Rs 2,000 Cr bail out being readied ?
This is the logic :
- the USA had an Enron, we have Satyam
- the USA tax payer bailed-out Fannie-May, so let the Indian tax payer bail out Satyam
But the USA did not bail out Enron.
But India is not the USA.Our farmers commit suicide and we dont have roads for example.
The Central Government has decided to take direct action to remis looking at a salary bailout for the 53,000 Satyam Computer Services employees.
A Rs 2,000 crore package is under consideration to ensure that Satyam employees get their salary on time after it the new board said that they are looking for funds.
CNN-IBN has learnt that the government is looking at giving three instalments of Rs 500 crore to Satyam for the next three months and is planning another infusion of about Rs 400 crore.
Prime Minister Manmohan Singh met senior Cabinet ministers and officials at his residence to discuss the over Rs 7,000 Satyam scandal where the bailout package was finalised.
Source : IBN Live
Manmohan Singh and P. Chidambaram who are completely silent on the Rs 60,000 Crore spectrum scam can hardly be expected to represent the hapless tax payer.
Kiran Karnik says this is a loan and not a ‘bail-out’.
Of course, Sir. A bail out is nothing but a tax payer loan given to a company that has zero chance of getting a loan from anywhere else.
Reasons why the bailout is a bad idea
- You have not completed the investigations and therefore have no idea about the true books of Satyam. Any bailout must be patient and wait for this to complete.
- Raju has claimed in his letter that he has personal money of > 1600 Cr in Satyam. Your bailout will mean his money is safe
- We are sick of hearing about the ‘brand’ (must be an Indian B-School thing). The Satyam brand is finished. No amount of taxpayer money can save it. The only thing that can save the brand is a clean chit from the court leading to the acquittal of Mr Raju
- The employees can be saved by splitting up the company and selling it in parts. Satyam needs to be taken into bankruptcy. This blog has an idea about how this could be handled.
- Take into account the legal troubles faced by Satyam in the UPAID case. Satyam might very well lose that case considering the admission of large scale forgery by Mr Raju himself. The claims are upward of USD 1 Bn. The Indian common-mans bail out money will be exposed to this huge risk.
- The class action lawsuits in the US courts might also well win considering the deliberate defrauding of shareholders, as admitted by Mr Raju himself. The Indian tax payer will be exposed to this risk as well.
The number one reason why the bailout must not happen is
The precedent being set.