Family-owned companies are the bedrock of any successful economy. Examples include Ford Motor Co. in the United States, Tata Group in India and Sabanci Holding in Turkey. But family-owned companies also may have serious corporate governance lapses.

At India’s Satyam Computer Systems Ltd., for example, family members attempted to divert assets into two other family-owned companies.

As the Times of India reported, “The Satyam scandal came to light on January 7, 2009, with a confession from the company’s founder B Ramalinga Raju that he had been cooking the firm’s books for several years.” In his letter to the board revealing the fraud, Raju states that, “What started as a marginal gap between actual operating profits and ones reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions....” Later, he describes the process as “like riding a tiger, not knowing how to get off without being eaten.”

It was later determined that Satyam had violated several laws that protect shareholders, and that are designed to prevent and penalize efforts to divert company assets from shareholders to the benefit of the perpetrators.

For more on the Satyam case, see:

• http://reut.rs/Icj4hL
• http://scr.bi/IA3vm7
• http://bit.ly/HEcrLX