Founder of Satyam Found Guilty of Fraud ; 10 People in All Convicted over Accounting Fraud at Software Services Firm

By Najar, Nida | International New York Times, April 10, 2015 | Go to article overview

Founder of Satyam Found Guilty of Fraud ; 10 People in All Convicted over Accounting Fraud at Software Services Firm


Najar, Nida, International New York Times


Ramalinga Raju, the former chairman of Satyam Computer Services, and nine other people were found guilty of criminal conspiracy to commit fraud.

An Indian court on Thursday sentenced the former head of Satyam Computer Services, the software outsourcing company, and nine others to seven years in prison after a trial over one of the largest corporate accounting frauds in India's history.

Ramalinga Raju, the former chairman of the Hyderabad-based company; his brother B. Rama Raju and eight others -- including two partners of an Indian affiliate of the accounting firm PricewaterhouseCoopers -- were found guilty of criminal conspiracy to commit fraud.

Ramalinga Raju was also convicted of criminal breach of trust, misappropriation of documents, fabrication of documents and falsification of accounts to the company board. The Raju brothers were fined 50 million rupees each, or about $800,000.

Investigators had estimated the loss to investors from the fraud at more than $2 billion.

The case came to light in 2009 when a resignation letter written by Ramalinga Raju, who founded Satyam, was made public, including an admission that $1 billion in cash that was on the company's books did not exist. In a later confession, he said that he had been falsifying records for seven years, in part to keep control over the company.

According to a charge sheet filed by the Indian Central Bureau of Investigation months after Mr. Raju's resignation from Satyam, the fraud involved more than 7,000 forged invoices, dozens of fake bank statements and thousands of overpaid, unnecessary employees. The agency wrote in an 80-page report on the case that the company was able to "make hay while the sun was shining" by selling shares while carrying out the fraud. Satyam attracted potential customers and investors by making them believe that the company was doing a high volume of business, according to the report.

Mr. Raju, who was educated in India and the United States, rose to prominence along with Satyam in the late 1990s, just as the information technology outsourcing business was taking off in India.

"The I.T. offshore business was pioneered by Satyam," said Kingshuk Nag, who wrote a 2009 book on the fraud. …

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