From Tech Poster Boy To Scamster, The Raju Saga
A little over six years ago, a confession by Satyam Computer Services founder Ramalinga Raju had shaken the corporate establishment for a fraud that was committed at the highest level at one of India's top four poster boy IT companies. It had brought to the fore a connivance of the entire top level of the company, from directors to auditors to analysts. The credibility of the Indian IT sector, sitting on a high pedestal, was at stake.
Raju's confession of fraud was of gigantic proportions — Satyam fudged accounts, gave wrong data to banks, financial institutions and investors as well as stock exchanges — a Rs 7,136 crore embezzlement within the company that led to his removal from the company's pole position and eventually led to his arrest and takeover of the company by Tech Mahindra. It had overstated its cash reserve position and fudged its financial results which showed profits far in excess of what the company had actually earned. Worse, this practice was happening for the last 5-6 years and this fraud went on undetected till Raju himself wrote a letter of confession about the crime. The CBI however estimated a loss of Rs 14,000 crore to Satyam shareholders.
On Thursday, after a 50-month trial, a special CBI court in Hyderabad found Raju and nine others guilty of cheating, forgery, destruction of evidence and criminal breach of trust and convicted them of criminal conspiracy and fraud and imposed a Rs 5 crore fine on Raju and his brother Rama Raju and sentences them and others to seven years in jail.
Raju and his brother apart from some others from the company were facing serious charges of criminal conspiracy, cheating, cheating by impersonation, forgery of valuable security, forgery for the purpose of cheating, using a forged document as genuine, and falsification of accounts and for causing disappearance of evidence. The CBI had also accused Raju and associates of inflating revenues, faking fixed deposits, falsifying accounts and fabricating invoices in a bid to project the company as enjoying sound financial health and deceive the investors.
The verdict is likely to have an impact on all the cases where Satyam and now Tech Mahindra is involved in context of Raju and Satyam's accounts and will ensure that the perpetrators of all such crimes are brought to the book. This will also act as a reminder for all other companies for any potential financial frauds in them.
Going forward it will be tough for Raju and his brother they have also been convicted by an economic offences court last year for cases filed by the Serious Frauds Investigation office and was sentenced to six months imprisonment apart from a fine of Rs 10.5 lakh. Apart from this, SEBI has also banned Raju and his brother from the capital markets for 14 years apart from asking them to pay close to Rs 3,000 crore on account of wrongful gains in share transactions. He also faces an Enforcement Directorate chargesheet under the Prevention of Money Laundering Act.
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