The conviction of B. Ramalinga Raju, the disgraced former chairman of Satyam Computer Services Ltd., B. Rama Raju, his brother and managing director, and some associates, closes a chapter on India’s biggest corporate fraud to date. In a way, the black sheep in the booming information technology industry have at last been nailed for their crimes. The accused were sentenced to a seven-year prison term for fudging accounts and inflating profits; for cheating investors and breaching the trust of thousands of shareholders; evading taxes and paying additional taxes at another point to justify the fictitious revenues they could not otherwise account for. These were not merely violations of law; the illegal actions brought corporate India, and its lynchpin, the information technology sector, under a dark cloud. It is therefore commendable that the meticulous work of investigators and judicial officers brought closure to a challenging trial that involved a voluminous amount of documents and electronic evidence. In the end, Mr. Raju received little sympathy despite admitting to the corporate fraud, which resulted in the abrupt fall of the $2 billion Satyam empire, which he announced through an e-mail to his colleagues, the Securities and Exchange Board of India and the stock exchanges. His actions clearly were motivated by the fact that the scale of the fraud was too big to sustain. Later, though, Mr. Raju sought to disown his admission and disputed the fact that he had written the e-mail that detailed the graft and fraud. Clearly, his attempt at deception failed.
The manner in which Mr. Raju sank from being the poster boy of the country’s software industry to a convict in a cheating case holds a lesson or two for the rest of the country in handling wealth, power and ambition. As a remand prisoner, he sought relief from the rigours of prison life by spending in a hospital much of a nearly two-and-a-half year stint in judicial custody. The seven-year jail term and the Rs.5.5 crore fine imposed on the Raju brothers is just punishment, though some would say it is too lenient considering the scale of the fraud. As for the others sentenced along with him, it is not often that auditors are held accountable for aiding and abetting fraud and forgery. The positive outcome of the Satyam story is that today there are greater initiatives to promote scrupulous and clean corporate governance — which inexplicably collapsed in this particular company — and better accounting standards. Thankfully, the industry survived the shock of the January 7, 2009, admission by Mr. Raju, and its aftermath, and what was then a modest $50 billion industry is now looking at revenues worth $146 billion in 2015.