The ministry of corporate affairs (MCA) has said that all banks related to the financial affairs of Satyam and its eight subsidiaries will come under the investigation of the serious fraud investigation office (SFIO) to ensure if there were any wrongdoing on their part. According to a MCA official, the SFIO would conduct the investigation under section 234, 209 (A) and 235 of the Companies Act, 1956. These acts relate to scrutiny of document, inspection of documents for investigation respectively.

According to section 234 of the Companies Act, 1956, the company is given a written order with respect to any matter to which such document relates to, and the company is supposed to submit the documents asked for within a specified time period.

The Companies Act empowers the central government to inspect the books of accounts of a company, to direct special audit, to order investigation into the affairs of a company and to launch prosecution for violation of the Companies Act, 1956. Books of accounts and other documents of the companies are inspected by the officers of the directorate of inspection and investigation authorized for this purpose under section 209A of the Companies Act and the Registrars of Companies. These inspections are designed to find out whether the companies conduct their affairs in accordance with the provisions of the Companies Act, to see whether any unfair practices are not being resorted to by the company which is not in the public interest. As per section 235 of the companies Act, 1956, the central government may appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the central government may direct.

B Ramalinga Raju, former chairman of Satyam, had said that the company had Rs 5,040 crore in non-existent cash and bank balances on its books. The company has stated that another Rs 3,308.41 crore had been parked in long-term fixed deposits. Although the break-up of these investments is not available, Satyam has listed BoB, BNP Paribas, Citibank, HDFC Bank, HSBC and ICICI Bank as it principal bankers.

The company had also shown a balance of Rs 1,166.89 crore in various current accounts that earn zero interest, which was the reason that made the government investigators and regulators, think about it.

Satyam has claimed deposits of nearly Rs 180 crore for the year ended March 2008 in international branches of several global banks. These include Banco do Brasil, China Merchants Bank, Dresdner Bank, HSBC Bank, Kookmin Bank, KSB Bank, BNP Paribas, Citibank, Citibank International, Mitsui Sumitomo Bank, UBS, UniCredit Banca, United Bank, Wachovia Bank and Woori Bank.

Fact or fiction?

• Satyam has stated that Rs 3,308.41 crore had been parked in long-term fixed deposits

• Although the break-up of these investments is not available, Satyam has listed BoB, BNP Paribas, Citibank, HDFC Bank, HSBC and ICICI Bank as it principal bankers

• The company had also shown a balance of Rs 1,166.89 cr in various current accounts

• Satyam has claimed deposits of nearly Rs 180 crore for the year ended March 2008 in international branches of several global banks like Banco do Brasil, China Merchants Bank, Dresdner Bank, HSBC Bank, Kookmin Bank, KSB Bank, BNP Paribas and Citibank