Between 2001 and 2009, when the accounting fraud was being orchestrated at Satyam [ Get Quote ], its founder B Ramalinga Raju [ Images ] [ Images ] and his kin made Rs 715 crore (Rs 7.15 billion) by 'intelligently' offloading Satyam shares, according to the Central Bureau of Investigation.
'They have cheated the investors on the one hand and made maximum gains for themselves on the other hand,' the CBI stated in its chargesheet, a copy of which is available with Business Standard.
The CBI charges in the accounting fraud pertain to conspiracy, cheating, forgery, falsification of records and causing disappearance of evidence. There is no charge of misappropriation of funds.
Of the Rs 715 crore (Rs 7.15 billion) made, Ramalinga Raju got Rs 27.91 crore (Rs 279.1 million) and his brother and Satyam's former managing director, B Rama Raju, got Rs 26.68 crore (Rs 266.8 million), in the form of gifts from family, said the CBI.
Besides, the Satyam founder 'himself offloaded the shares and received Rs 26,67,97,198,' says the chargesheet.
In 1999, according to the CBI, B Suryanarayana Raju, another brother, his wife Jhansi Rani and his mother Appalanarasamma offloaded their shares indirectly through the accounts of 17 individuals 'who are trusted employees and their family members.'
The method, the CBI said, was to transfer physical shares through endorsements in the names of the 17 individuals who, in turn, deposited them in demat accounts. Later, these individuals would offload the shares through five investment companies -- Elem Investments, High Grace Investments, Fincity Investments, High Sound Investments and Veeyes Investments.
All the five companies were floated by Ramalinga Raju and others for the 'purpose of sale of shares held by the promoters.' Subsequently, the money in the accounts of the individuals was transferred to the accounts of the promoters through cheques, said the CBI.
The CBI said the Satyam founder and his brother also gained 'wrongfully' to the tune of Rs 21.05 crore (Rs 210.5 million) and Rs 24.32 crore (Rs 243.2 million), respectively, through dividends. "Even though the company was making very low profits, he declared high dividends not in consonance with the profits of the company," it said.
This apart, the CBI said Ramalinga Raju got Rs 1.44 crore (Rs 14.4 million) and Rama Raju Rs 1.34 crore (Rs 13.4 million) as commission from Satyam 'during the fraud period by virtue of' their position in the company.
Explaining how the accounts were inflated, the CBI said the company generated 7,561 false invoices by a technique called 'excel porting.' The access to this was given only to those associates who were working in the accounts receivable team. The total amount shown against these invoices was Rs 5,117.69 crore (Rs 51.18 billion), it said.
"Some of the associates whose names have been shown to have worked in the projects contained in these invoices denied having worked in such projects, thus confirming the falsification of the invoices," the CBI said, adding that the false invoices have been hidden from business circles and their financial incharges.
Besides, to account for the receivables shown in the false invoices, the corresponding bank statements were also forged, it said. Thus, the accused inflated sales every quarter, it added.
The CBI has accused Srinivas Vadlamani, former chief financial officer, of conspiring with the promoters in inflating the accounts. The CBI said Vadlamani 'actively guided the personnel in the finance department with regard to the quantum of inflation of sales to be infused into the computer system from time to time.'
On the Price Waterhouse auditors S Gopalkrishnan and Srinivas Talluri, the CBI said they consciously overlooked the accounting irregularities.
Meanwhile, Satyam Computer Services Thursday moved the Company Law Board to seek approval of its proposal to sell the IT company to Tech Mahindra [ Get Quote ]. The approval of the CLB is necessary for the new management to come in and take control of the firm.
In a related development, BK Modi-owned Spice Group, which completed the second round of bidding for Satyam but later withdrew from the race, now plans to write to former chief justice SP Barucha (who oversaw the bidding process) alleging 'lack of transparency in the deal.'