Is the Satyam scandal just about a promoter manipulating the financial statements of his company to show a superior performance? Or is it about systematic siphoning of funds from the company over the years? Emerging events seem to increasingly point to the latter.

Lets start with the so-called confession statement of Mr Ramalinga Raju, the disgraced chairman of the company. Lawyers have already expressed doubts over whether the statement can actually be deemed a confession and enough to implicate Mr Raju. Indeed, they say that it is a very well drafted document designed to draw attention to the hole in the finances without implicating himself anywhere for any act of commission. Deflecting attention?

A careful reading of the statement shows that there is indeed merit in this view. Mr Raju has pointed to cash balances not being the same as reported in the audited financial statements, he has said of how revenues were inflated, and so on. But nowhere has he said that he was responsible for this nor has he pointed his finger at anyone else. Of course, as the chairman, the buck stops with him but that is not the same as saying I did it.

If anything, he has tried to project himself as the saviour by pointing out how he arranged Rs 1,230 crore for the company and how neither he nor the managing director took even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results.

Mr Raju appears to have attempted to deflect attention from what is possibly the more serious crime of siphoning of funds to the relatively lesser one of accounting skulduggery. This is being clever by half. How on earth did he think that the shareholders, lenders, legal agencies and the world at large would believe him on this?

People who were and are working in responsible positions in Satyam say that the company has a real business going and some of its divisions are extremely profitable and there is no question of doubting the revenues from them. There is no way that operating margin will be as low as 3 per cent, they say, unless of course, if money had been sucked out of the company.

The second event that raises doubts is the carefully orchestrated arrest of Mr Raju. He surrendered himself to the police the night before he was to appear before the SEBI investigating team. The arrest and remand ensured that SEBI was unable to interrogate him.

The market regulator will eventually be able to quiz him, but the question is: Will there be evidence destroyed before that? As it is, there is the possibility that Mr Raju may have destroyed crucial evidence implicating him before he went public with his confession. Political angle

And then, there is the political angle to the scandal. Mr Raju and his companies (Maytas group) have been beneficiaries of large public contracts for transport systems and irrigation projects in Andhra Pradesh. Nexus between businessmen and politicians is an accepted reality in this country. So is someone powerful attempting now to protect Mr Raju? Or is it that he knows too much about wheeling-dealings and hence needs to be kept away from investigators?

Allegations and counter-allegations have been flying thick and fast from both the ruling and Opposition parties in Andhra Pradesh over favours, secured and shown, to Mr Raju by both. The government appointed board has a task on its hands. It will have to dig, and dig deep to unravel the scandal in all its dimensions. What is now out in public is probably just one dimension and it may be the least scandalous one. Mr Raju has himself said that the irregularities have been happening for years. Therefore, it is only correct to assume that more skeletons will come tumbling out once SEBI and the Company Law Board bury their noses into the books of Satyam.

There is the danger though that political pressure will be brought on to scuttle the investigations or obfuscate the findings. This is where the government-appointed board will assume importance. Not only will the government have to appoint people of integrity and high standing but these people will have to discharge their responsibility of getting to the bottom of this scandal without hesitation or fear.
ICAI to take stock

Finally, a word on the auditors, Price Waterhouse. The Central Council of the Institute of Chartered Accountants of India (ICAI), regulatory body of the accounting profession, is set to meet on Monday to take stock of the developments from the Satyam scandal on the profession.

Interestingly, two members of the Central Council, Mr S. Gopalakrishnan and Mr Harinderjit Singh, are senior partners of Price Waterhouse. Mr Gopalakrishnan signed the 2006-07 balance sheet of Satyam. Will the two gentlemen sit in on the deliberations on Monday at the ICAI? Or will they opt out on grounds of conflict of interest? Or better still, will they resign from the Central Council, which is the policy-making and governing body of the ICAI? Is it too much to ask for the last?