Saturday, Oct 01, 2022

Manufacturing Credibility

Hire 'world class' auditors for your accounts. Get 'big' and 'respected' people on the board. Engage top-end PR agencies and image managers. Use technical language to obfuscate truth. Collect 'prestigious' awards. Add some charity to buy loyalty and

To sketch the 'propaganda model' of mass media in the United States, Edward Herman and Noam Chomsky used an interesting phrase of the pre-eminent public intellectual, Walter Lipmann: 'manufacture of consent.' Their joint book on the subject was called Manufacturing Consent (Vintage, 1994). I wonder if this phrase could be appropriated to describe the entire Satyam disgust that has been unravelling before us.  Doesn't the Satyam tale come across as one of manufacturing credibility? 

Quite simply, over the years, haven't the Satyam managers created a smokescreen of credibility to carry out their fraud? Their modus operandi, in hindsight, appears sophisticated. Satyam hired 'world class' auditors to endorse their accounts. They hired 'big' and 'respected' people to serve on their board. They hired top-end public relations agencies and image managers to float an impressive balloon. They used technical language to obfuscate truth. They collected 'prestigious' awards to evoke respect. They did charity to buy loyalty and employed humility to disarm people. They did a whole lot of other things to keep themselves going. But we now understand that they were not one bit credible. They only manufactured credibility through association. It is not just the investors, employees and clients at Satyam who have been conned by this credibility game, but all of us who believed it through the channels of mass media and the tides of hearsay. 

Economist Jayati Ghosh recently wrote about awards that Satyam collected, which obviously helped them to build an 'unquestionable' reputation: "Much is already being made not only of individual greed that is supposed to have prompted this tale of financial mendacity on a grand scale, but of the agencies that enabled and possibly even encouraged it. Attention has been drawn to the obvious failings of the Board of the company, including its so-called 'independent' directors. The dereliction of the auditors, Price Waterhouse Coopers, is obviously coming under scrutiny. But there are some other important players who celebrated Satyam Computers and its Chairman of the Board B Ramalinga Raju all through this period, even up to just a few months ago – the national and international dispensers of entrepreneurship and corporate governance awards. Satyam Computer's much vaunted success was not only defined in terms of its rising share values and apparently remarkable returns: it was also because of the explicit recognition that came from national and international awards to the company and its managers." 

A quick estimate shows that Satyam won nearly 45 notable awards in the period between 2000 and now. In fact, the Golden Peacock Award, instituted by a UK-based agency that sets a benchmark for corporate governance, was given to Satyam twice, first in 2002 and then in 2008, under the special category of 'risk management and compliance issues'.  It is another matter that it was hastily withdrawn after the fraud broke. 

Since Satyam has been exposed we tend to think that they were the only ones who played the credibility game in India. We want to quickly separate them as a rotten apple and move on, so that other, similar reputations do not come crashing down. But even a cursory peek at the rest of the corporate community would reveal to us that this is by no measure Satyam's patented ingenuity. As a reporter who sniffs around for scandals, my deepest hunch is that most corporates do it, but perhaps with a greater degree of sophistication and a varying degree of fraud behind the screen. For instance, I was shocked recently when an IT insider casually told me that to exaggerate the number of employees in a company, like the way Satyam has most likely done (53,000), was an 'industry standard'. Referring to the World Bank ban on Wipro, he said that it is also a 'standard practice' in the industry that when you launch an IPO, you take care of your 'support community'. He found nothing wrong in what Wipro had done. Again, one should realise in these matters each company is guided by its own formula of bend and brazeness."  Also, the credibility game is not limited to the corporate world alone, it extends to other fields as well. For instance, it happens in politics, academics and the literary world too. The building of a certain reputation and credibility around oneself is seen as a one time effort, an important social investment by corporates. They play the media to acquire it and further use its amnesia to retain it. The moment they are assured they have credibility in the market, they begin to trade with it. 

This manufacturing of credibility is comparable to the meticulous exercise of branding that takes place all the time around us. If you buy a branded shirt, the belief is that you'll never find the stitch overlapping or its colour bleeding. If you buy a soft drink produced by a multinational company you are not supposed to find pesticide residues in it. If you break the chocolate bar of a reputed company, you can be assured that there will be no worms embedded. If you go to a speciality hospital, the doctors will always remember to take the scissors out before they sew up your stomach on the operation table. What branding does is it pushes you to blindly consume without constantly verifying truth, while truth is something that needs constant interrogation. Branding also clouds reality. For instance, the moment you brand Bangalore as an 'IT City,' you tend to erase the existence of other cities inside this seemingly single city and forget people who live outside the ambit of the hi-tech industry.

To further establish the points I have made on corporates and their existence beneath a self-painted coat of credibility, let's stop theoretical inferences. Let me instead draw two examples from my reporting experience: Some years ago, I was investigating the land demands of a company much applauded for its values. It was a public listed company; the demand was for tracts of agricultural land belonging to the poor and the pressure to acquire and allot was placed before a democratically elected government. So, needless to emphasise, there was enough public interest in the story. But it was a taboo to cast aspersions or raise questions against this company in the media.

Through their self-righteous talk, the impression this company has built over the years is that they are way above board, terribly transparent and that their credibility is cast in stone. I wasn't questioning any of this but was asking some tough questions related to their actual land requirements. During the process of writing the story, there were attempts to stop the story and when they were unsuccessful, I was invited for a chat at their office after it was published. 

Once I was in, after the elaborate security procedures, they started sizing me up -- if I had written the article for monetary gains or if I was drunk with Left ideology. They hurled allegations like I had taken money from a particular politician to do the hatchet job and all those familiar things that a working journalist hears each day of his working life. When this didn't work, they abused people whom I had quoted in the article and also those I hadn't, like for instance Karl Marx. They also threatened to sue me under the copyright act for picking and quoting a line from their annual report, which is a public document. They showed me some official papers to prove their innocence, but they were all taken away before I could run my eyes on them. But they promised to send it all across to my office.

I had decided to keep my cool and for nearly an hour I kept repeating that we would be happy to publish their version, which they had actually denied us when the article was being printed. I also offered to interview their big man. But nothing seemed agreeable to them. Finally, this man who was talking to me swung to another extreme. He gently touched my right hand, which lay carelessly on the sofa arm and said: "Why do you do this? You are middle class and we are middle class. We can't pull down our own revolution. What we have built is fabulous. If you haven't seen our campus already, you should take a look." I accepted the offer without blinking or thinking. But before I left for my golf cart tour, the man offered me a gift -- it was Amartya Sen's book Argumentative Indian. I said I had a copy of it already and didn't forget to thank him for his generous gesture. He again repeated that very soon I would have all the documents pertaining to their land dealings and that would cure my misconceptions.

After a couple of days, I received an e-mail from this company which contained selective counterpoints to my story, but there were no documents attached. I was supposed to accept their word against mine, nothing stood as independent proof. Also, at the top of the mail, it was curiously marked in bold: 'This is not for printing or using for a follow up feature.' Beneath, the disclaimer read: 'privileged and confidential information intended solely for the use of the addressee(s).'

The second case is not as elaborate as the first one, but since this company too, much older to the one referred above, makes similar claims of righteousness, I was appalled by their brazen methods. This company was setting up a plant in Orissa and they had run into major problems as a result of opposition from environmental activists. Since the key troublemaker lived in Bangalore, they wanted me to help them 'research the problem.' In other words to do espionage on the guy. They chased me for some time, but were sensitive enough to understand my reluctance. 

These two tiny examples should give us an inkling to corporate games behind the credibility smokescreen. Anyway, to be fair, the two examples I have cited don't match up to the magnitude of Satyam's fraud on our trust. They are still mild and preferable over many satanic avatars we have known in corporate history.