Ex-insider blew the lid off Satyam scam

THE shocking disclosure of the Rs 7,000-crore-plus scam that nearly brought down Satyam Computer Services may have been announced to the world by its disgraced founder, but it now transpires that B Ramalinga Raju’s confession was prompted by whistleblower action.
    A person who used the pseudonym of Jose Abraham, and claimed himself to be a former senior executive in Satyam involved with its contract with the World Bank, acted as the whistleblower whose email to a Satyam board member triggered a chain of events that culminated in erstwhile chairman Mr Raju’s decision to confess to the financial crime.
    These revelations form part of a 14,000-page report submitted by the Serious Fraud Investigation Office (SFIO) to the government earlier this week, which estimated the scale of the Satyam scandal to be Rs 7,333 crore as of end-September last year.
    Mr ‘Abraham’ had first written to the company’s independent director Krishna G Palepu on December 18, 2008 that Satyam did not have any liquid assets, and this fact could be independently confirmed from its banks, an official, who is privy to the confidential SFIO report told ET. The email was sent a day after Mr Raju was forced to abort Satyam’s plans to buy two companies linked to his family — Maytas Infra and Maytas Properties — after it ran into a storm of investor protest.
The email sent to Mr Palepu spread quickly among Satyam’s former board members, with Mr Palepu first forwarding it to M Rammohan Rao, another independent director in the company, the official said. Mr Rao thereafter forwarded the email to other board members VS Raju and TR Prasad, Satyam’s statutory auditor S Gopalakrishnan of Price Waterhouse.
    A copy of the email was also sent to B Ramalinga Raju, who had started receiving calls from members of the board’s audit committee, but did not respond to any of them. The SFIO report says Mr Raju held meetings with the company’s CFO and vice-president for finance G Ramakrishna, between December 25, 2008 and January 7, 2009 to work out a plan to hide the fraud.
    Failing to find a way out and concerned that he might be caught by capital market regulator Sebi and the US Securities Exchange Commission, Mr Raju issued his sensational confession in which he admitted to have cooked Satyam’s books for years, bringing the company to the brink of collapse. SFIO report’s crucial to initiate action; falsification began in ’01
THE official said the email acted as a catalyst for the former board members of Satyam to question Ramalinga Raju’s activities in Satyam. The investigating authorities could not, however, elicit any response from Mr Abraham when it sent questions to the email address used for communicating with Mr Palepu.
    The SFIO report will form the foundation for initiation of a criminal action against Ramalinga Raju, Rama Raju, Vadlamani Srinivas, Price Waterhouse officials S Gopalakrishnan and Srinivas Talluri, and two other company executives — senior manager finance D Venkatapathy Raju and finance manager C Srisailan.
    According to the investigation report, the falsification of the company’s accounts began in the financial year 2001-02 after there was an informal meeting between Ramalinga Raju, his brother Rama Raju and Mr Srinivas, apart from the company’s vice-president finance G Ramakrishna.
    The scope of the falsification of accounts, which was around Rs 234 crore in 2001-02 ballooned to Rs 5,422 crore by 2007-08 and Rs 7,333 crore by end-September 2008, the official said.
    Once ranked India’s fourth-biggest software exporter, Satyam will soon be taken over by smaller rival Tech Mahindra, which won an auction for a controlling stake in the Hyderabadbased company earlier this week.

 

 

 

BR Raju at Chanchalguda jail in Hyderabad

 

 

 

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