rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Satyam fraud: Promoters siphoned off Rs 2,743 cr

Satyam fraud: Promoters siphoned off Rs 2,743 cr

July 12, 2010 12:43 IST
B Ramalinga Raju, the disgraced founder of the erstwhile Satyam Computer Services, and his family members wrongfully gained Rs 2,743 crore (Rs 27.43 billion), the Central Bureau of Investigation (CBI) said.

For the first time, the premier investigating agency, as a part of its media workshop, discussed Satyam fraud as a case study.

CBI said Satyam inflated its cash balance to Rs 5,040 crore (Rs 50.40 bilion). CBI officials also said it had understated liability of Rs 1,230 crore (Rs 12.30 billion) and overstated debt by Rs 490 crore (Rs 4.9 billion).

So far, CBI has filed three chargesheets against Ramalinga Raju and some of his associates. These pertain to criminal conspiracy to defraud investors by fabricating invoices and documents.

Last year, Tech Mahindra acquired Satyam and renamed it as Mahindra Satyam.

The findings also revealed that the promoters had a 2.18 per cent stake as on December 2008, compared to 18.78 per cent in 1991. They earned Rs 767.73 crore (Rs 7.67 billion) by selling shares through benami transactions and brokers, it said.

The promoters acquired 935 properties, of 5,757.30 acres, worth Rs 3,454.9 crore (Rs 34.54 billion). They acquired these properties during 1999-2008, according to CBI.

Under Ramalinga Raju, Satyam floated 327 companies and published inflated financials. These front companies purchased 6,000 acres of land, said CBI, adding Satyam had taken loans of Rs 1,230 crore from these companies, which were not even accounted in books.

Under the fictitious sales segment, CBI said from March 2003 to December 2008, about 7,561 invoices were found fake. All these fake invoices were directly inserted into the systems through Excel Porting (which was provided for bypassing the regular flow of invoices generation for emergency cases. However, this was misused).

The investigation also revealed that Satyam had executed projects in the name of seven non-existent companies - Mobitel, Cellnet, E Care, Synony, Northsea, Autotech and Hargreaves.

On corporate governance, CBI found out that the company directors received handsome remunerations, stock options at Rs 2 against the market price of Rs 500.

The directors acted as mere rubber stamps and the promoters were always present to influence the decision.

Moreover, the promoters received a dividend of Rs 27.08 crore (Rs 270.8 billion) in 2007-08 and 2008-09. But the actual profit after adjustment of fake revenues was Rs 176.12 crore (Rs 1.76 billion) in 2007-08 and Rs 269.16 crore (Rs 2.69 billion) in 2008-09.

The investigating agency claimed they were not eligible for dividends according to Section 205 of the Company Law.

BS Reporter in Mumbai
Source: