Byju’s controversial events on Thursday evening has a corporate level echo of the Saturday Night Massacre. But first, what exactly is the Saturday Night Massacre?
The Saturday Night Massacre is an event etched in global political history. What was a normal Saturday morning on October 20, 1973, escalated into an infamous night with severe ramifications.
It was a turning point in the Watergate scandal and the investigations into the administration of then President Richard Nixon. As the actions of special prosecutor Archibald Cox tasked with investigating into the break in (by Nixon’s partymen) into the Watergate Hotel, started getting too hot for Nixon to handle, Nixon ordered his Attorney General Elliot Richardson to fire Archibald Cox. Elliot Richardson refused and resigned from his position. His replacement, Deputy Attorney General William Ruckelshaus, too refused to execute Nixon’s orders and resigned.
Also read: Byju’s leap from frying pan into the fire
Finally, it was the next in line for the post, Solicitor General Robert Bork, who while unwilling, complied with Nixon’s orders. The series of events that played out over a few hours on a Saturday evening, that resulted in two top government officials and a special prosecutor getting shunted out, is referred to as the Saturday Night Massacre. That night was a trigger point that escalated the crisis for Richard Nixon and led to his resignation as President few months later.
Byju’s spiralling crisis
The events of June 22, Thursday night, when it comes to Byju’s, appear like a corporate level version of the Saturday Night Massacre. With key directors and auditors resigning or maybe shunted out, all within few hours on a Thursday evening, a new auditor appointed immediately as though Byju’s was waiting for this to happen, the flow of events is quite bizarre, intense and unprecedented in the corporate world. And there are good chances that it could turn out to be a trigger point in the company’s history as well.
The directors who have ‘resigned’ were representing key investors in the company. The auditor who resigned – Deloitte, has cited long delays in financial statements of Byjus pertaining to FY22 and no communication on resolution of audit committee modifications pertaining to FY21. With many companies having finalised FY23 financial statements, that Byju’s is yet to finalise FY22 statements is quite a serious issue reflecting possible breakdown in financial controls.
Amusingly around the same time when Deloitte resigned, the company has released a statement trying to portray the event as a voluntary company decision and that Byju’s has on its own initiative appointed another auditor to strengthen financial governance! Further, the company has denied the director resignations so far, but its denial does not have many takers.
Poor credibilty
Such attempts to influence the narrative are likely to fall flat given its poor prevailing credibility, terribly poor capital allocation with billions of dollars burnt with no meaningful results, accounts from customers on how they were ‘coerced’ into buying Byju’s products, toxic work culture as reported by current and former employees, filing cases against lenders to the company.
There are times when lost grounds and reputations can be recovered and there are times when it cannot. Byju’s has not only reached bottom but appears to have started digging to get into deeper mess. Winning stakeholders (investors, employees, customers and society) confidence is too hard in this context. It may be possible only under a new team.
Whether Byju’s can survive on its own or not is something only experts after doing due diligence can determine. But given the impact its failure can have on multiple stakeholders and to India’s startup and corporate image, may be it’s time for an external intervention like the one that happened a long time ago, after multiple directors resigned within few days in a famous company – Satyam Computers.