Hyderabad: The chairman of Satyam Computer Services will appear in court on Saturday, a police official said, a day after he was arrested on charges relating to India’s biggest corporate scandal. Ramalinga Raju and his brother B Rama Raju, co-founder and managing director, were arrested late on Friday on charges of criminal breach of trust, criminal conspiracy, cheating, falsification of records and forgery.
At Saturday’s hearing authorities will seek permission to hold Raju and his brother in custody for further interrogation, said V S K Kaumudi, inspector general of police in the crime investigation department in the southern city of Hyderabad.
Satyam, which specialises in business software and back-office services for clients including General Electric and Nestle, is based Hyderabad.
Chairman and founder Raju resigned on Wednesday after revealing years of accounting fraud, including an admission that about $1 billion, or 94% of the cash and bank balances on Satyam’s books at end-Spetember, did not exist.
The board of Satyam, which was scheduled to meet on Saturday, has been dissolved by the government and a minister has said a new board would be constituted with 10 members, which would meet within seven days.
There was no move at this time, however, to take over Satyam’s management, said Corporate Affairs Minister Prem Chand Gupta on Friday.
Analysts said Satyam’s very existence was threatened by the scandal, which stand-in Chief Executive Ram Mynampati said has pushed the company into a crisis of unimaginable proportions.
The company’s market value has shriveled to $330 million, from more than $7 billion six months ago.
Satyam’s interim CEO Ram Mynampati said on Thursday the chief financial officer had also offered to resign after Raju’s admissions.
Several securities fraud class action lawsuits have been filed in the United States on behalf of investors who bought Satyam American Depository Receipts (ADRs) in the last five years.
Raju was questioned by the police early on Saturday morning after overnight interrogation regarding the Rs7,800 crore fraud, engineered by him in the company.
“Raju underwent medical check-up early this morning as he is a diabetic and hypertension patient. ” Raju’s lawyer Bharat Kumar said.
SFIO team asked to get magistrate permission to quiz Raju
A team from the Serious Fraud Investigation Office of the Corporate Affairs Ministry today sought access to Raju, but was told by the Andhra Pradesh Police to get permission from the magistrate.
The SFIO team had reached the state director general of Police’s office to question Raju and his brother Rama Raju.
Additional director general of Police-CID A Sivanarayana said: “They (SFIO) have to obtain permission from a magistrate.”
He said Satyam’s chief finance officer Vadlamani Srinivas has not yet been arrested.
Earlier, a Sbi team had sought access to Raju, but was also asked to follow the same procedure.