‘Raju, his brother Rama Raju and CFO Srinivas Vadlamani were cornered on all fronts and had no other option but to make the confessional statement and surrendered before police’
The Central Bureau of Investigation (CBI) has informed the special court where final arguments on the fraud in Satyam Computer began on Thursday that the former company chairman B. Ramalinga Raju’s confessional statement on January 7, 2009, was not at all the trigger for exposure of the Rs. 14,000 crore scam.
The investigating agency has said that Ramalinga Raju had confided to employees of DSP Merrill Lynch about the illegalities in the company on January 5 and the same was brought to the notice of Securities and Exchange Board of India (SEB) by DSP ML the next day.
Ramalinga Raju had to resign due to depleted share holding because he knew that the next management of the company would in any case come out with facts and lodge a police complaint.
Thus, Ramalinga Raju, his brother and managing director Rama Raju and chief financial officer Srinivas Vadlamani were cornered on all fronts. Ramalinga Raju had no other option but to make the confessional statement and surrendered before police.
The shares of Raju brothers and their family members fell to around 1.6 per cent by December 31, 2008, and as such could not continue in their positions in the company. By that time, the fraudulent acts that went on for several years was making rounds in the company through an e-mail sent by one Jose Abraham.
Explaining the modus operandi adopted by the brothers and Srinivas, the special public prosecutor of CBI, K. Surender said they set the revenue targets for the next quarter during the investor calls.
They created seven fake customers against whom purchase orders were raised and invoices designed. The fake invoices of seven customers were shown as revenue. The fake revenues finally found their way into the annual financial statements to present a rosy picture about the company.
The fake revenues increased the liability of the company as it had to declare dividends without earning profit. It resulted in additional income-tax liability which further led to fabrication of tax records.
The external auditors S. Gopalakrishnan and Talluri Srinivas extended their support in documentation and tax payments.
The shareholders lost to the tune of Rs. 12,400 crore and other investors Rs. 1,600 crore in the process. The personal gain to Rajus was about Rs. 700 crore and 1,000 immovable properties. They raised loans to an extent of Rs. 2,000 crore by pledging shares.
‘Raju, his brother Rama Raju and CFO Srinivas Vadlamani were cornered on all fronts and had no option but to surrender before police'