Satyam Scandal and Misgivings of Business Management Education

The Satyam scandal raises serious questions about the MBA culture and business management education. It is significant that the controversial independent director on the board of Satyam Computer Services, N. Mohan Rao, was the dean of the high profile Indian School of Business in Hyderabad. He has now stepped down from that position.

He could not have been unaware of the fraud of nearly Rs 7000 crore as he had played a role in approving the aborted deal between Satyam and Maytas while chairing a board meeting on December 16. He will be succeeded by Ajit Rangnekar, son of the veteran CPM leader Ahilya and P.
B. Rangnekar. He would be expected to give a more ethical dimension to the school.

Another highly educated director holds senior positions in prestigious management institutions in the US. Krishna Palepu is the director of research in the Harvard Business school with specialisation in subjects like corporate governance and enhancing value of corporations.

The disgraced chairman of Satyam, Ramalingam Raju, too has an MBA from Ohio and has done a course in the Harvard Business School. How is it that people with such elite education are involved in such unethical conduct? One reason is that management education has little concern with ethics.

The Harvard Business School, the most prestigious of them all, is itself now under an intensive scrutiny. An incisive book on the HBS exposes the MBA culture there. The recently published book What They Teach You at Harvard – My Two Years in the Cauldron of Capitalism is written by a former Paris correspondent of the Telegraph, Philip Broughton.

The author spent $ 175,000 on his two year course but found that for all its reputation, power and pomposity, Harvard neither understands the complexity nor acknowledges the chaotic unpredictability of the world economy better than anyone else. It teaches you to major in hypocrisy, you go there to make loads of money, there is also a lot of pretentiousness and jargon. They think of themselves not only as the most powerful, richest, most successful people but also morally good.

There is growing realisation in India now that management education has to be made more relevant to our ethos, should cease to be based on the American model. An IIM review committee has made several recommendations in this connection.

What we are witnessing is business of education not education of business, says Varun Arya, a governing body member of IIM, Ahmedabad. Education by definition is based on ethics. He mentions the traditional concept of Shubh Labh, a reasonable profit.

The human resource department ministry has recommend that social sciences be offered for teaching in the top six management institutes in the country which it supports. These should not be merely market driven.

Business schools are also blamed for the current world fianancial crisis by Business Week, the leading financial journal. The schools value leaders’ charisma over substance and uncritically embrace free market and profiteering.

The crisis should also drive some sense into the heads of those who always dismiss people’s struggles against anti-people projects saying common people have no expertise and experts, engineers, management gurus know best. The whole American model, which these people have been shamelessly applauding, has now collapsed. Even a section of capitalists are opposing this model. This is clear from the recent conference for New Capitalism attended by French president Sarkozy, German Chancellor Angela Merkel and former British Prime Minister Tony Blair.

The IT and management professionals got fat salaries and had started thinking that they are far superior to doctors, engineers, architects and other professionals. The Satyam scandal has also thoroughly exposed the company’s patron, former chief minister Chandrababu Naidu, who was being hailed as the poster boy of economic reforms and a politics completely servile to American interests.

Also involved in the Satyam controversy is Mr R.C. Sinha, a retired bureaucrat from Maharashtra, who recently resigned as the chairperson of the tainted Maytas Infrastructure company in Andhra Pradesh which is closely connected to Satyam. He has been criticised for allotting 130 acres of land in the Mihan, the multimodal international hub airport at Nagpur to Mayatas at concessional rates in his capacity as vice chairman of the Maharashtra airport development corporation based in Nagpur. He had been hailed as the iron man or steel man in a section of the media for his ruthless handling of the flyover and expressway projects.

Now, we are looking to foreign universities to educate our politicians which is so ridiculous considering that our problems are so entirely different. Thirteen members of our parliament attended a four day course in political leadership at the very elitist Yale university in America in june last year. Among them were Suresh Prabhu of Shiv Sena, Vijay Darda , owner of the Lokmat media group, and Jyotiradityaraje Scindia, the young minister of state for communications. Later, they met senior politicians and businessmen.

The Yale programme for Indian politicians was jointly organised with the federation of the Indian chambers of commerce. That raises several questions. Who paid all the expenses of travel and teaching ? if someone sponsored this, people would certainly like to know because this is a sensitive issue. There is nothing like a free lunch. There are always strings attached.