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Raju trial on 32 counts; Mynampati in dock too: Sources

The Serious Fraud Investigation Office (SFIO) in its report on the Satyam scam has recommended that its erstwhile chairman and perpetrator of the fraud Ramalinga Raju be charged for 32 offences under the Indian Penal Code and The Companies Act. It says that Satyam made its first losses in 2007-08, and that promoter shareholding was corporatised in order to avoid short-term capital gains tax.

our investigative team also learns that Satyam's promoters pledged 3.61 crore shares of Maytas Infra, in an attempt to cover margin calls in December 2007. Pranshu Sikka reports.

It learnt from sources that the SFIO report has a number of major findings. The reports, sources say, recommends prosecution for Ram Mynampati, the Satyam employee who had taken Satyam’s charge as CEO intermediately post the Satyam scam. This prosecution has been recommended under Sections 201 sub-clause 1A, Section 211 sub-clause 7 and 8 and Section 209 sub-clause 5 of the Company’s Act. A then whole-time director, Ram Mynampati’s explanation in the scam involvement, SFIO says, is not “tenable” and therefore it recommends prosecution.

The Maytas connection

The SFIO has told the Ministry of Corporate Affairs that 3.6 crore shares of Maytas Infra were pledged by the promoters of Satyam Computers Services Ltd to meet the margin calls on December 18 2007.

There is another one very glaring connection: the report says Maytas Infra issued a public offer, a Mauitian firm acquired 38% equity share in the realty company. SFIO says these deals look suspicious and has forwarded the details of these deals to the Directorate of Enforcement for further investigation as it suspects that the money for this deal was routed through accounts of Satyam Computers Services Ltd.

Auditors’ role

About the role of Price Waterhouse, Satyam’s auditors during the scam, the SFIO has suggested their “connivance” with the then management of Satyam to carry out the fraud.

The SFIO is pretty damning in its report: it says the auditors did not understand complexities of electronic book keeping, which is a glaring accusation and added that the auditors did not even check 1% of the invoices submitted by the then management of Satyam, which again shows their whole callousness towards verifying the accounts.

The report has also recommended that the non-executive directors should refund the commission, which they have been paid to the tune of Rs 72 lakh odd over the past one year.

The fraud deconstructed

Sources say that, over the last ten years, the Raju brother had run over 374 companies. Out of these, about 158 odd ones, are directly under the scanner. 150 of these companies were involved in purchase of land whereas eight companies were involved in investments.

SFIO sources say that according to its findings, the Rajus were also selling their shares through four out of these eight companies. They did not want to sell the shares directly in the market because they thought that would impact the sentiment negatively and therefore they were selling their shares through these four investment companies.

As far as the companies involved in purchase of land are concerned, the money that was required was again being routed through these eight investment companies.

Another name which has emerged according to sources in the report is that Surya Narayana Raju, Ramalinga Raju’s brother. The SFIO report says he helped and abetted to the crime.

Source: CNBC-TV18


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