Raju diverted ‘salaries’ of 13,000 non-existent Satyam staff: CIDhttps://indianexpress.com/article/news-archive/web/raju-diverted-salaries-of-13-000-nonexistent-satyam-staff-cid/

Raju diverted ‘salaries’ of 13,000 non-existent Satyam staff: CID

Sixteen years after he founded Satyam,B Ramalinga Raju allegedly began work on building another,more shadowy empire: channeling ‘salaries’ of non-existent Satyam employees....

Sixteen years after he founded Satyam,B Ramalinga Raju allegedly began work on building another,more shadowy empire: channeling ‘salaries’ of non-existent Satyam employees into land purchases by ghost companies,and forging bank statements and NBFC certificates to hoodwink auditors.

By the time the scandal exploded in India Inc.’s face,Raju had allegedly diverted a massive stash of Satyam’s money to his empire of fraud — siphoning off,on an average,Rs 20 crore every month,cash that was shown in Satyam’s books as the salary bill of nearly 13,000 employees who did not,in fact,exist.

Top investigators in the Economic Offences Wing of the Andhra Pradesh CID told The Indian Express that Raju’s youngest brother Suryanarayana Raju was his chief lieutenant in the operation. The elusive and low-profile Suryanarayana actually played a far bigger role in the scam than Raju’s other brother,B Rama Raju,the CID now believes.

Raju’s counsel Bharat Kumar rejected news reports on the nature and extent of the scam based on anonymous sources among the investigators.

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“The media have been covering this issue extensively well within their rights but it is very unfortunate that a section of media is carrying absolutely distorted facts,versions regarding the investigations depicting certain issues without any basis,” Kumar said.

CID sources said the chain of events that led to the scandal began some time around 2003,when Satyam Computer Services,founded in 1987,was a major company,one of the four pillars of the IT industry,and its founder a celebrated figure among India Inc.

Ramalinga Raju began to open hundreds of salary accounts every month in the names of fictitious Satyam staff. In random ‘recruitment drives’ in campuses,Satyam offered jobs to thousands,but no appointment letters were ever issued. On paper,Satyam’s workforce swelled to 53,000,though the actual number was no more than 40,000. ‘Salary accounts’ however,continued to be opened,and ‘salaries’ were deposited in them.

The money in these accounts flowed to benami companies and real estate fronts who bought up vast swathes of land,mainly in Ranga Reddy,Nalgonda and Hyderabad,mostly through real estate broker Akula Rajaiah,the CID’s Public Prosecutor K. Ajay Kumar told the court of the Sixth Additional Chief Metropolitan Magistrate here today.

Kumar told the magistrate that Raju had confessed to making at least 400 benami transactions to buy land across Andhra Pradesh. Raju transferred Satyam shares to his brother Suryanarayana Raju and mother Appalanarsamma,resulting in a loss of nearly Rs 7,400 crore to small investors.

Satyam’s balance sheets showed fixed deposits worth nearly Rs 3,000 crore. According to the CID,Raju backed the FDs with forged bank statements. A fake statement from HDFC Bank’s Bashirbagh branch had been found in raids,the CID said.

The CID sought custody of Raju and Satyam’s former Chief Financial Officer V Srinivas for another three days,but got only one more day from the court. The CID did not seek further custody of B Rama Raju.

Additional Director-General of Police (CID) A Siva Narayana told The Indian Express that they had found documentary evidence that may help them link diversions of Satyam money to purchases of land. In raids on flats,bungalows,offices and safehouses of Raju and Suryanarayana Raju,the CID on Wednesday night and Thursday morning seized more than 100 sale deeds,land and property transaction records,records of hundreds of bank accounts,and documents that confirmed at least two dozen benami companies of the Rajus.

Meanwhile,US-based investor Lazard Asset Management has sold its entire stake of over 5 per cent in Satyam for about Rs 77 crore through open market transactions,the Bombay Stock Exchange was told today.

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Insurance major LIC,which has equity investment and board representation in Satyam,said the firm was still valuable and could be revived with the right leadership.