Satyam fraud accused sent back to jail

22 January 2009

While sending both former Satyam chairman B Ramalinga Raju and his brother Rama Raju back to Chanchalguda jail under police custody, a magisterial court in Hyderabad noted the prosecution's argument that Satyam's employee strength had been greatly inflated, and as much as Rs20 crore a month was siphoned off in the name of non-existent employees.

Public prosecutor Ajay Kumar also said Raju was involved in as many as 400 suspicious land deals in Andhra Pradesh, where Satyam is based.

Hundreds of acres of land were bought on benami accounts (including that of his aged mother), and HFDC Bank documents were also forged. He said of the 52,000 employees on Satyam's books, 12,000 were fictitious.

The latest charges cast serious doubt on Ramalinga Raju's claims that the massive fraud was an elaborate attempt to keep the company afloat, and that he did not personally benefit from the scandal.

The 6th additional chief metropolitan magistrate granted extension of police custody of the two till 4 pm on Friday. Former chief financial officer Srinivas Vadlamani's custody was also extended. The court dismissed the contention of Vadlamani's lawyer that nothing substantial has come out of the four days of CB-CID interrogation and ''there is no specific mention of insider trading and siphoning of funds in CB-CID petition''.

Interestingly, the Criminal Investigation Department, which prepared the prosecution's case, did not ask for documents that have been seized by other agencies like the Serious Fraud Investigation Office (SFIO) and the Registrar of Companies (RoC), saying it would serve no purpose.