The first anniversary of Ramalinga Raju's confession has produced a predictably vast amount of commentary on the Satyam scam. The general opinion seems to be that the government and the interim board appointed by it have done an excellent job on rescuing the company, but that the pace of any reforms that may have followed is not quick enough. I find this view incredibly naive.
Let me offer what I believe is a more realistic view. Nothing meaningful has been done to prevent more Satyam-like scams, nor will it ever be. The reason is simple — the only meaningful reforms would have been to create conditions that would make directors and auditors genuinely unwilling to participate in such shenanigans. However, this would rock way too many boats that no one seems to have any interest in rocking. In the Satyam case, only the individuals who were directly complicit in the crime have been arrested. All the heavyweight luminaries who were independent directors on the board are living happily ever after, as is the management leadership of the audit firm. Only the individual auditors who are said to have actively participated in the scam are being tried. There's a whole lot of talk about corporate governance, but all those who were answerable for incompetent execution of their supervisory duties find themselves doing fine.
The government did a competent job (or rather, it appointed a board that did a competent job) of rescuing Satyam because the company had a huge workforce and operated in an industry that is crucial to Indian business' global image. The company's collapse in the midst of a global economic crisis was the last thing anyone wanted. However, once Raju had written his fateful letter on 8th January, Satyam's past and future were divorced from each other. Everything was done to rescue the company, but nothing was done to create a basis for preventing more Satyams.
For the investment community, the message is clear. There could be (or rather, almost certainly are) plenty of more Satyam's out there. There could be any number of promoters who are falsifying numbers and bleeding their companies. And if you thought that the Satyam scandal was an opportunity to fix the system so that responsibility could be fixed where it should be, then you were wrong. By and large, investors will continue to have to monitor corporate governance themselves without relying on any significant systemic changes.