This scandal will proceed to signify something — namely, a major revamp of regulatory oversight in one of the world’s two fastest-growing economies, as well as the sentencing of its masterminds.

The Satyam scandal is not about the sky falling, or about systemic investor risks in India.

Founder Raju, now (unlike Bernie Madoff) in jail without bail, must be jittery. He must realize that other Indian confidence tricksters before him have met a cruel fate.

Harshad Mehta, an Indian stockbroker who manipulated Bombay Stock Exchange prices in the 1990s after siphoning interbank transactional funds, was charged with over-70 criminal offenses, arrested by Indian police, and then died after a heart attack in a common prison in 2002.

A similar destiny, in yet another jail, awaited Rajan Pillai, the head of confectionery giant Britannia Biscuits, described by the New York Times as “one of Asia's most flamboyant businessmen.” And unlike Marc Rich, neither Mehta nor Pillai could dream of a Bill Clinton-style Presidential pardon.

Nevertheless, the investigation of Raju will follow due process, and take time.

So too will the corrective measures. Unlike most developing countries, India’s markets have long traditions (the Bombay Stock Exchange, in fact, is older than Tokyo's). They have also not been sculpted by foreign consultants as scaled-down editions of Wall Street or London.

Indeed, the complexity of Raju’s fraud is a backhanded endorsement of the sophistication of India’s financial markets and the staggering number of its listed companies — 17,000 in total.

One of the most startling revelations of the Satyam scandal is that Raju’s fraud became possible only after his Nasdaq-listed firm chose U.S. GAAP (generally accepted accounting principles) to state (and fudge) its accounts.

Such maneuvering would not have been possible under accounting rules used by the Institute of Chartered Accountants of India, the world’s second-largest body of its kind.

All this may provide salutary lessons, not just for auditors like PriceWaterhouseCoopers, but also for U.S. B-School gurus preaching the gospel about business transparency and ethical standards in faraway places.

It is simply a story about personal greed, about the excesses of global capitalism in an era of dizzying borrowing and growth — and the inability of understaffed regulators (or blindly-trusted firms like PriceWaterhouseCoopers) to keep pace.

To assess the fallout, it is important to place the $1 to $1.5 billion fraud committed by Raju in the broader context of India’s software industry, with revenues in the past three years alone (2006-2008) totaling $120 billion dollars.

Predictably, some in the international media have blown the scandal out of proportion. A ‘death blow’ for Indian IT, say some. A major opportunity for rivals to India such as China and the Philippines, conclude others.

The origins of such reports are worth examining, though. The Manila Times from the Philippines speaks of its country’s companies ‘snatching’ Indian business after the scandal. Never mind that the entire Filipino outsourcing industry (with 2008 billings of $6.8 billion) is only slightly larger than one Indian software firm, Tata Consultancy ($5.7 billion in revenues) — or that the country of Presidents Marcos and Estrada may do well with a little spot of introspection about fraud and scandal.

Indeed, the very fact that Raju’s story eventually broke into the open offers evidence of a more powerful system of corporate control than auditors and regulators can achieve. This concerns India’s highly competitive media, as well as its activist shareholder culture.

After all, Satyam’s shareholders resisted a merger with two property firms owned by Raju’s family, which could have filled up the billion dollar hole in its balance sheet for several years. As a result, its crooked chief was left with nowhere to hide.

Such factors also stand in sharp contrast to the bigger India ‘rival,’ China, where lawyer Yan Yiming has built a career battling the near-routine misleading of investors by the country's secretive, state-controlled corporations.

These perspectives are now especially perturbing given the high exposure by Chinese companies and banks to foreign-currency financial assets (including the murky world of derivatives), and the country’s still relatively unrefined superstructure of rules and regulations.

India invented reincarnation, and Satyam — now assiduously courted by suitors from India and abroad — will be both reinvented and reincarnated, within a few months.

A good comparison here may be the failure in 2004 of India’s Global Trust Bank and its relatively straight forward merger with another Indian bank, compared to the collapse six years previously of China’s Guangdong International Trust & Investment Corp (Gitic). One of the biggest problems with the latter, as London’s Financial Times observed, was a lack of documentation on asset ownership.

In the final analysis, the Satyam scandal is not about the sky falling, or about systemic investor risks in India. It is simply a story about personal greed, about the excesses of global capitalism in an era of dizzying borrowing and growth — and the inability of understaffed regulators (or blindly-trusted firms like PriceWaterhouseCoopers) to keep pace with the inventive hordes of free market messiahs.

Lest one forget, much bigger, brighter and earlier examples of exactly such follies include Enron and Worldcom in the United States, Europe’s Parmalat, Lernout & Hauspie and scores of others.

Above all, one should not confuse Satyam itself or its tens of thousands of world-class engineers with its founder. The company’s 180 Fortune 500 clients

The complexity of Raju’s fraud is a backhanded endorsement of the sophistication of India’s financial markets and the staggering number of its listed companies — 17,000 in total.

have not shut down their mission-critical IT systems and run for support to Mother IBM.

To my mind, it is unlikely that any of Satyam's principal clients will bother to switch Indian vendors. Some smaller ones may follow the recent decision by National Australia Bank (NAB) to shelve new contracts with Satyam, until its future has become clearer. The Australian bank has, however, also clarified that its IT department lacks the expertise to transfer ongoing projects with Satyam (worth a few million dollars) back home. Such a story is likely to be heard some more times in the weeks to come.

India invented reincarnation, and Satyam — now assiduously courted by suitors from India and abroad — will be both reinvented and reincarnated, within a few months at the outside.