Hyderabad:The Central Bureau of Investigation (CBI) has arrested three senior executives of Satyam Computer Services Ltd for their alleged involvement in preparing fake bank statements and documents that contributed to the Rs7,136 crore accounting fraud at the firm.
G. Ramakrishna, vice-president (finance), D. Venkatapathi Raju, senior manager (finance), and C. Srisailam, manager (finance), were presented before the magistrate of the CBI court in Hyderabad on Monday afternoon and sent to judicial custody till 15 April, V.V. Laxmi Narayana, deputy inspector general of CBI, said.
The arrests, which took place late on Sunday, come after Satyam chief financial officer (CFO) Vadlamani Srinivas had told audit standards body Institute of Chartered Accountants of India (Icai) that the firm’s management had given forged documents to its auditors Price Waterhouse, the Indian affiliate of global auditing firm PricewaterhouseCoopers.
In the net: Satyam staffers D. Venkatapathi Raju (L) and C. Srisailam after being produced in Nampally court on Monday. The two, along with a third employee, G. Ramakrishna, were sent to judicial custody till 15 April. PTI
The CFO had earlier said in his confessional statement to the police in January that Ramakrishna used to handle the audit of account books, and his own role was limited to examining the balance sheets and profit and loss statements at the end of every quarter.
Icai president Uttam Prakash Agarwal said Vadlamani gave a similar statement on his role in auditing Satyam’s books before the Icai committee on Sunday. He also absolved Price Waterhouse, saying they had relied on the fake documents submitted to them.
The jailed Price Waterhouse auditors—S. Gopalakrishnan and Srinivas Talluri—had pleaded innocence before Icai on Sunday.
The arrests are the first by CBI in the Satyam case after it took over the investigations from the Andhra Pradesh Crime Investigation Department, on 17 February. So far, nine persons have been arrested in connection with India’s biggest corporate fraud, including the three finance department executives.
The fraud at the software services outsourcer came to light after its founder B. Ramalinga Raju on 7 January confessed to fudging the firm’s accounts over several years.
Of those arrested, D. Gopalakrishnam Raju, general manager of SRSR Advisory Services Pvt. Ltd, a financial advisory services firm serving Raju family entities, has obtained bail from a local court. B. Suryanarayana Raju, Ramalinga Raju’s younger brother, had also obtained anticipatory bail from the court on 5 March.
Meanwhile, market research and consultancy firm Forrester Research has advised its clients, who have Satyam Computer Services as their technology vendor, to immediately finalize a ‘plan B’ in view of the impending sale of Satyam.
In a report on Monday, Forrester country manager Sudin Apte says, “To protect their own interests and ensure continuity of service, clients need to accelerate finalization of their ‘plan B’ and keep a close watch on which firm buys Satyam to decide if and when to pull the trigger to shift to that ‘plan B’.”
Forrester counts engineering and construction firm Larsen and Toubro Ltd (L&T), which has an information technology (IT) arm, and International Business Machines Corp. as the front-runners to buy a 51% stake in Satyam, which has been put on sale by a government-appointed board.
“L&T has the most service overlap and relevant IT industry experience. Its corporate reputation, ability to manage mergers and acquisitions, and overall reputation in Indian industry, including its relationships in government agencies, make it the most likely winner...,” the firm says in its report.