Almost six years after he confessed to committing a corporate accounting fraud that has been billed the biggest in the country’s history, a special CBI court on Thursday sentenced B Ramalinga Raju, founder of Satyam Computer Services, to seven years’ rigorous imprisonment along with a fine of Rs 5 crore. He was found guilty of forging documents and falsifying accounts in the R7,000-crore accounting fraud scandal. Besides Raju, nine others were given seven years’ jail terms by the court in Hyderabad.
Additional chief metropolitan magistrate BVLN Chakravarthi convicted the 60-year-old Raju and nine others in the case that rocked corporate India after Raju confessed to fudging accounts to the tune of over R7,000 crore in January 2009. The CBI had already charged the 10 accused of fabricating invoices, falsifying accounts, impersonation and faking fixed deposit receipts, causing a loss of over R14,000 crore to lakhs of shareholders.
Though industry leaders and corporate lawyers welcomed the judgment, they pointed out the shortcoming in the Indian judicial system that it took so long to deliver justice in a case where the confession was made by Raju himself. Noted lawyer Harish Salve said the case has taken long as “we do not have the infrastructure in our courts to deal with these kind of cases. It has shown that even if it takes time, we are now matured enough to deal with these kind of complex cases of corporate fraud and investigate them thoroughly and at verdict.”
Former Sebi executive director JN Gupta while stating that it will make sure that in future such things are brought to justice, lamented that it took so long for the verdict to come. “If we remember, the admission was sometime in January 2009 and we are in April 2015. Over six years have passed. I think there is a need that system should be improved and justice should be done in timely manner,” Gupta said.
Echoing similar sentiments, another ex-Sebi executive director, PR Ramesh, said that while the order is good, it “came in quite late… This is a case where there has been admission and after such a long time order is coming… The system has taken lot of time to come up with a conclusion on the offence that was contested. This actually creates a need for fast-track courts for this type of corporate fraud,” he said.
“All the accused have been convicted of almost all charges,” special prosecutor K Surender told reporters outside the court. “The fraud had a larger impact on the society at large,” he added.
Ramalinga Raju has already served 32 months in jail. Raju and the others are likely to appeal for bail in the high court in the next few days.
According to the court order, the crime was registered in January 9, 2009, by the CID based on a complaint lodged by Nahar Singh against Ramalinga Raju, his brother B Rama Raju and other directors. Ramalinga Raju and his brother Rama Raju were convicted under Section 409 (criminal breach of trust by merchant or agent), while CFO Vadlamani Srinivas, external auditors S Gopalakrishnan and Talluri Srinivas and vice-president (finance) G Ramakrishna were convicted under Section 406 (criminal breach of trust). Price Waterhouse auditors Gopalakrishnan and Talluri Srinivas and Ramakrishna were also convicted under Section 419 (impersonation). Besides, the 10 accused were convicted under sections 467, 468 (forgery), 471 (using forged documents as genuine) and 472-A (fudging of accounts) and 201 (destruction of evidence) as well.
“This was one of the biggest corporate fraud in independent India having international ramifications. It was a complicated case involving digital evidence, computer forensic techniques, audit procedures, accounting standards, revenue records, source codes, computer network logs, etc,” the court order said.
Meanwhile, PricewaterhouseCoopers, parent of Price Waterhouse, said in a statement, “We are disappointed with this verdict given by the court of Additional Chief Metropolitan Magistrate at Hyderabad. As we have said many times, there has never been any evidence presented that either of our former partners S Gopalakrishnan or Srinivas Talluri were involved in or were aware of the management-led fraud at Satyam. We understand that Gopal and Talluri are considering filing an appeal against this verdict.”
Earlier, the Securities and Exchange Board of India (Sebi) had barred Ramalinga Raju, Rama Raju, Srinivas and Gupta from the capital markets for 14 years, besides ordering them to cough up R1,848.93 crore with 12% interest from 2009 for making unlawful gains from the company.
However, the accused have challenged the Sebi order. Further, the Enforcement Directorate (ED) has also filed a charge sheet against 213 people including Raju and 166 firms under different provisions of Prevention of Money Laundering Act, and attached different properties belonging to them.