Satyam case: Ramalinga Raju gets 7-yr jail; ordered to pay Rs5-cr fine

A special court in Hyderabad today sentenced B Ramalinga Raju, chairman of the now defunct Satyam Computers and nine others who were found guilty of criminal conspiracy and cheating in a Rs7,000-crore accounting scam. The verdict comes six years after the biggest corporate accounting fraud came to light in 2008.

Satyam promoter B Ramalinga RajuThe court also handed down a 7-year jail term and a fine of Rs5 crore for Raju.

All the 10 major accused in the Satyam Computer Services accounting fraud, including founder B Ramalinga Raju and his brother B Rama Raju, have been found guilty.

Raju and former employee G Ramakrishna were also found guilty under section 201 (causing disappearance of evidence of offence) of IPC by Special Judge BVLN Chakravarthi, in the case probed by CBI.

Judge B V L N Chakravarthi pronounced all of them guilty in what is considered the biggest corporate scam ever unearthed in India - said to be worth between Rs7,000 crore and Rs1,400 crore, depending whether or not one takes erosion of value for shareholders into account.

Sentences in the case will be pronounced on Friday.

Besides Ramalinga Raju, who was the founder-chairman of the company, the other accused are his brother and Satyam's former managing director B Rama Raju, former chief financial officer Vadlamani Srinivas, former Pricewaterhouse auditors Subramani Gopalakrishnan and T Srinivas, Raju's another brother B Suryanarayana Raju, former employees G Ramakrishna, D Venkatpathi Raju and Ch Srisailam and Satyam's former internal chief auditor V S Prabhakar Gupta.

The case had rocked corporate India and led to a massive upheaval in the software and information technology enabled services (ITeS) industry - the company was put up for auction under government supervision, and eventually bought by the Mahindra Group.

Trial of the case began on 8 November 2010 and was completed on 24 June 2014. During the course of the trial, the special court examined 216 witnesses and marked 3,038 documents. A final verdict was expected a month ago, but the court deferred it citing the sheer volume of documents.

B Ramalinga Raju, one of the pioneers of the Indian IT industry, confessed to manipulating his company's account books and inflating profits over many years. The confession came on 7 January 2009 (See: Satyam's Raju admits to fraud and resigns).

On 16 December 2008, Satyam had announced its board's approval for fully acquiring Maytas Properties for $1.3 billion, as well as 51 per cent in Maytas Infra for $300 million. The two companies were promoted by Raju and his sons.

The Satyam management, however, called off the deal on 17 December 2008, after investors expressed outrage at the decision (Shareholder revolt forces Satyam to dump Maytas bid).

In the letter, Raju had admitted, ''The aborted Maytas deal was actually a last attempt to fill the fictitious assets with real ones.''

He was arrested by Andhra Pradesh Police's Crime Investigation Department along with his brother Rama Raju and others on 11 January.

Raju and others were charged with offences like cheating, criminal conspiracy, forgery and breach of trust under relevant sections of the Indian Penal Code (IPC) for inflating invoices and incomes, account falsification, faking fixed deposits, besides allegedly falsifying returns through violation of various Income Tax laws.

In February 2009, the CBI took over the investigation and filed three charge-sheets over the ensuing year, which were later clubbed into one. The first two charge sheets dealt with the account fudging by Raju with the assistance of nine others, while the third charge sheet relates to "violation" of various Income Tax rules (Court orders CBI to club all three Satyam cases).

While the CBI accused Raju and the others of cheating, breach of trust by way of inflating invoices and incomes in the first and third charge sheets, the second one dealt with the accused allegedly falsifying returns through violation of various IT laws.

During the trial, the CBI alleged that the scam caused a loss of Rs14,000 crore to shareholders of Satyam, while the defence countered the charges saying the accused were not responsible for the fraud and all the documents filed by the central agency relating to the case were fabricated and not according to the law.

The Enforcement Directorate had also filed a charge sheet against them under Prevention of Money Laundering Act.

In January 2014, Ramalinga Raju's wife Nandini Raju and sons Teja Raju and Rama Raju were among 21 relatives of the former Satyam boss who were convicted by a Special Court for Economic Offences in Hyderabad for default in Income Tax payment.

Ramalinga Raju, Rama Raju, Vadlamani Srinivas and former director Ram Mynampati were sentenced to six months' jail on 8 December 2014 and fined by the Special Court for Economic Offences in connection with complaints filed by Serious Fraud Investigation Office (SFIO) for violation of various provisions of the Companies Act.

But the next sentence is likely to be considerably stiffer.