news Thursday, April 09, 2015 - 05:30
After more than 6 years, a CBI special court in Hyderabad has found former Satyam chairman Ramalinga Raju guilty of fraud. All 10 accused in the case have also been found guilty in a scam that has been dubbed as one of the biggest financial scams in the country's corporate sector. The accused have been found guilty of cheating, forgery and criminal breach of trust which had caused a loss of Rs 14,000 crore to shareholders of Satyam. The quantum of punishment is likely to be announced by the special CBI court in Hyderabad tomorrow. Unlike most financial frauds that happen in India where the technical details are seldom known, the Satyam fraud stands out. The Securities and Exchange Board of India (SEBI) has made public, a blow-by-blow account of how the scam happened. The fraud was simple, but it turned out to be India’s biggest corporate scandal. The top management of Satyam Computer Services dressed up their accounts, balance sheets and profit margins to show a rosy picture of the company, in an effort to woo more and more investments from the public. Fixed deposit receipts of many banks were forged for the same purpose. All this they did consistently over a period of six years from 2003 to 2009. Additionally, they also prepared over 7,561 fake invoices, fake clients and fake projects. They even recruited more and more people to show that the "growing" company was in need of more staff.  For instance, in 2008-09 it showed its operating margin as 24% when the actual figure was only 3%.  Over the six years, when the company rode on these falsified balance sheets, its top management, Ramalinga & Co. probably did not comprehend that their fraud may be out so soon. Their plan crashed when the company could not pay its employees their salaries.  On 7 January 2009 its chairman Ramalinga Raju wrote a letter of confession to the employees saying that the company ran for last six years on 'asatya,' falsehood. He revealed what he and his coterie were doing for the past six years.  Read - The confession letter Ramalinga Raju wrote in 2009, and later denied As soon as the letter went public, he was taken into custody, the CBI charging him under sections 409 and 467 of the IPC - criminal breach of trust and forgery - both would attract life imprisonment. He was lodged in Hyderabad's Chanchalguda Prison where he remained an under trial for eight months. In September that year, he was afflicted with hepatitis C which secured him a shift from the shady gaol to a posh NIMS hospital room. And since then he has managed to not enter the jail again except for a week in between.  All top level officers of the company washed off their hands by putting the blame solely on team Raju. The CFO said that he was looking into investor relations work and therefore did not notice the irregularity. A former CFO said that all the bank statements were in the custody of the Chairman and the Managing Director and that they did not have much access to it. The internal auditor said that they company’s financial team had assured him that the accounts would be reconciled.  The company’s top management officials made good of the falsified claims which in turn raised the share value of the company. They made crores of Rupees by selling the shares of the company, which the SEBI in its investigation found. They invested the ill-gained money to buy land in Hyderabad. The market watchdog found the officials guilty of unfair manipulation of stocks and insider trading, and asked them to deposit, with an interest of 12%, the unlawful gains which it estimated to be Rs. 1850 crore. However, the investigating officer of the CBI DIG V V Lakshminarayana said this about the master-mind behind the fraud: “There wasn’t any sense of regret in Raju. If the Maytas deal (which Satyam was to strike soon) had gone through, he would have cited recession and sacked employees and tried to fill in the gaps.”  Apart from SEBI and CBI, the Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED) have also booked Raju.  It was not on legal front alone that Raju had to struggle. Hepatitis C and a serious liver disease took a toll on his health. He was also experimented with a drug that was not yet approved in India. “He had to take 14 injections week after week and, at the time, he couldn’t eat and was only on liquid diet. It was a tough phase but Raju was in touch with close friends. Early this year those drugs started showing results,” a relative of his had said .     Special judge BVLN Chakravarthi had postponed the verdict on March 9 and later April 9, citing voluminous documents of the case. Around 3,000 documents were marked and 226 witnesses examined during the trial that began around six years ago.  

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