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Satyam Founder Raju Charged With Fraud Amid Sale
Posted on: 08-04-2009 , 04:: | DY365 Bureau

the nation’s equivalent of the FBI, filed charges against Satyam Computer Services Ltd, founder Ramalings Ranju  for his role in the country’s biggest corporate accounting fraud.

The changes include criminal conspiracy and falsification of accounts, and carry a maximum penalty of life in prison, CBI Deputy Inspector General V.V. Lakshmi Narayana said by phone yesterday. Raju’s brother and former managing director,Rama Ranju  and two partners at PricewaterhouseCoopers LLP’s Indian affiliate were among nine people charged in the case, he said.

Raju and his alleged co-conspirators will stand before a Hyderabad court as Satyam’s state-appointed board is pursuing a sale of the company to restore investor confidence and stem client defections. The 54-year-old founder of what was once India’s fourth-largest computer-services company triggered a 74 percent drop in Satyam’s stock after a Jan. 7 admission he inflated more than $1 billion of assets.

“If charges weren’t made then there would be a lingering question and skepticism about the ability of the regulators and the authorities to take action,” Jamie Allen secretary-general of the Asian Corporate Governance Association, said by telephone from Hong Kong. “So it’s a positive move from a corporate governance perspective and in terms” of India’s reputation.

S.Bharat Kumar  Raju’s lawyer, declined to comment, citing the need to see details of the so-called charge-sheet, a legal document listing the alleged offences. Kumar said he no longer represented Rama and that he didn’t have a contact number for his counsel K. Ravindra Reddy.

Satyam rose 1.3 percent to 45.8 rupees as of 12:14 p.m. in Mumbai trading. The benchmark Sensitive Index fell 2.2 percent.

Investigation, Charges

Aside from the Raju brothers who ran Satyam and the two partners from the company’s former auditor, authorities have also filed charges against four officials at the software provider’s finance department, according to a CBI release.

“We’ll keep on investigating and if anything comes up substantially, we may file a supplementary charge-sheet,” Narayana said.

Price Waterhouse India said it was disappointed with the CBI’s decision to indict its partners. “The two Satyam audit partners and Price Waterhouse India were victims of” the fraud, the accounting firm said in an e-mailed statement yesterday.

Gopalakrishnan, who was suspended in January, had retired at the end of March and Talluri remained under suspension pending resolution of the Satyam probe, Price Waterhouse said.

‘Victims of Fraud’

“PwC’s view is that they’re victims of the fraud and that might very well be the case,” Allen said.

Amit Desai, Talluri’s counsel, couldn’t immediately confirm if his client had received a copy of the charge-sheet as it was “filed late yesterday evening,” he said by telephone. Contact details for M. Natarajan, Gopalakrishnan’s lawyer, weren’t immediately available.

The CBI’s 65,000-page submission includes a 300-page charge-sheet, depositions by 433 witnesses and 1,532 documents, the federal investigating agency said.

Satyam plans to announce the winning bid for 51 percent of the company on April 13, director Deepak prakesh  said last week. Larsan &Toubro Ltd, India’s largest engineering firm, and Tech Mahandra Ltd ,the software-services provider partly owned by BT Group Plc, have said they may bid. Cognizant Technology Solutions Corp. may team up with billionaire investor wilbur Ross  and bid for Satyam, the Business Standard reported on April 4, citing an unidentified banker.

International Business Machines Corp. may pull out of the bidding for Satyam because of fears about possible lawsuits in the U.S., the Business Standard reported, citing an unidentified investment banker familiar with the situation.

Raju’s disclosure triggered probes including inquiries by India’s Serious Fraud Office and markets regulator and several lawsuits by investors in the U.S.


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