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Government's probe finds ex-Satyam directors guilty

January 29, 2009 01:58 IST

The government has decided to make all former Satyam Computer Services [Get Quote] top executives and board members, including the independent directors, answerable for the fraud in the company on grounds that they "attempted to enrich themselves unjustifiably at the cost of the company and its stakeholders".

Listing all the former top executives and independent directors, company secretary and Price Waterhouse auditors as respondents, alongside B Ramalinga Raju and his brother Rama Raju, the government said in a petition filed with the Company Law Board last week that some of them were even trying to escape from the country.

It added that Ramalinga Raju, Rama Raju, Rammohan Rao Mayanpati, independent directors M Srinivasan, K G Palepu, M Rammohan Rao, V S Raju and T R Prasad failed to discharge their duties. The government also pleaded for the inclusion of ex-Satyam CFO Srinivas Vadlamani as a party, saying that he had "full control over the operational, financial and policy decisions of the company".     

Incidentally, the bail petitions of Ramalinga Raju, his brother Rama Raju and the company's former CFO Srinivas Vadlamani were dismissed by the additional chief metropolitan magistrate today. In another development, market regulator Sebi on Wednesday said it would appeal against a magistrate court's order denying it permission to interrogate Ramalinga Raju and Rama Raju.

Based on the investigation report of the Registrar of Companies, Hyderabad, the government said: "There is every reason to believe that the affairs of the company were carried out with the intent to defraud creditors of the company and its shareholders for fraudulent purpose."     

Pointing a finger towards companies run by Ramalinga Raju's sons, the government said: "There is a nexus between the second respondent (Ramalinga Raju) and the person in control of Maytas Properties and Maytas Infra Ltd, who are the sons of the second respondent. There is every possibility of the cash reserves having been siphoned off at any point of time prior to the public admission made by Ramalinga Raju on January 7, 2008."

In a related development, the Andhra Pradesh chief minister Y S Rajasekhara Reddy on Wednesday said the state government would welcome a CBI probe into the Satyam case "if deemed appropriate".

In a letter to the prime minister, Reddy said: "The investigation so far has revealed embellishment of bank accounts by the company for more that seven years to impress the clients within the country and overseas. This inflation of the current account balance is testified by bank official concerned. The company raised money from non-bank financial companies by pledging shares. More than 300 companies were also raised by the close relatives of Ramalinga Raju and this facilitated insider trading of shares.''

On the Maytas issue, Reddy's letter said: "The investigation of the Satyam case includes a probe into connecting links between Satyam and Maytas," Reddy stated in the letter.

Meanwhile, PricewaterhouseCoopers' global CEO Samuel DiPiazza has rushed to India from Davos, where he was expected to attend the World Economic Forum. "He is here to discuss the situation in detail and to offer support to the firm in India," confirmed a PwC spokesperson. DiPiazza's visit comes after Price Waterhouse, PwC's audit arm, suspended S Goplakrishnan and Srinivas Talluri, who were the statuary auditors of Satyam and were arrested last week by the Andhra Pradesh police.

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