of value than it had made itself out to be. In a bankrupt firm, the remaining assets normally come to belong to the creditors but what if the main creditors happen to be the work-force? If that is in fact the situation in this case, Satyam may be a prime candidate to be transformed into a “Labour-Managed Firm” of the sort discussed by Jaroslav Vanek (The General Theory of Labour Managed Firms and Market Economies, 1970) and James Meade (The theory of the labour-managed firm and profit-sharing, Economic Journal 1972), and surveyed by e.g. Louis Putterman in the New Palgrave Dictionary and by Martin Ricketts in The Economics of Business Enterprise 2003.
As I had briefly mentioned earlier here, the transition could be made by Satyam’s existing technical and other staff being allowed to participate (with their personal savings and claims to future income) in any auction of the “works-in-progress” that constitute the client contracts the company presently has around the world and which constitute its major intangible asset. This may be the single best way to preserve the firm’s value as well as the income-streams of its staff.
The staff would have to make a transition from being employees to becoming self-managers which may not be easy in practice, although in theory the information-technology industry may be well-suited to labour-managed firms given the peculiarly intangible nature of their products. The marginal cost of production of (true) information is typically very high but the marginal cost of dissemination of information is near- zero.
If this happened and a corrupt bankrupt Satyam-I transformed itself into a viable Labour-Managed Satyam-II, the newly appointed board would become redundant even more quickly than it would have done otherwise — though this board may be even less likely to know of Vanek and Meade than to be familiar with modern corporate finance. Time perhaps to hit the textbooks, gentlemen, and burn that midnight candle! Is that something we can expect from some of the key lobbyists of India’s organized business sector?
Postscript 1 : Of course if the asset-side has been fraudulently exaggerated while the liabilities-side has been small, the fraud has been directly perpetrated on equity-holders who held stock that was overvalued by the market as a direct result of the fraud.
Postscript 2: I find (grotesquely) amusing the new found emphasis on “Independent Directors” in view of the obvious fraud in the advertised biographies of some rather notorious Independent Directors in the IT-business and other sectors of corporate India and the higher bureaucracy! There seems in fact to have been a wild hyperinflation of reputations generally, especially in Delhi, Mumbai, Bangalore, Pune and other such hip with-it places — people claiming to have earned PhDs when they have none, people calling themselves “Dr” on the basis of some defunct Soviet management institute having once paid them off, people claiming to be Harvard postgraduates on the basis of some outsourced executive development programme of a few weeks’ duration, people claiming academic publications and academic affiliations which are non-existent, etc etc. All that for another day! (But any former students of mine who may find the above pertinent to themselves may please know their old prof is cross with them! Tsk tsk!) (And then there was the one of the senior government economic planner who told his astrologer on the telephone his correct date of birth but had lied to the Government of India by a couple of years…. clearly he did not want to get his own Ptolomaic horoscope wrong even if his plans for India in the Copernican world went awry!)