BackThe preemptive redemption of Ramalinga Raju
On 8 December, Raju was fined Rs10.5 lakh in six different cases, but the big judgement, in the case filed by CBI, is just ahead of the man, on 23 December
Premium
It is an unmistakable entry of someone who is important. And rich.
At 10.22am, a blue BMW 7 Series, 740 Li, AP 29 N123, pulls into the courtyard of the parking lot of the Nampally Metropolitan Court in Hyderabad. There’s commotion, stares. Two men step out, Teja Raju and Rama Raju, the children of B. Ramalinga Raju. Dressed alike in crisp light-blue shirts and formal trousers, they survey all around them: two cameramen, standing on the far left, behind the iron fence, which separates the court and the busy, dusty street outside; the woman sweeping the floor inside the court some distance away; men of various distinctions fumbling with their black lawyer robes; people trying to park their motorcycles.
The brothers head inside. A security guard and the BMW driver keep a close watch over the car.
It is 13 November 2014. Five years and 10 months since the Satyam scandal first came to light, or, to be precise, 2,136 days after Raju’s confession letter first hit the Bombay Stock Exchange (now known as BSE). Since then, the world has changed. Osama bin Laden is dead; Vijay Mallya, the King of Good Times is but a pale shadow of himself, a wilful defaulter; what used to be Andhra Pradesh is now two states; Chetan Bhagat has written four more best-selling novels; and Bernie Madoff, the perpetrator of the largest, longest and widest Ponzi scheme in history, (which incidentally broke just weeks before Satyam: December 2008), has been sentenced to 150 years in prison.
But then again 13 November is an important day.
It is the day for the first hearing in the case slapped by Securities and Exchange Board of India (Sebi) on Ramalinga Raju, 60, his kin and several others associated with Satyam. The charge: of having committed a sophisticated white collar financial fraud with a pre-meditated and well thought out plan and deliberate design for personal gains and to the detriment of the company and investors in its securities. Closing a five-and-a-half-year long probe, in September 2014, Sebi barred Raju and four others from the markets for 14 years. For good measure, it also asked them to return ₹ 1,849 crore worth of unlawful gains with interest.
Raju is contesting the ban and the fine. So are all the other accused.
As the brothers make their way to the court room, one of us trails to see if they are up for a chat. Teja, the elder of the two siblings, is greeted by one of his lawyers, Ramakrishna Raju, in the corridor.
Only, Teja denies that he is Teja, and claims he is a lawyer.
Then he shuts up and follows his brother inside the court room. The brothers occupy corner seats in the rectangular room. Rama Raju junior, the younger one, sits next to a window (on his right), Teja on his left.
At 10.28am, a black Honda Accord, AP 28 B 0123, pulls into the courtyard. A man seems to have been waiting for it. As soon as the car comes to a halt, next to the BMW, he reaches out to open the door. Ramalinga Raju steps out. Dressed in a cream coloured shirt, dark brown trousers and sandals. He is clutching a folder in his left arm and a pen in his right hand. Clean shaven and bespectacled, Raju looks a little tired but composed. Perhaps contrary to what one would expect, he is well turned out. Unlike his sons, Raju doesn’t look around. He looks ahead, in a way not making eye contact with anyone and paces straight towards the courtroom.
The Metropolitan Court is a crowded, stuffy, noisy mess of lawyers, touts, policemen, thieves, beggars, drug addicts, rapists, terrorists, politicians, white collar criminals and their relatives and well-wishers. The Sebi hearing is inside court hall of the special judge of economic offences. The notice board outside has a flimsy chart stuck to it. It states that the judge has 12 cases to look at; one judgment, one for arguments and the rest for appearance and bail. The last two cases on the list are Sebi vs B. Ramalinga Raju; one for unfair trade practices and another for violation of insider trading regulations.
Raju is already in. Seated in the last row on Teja’s left, just before the wooden palisade, reserved for the accused. At the centre of the room, several lawyers are busy studying documents and giving one final look at the applications of their clients. The other accused—B. Rama Raju, Vadlamani Srinivas, B. Suryanarayana Raju, G. Ramakrishna, V.S. Prabhakara Gupta—are all outside the court room along with several other accused whose cases will be heard during the day.
The judge isn’t in yet. The room has a lot of chatter but Raju is in a quiet zone of his own, studying some papers on his lap. He scribbles intermittently. Occasionally, he checks the time on his leather wristwatch. He then has a quick word with Teja. His other son, Rama Raju seems distant and uninterested, occupied with the world outside the window, the foliage of trees or the bustling parking lot. Or perhaps the BMW. The courtroom is getting noisier, so the attender yells, “Silence, Silence." Everyone calms down.
At 10.47am, the judge, M. Laxman walks in. The room goes quiet. Everybody stands up. Hands rising to their chest in a namaste. After the judge takes his seat, everyone sits down. The proceedings begin.
“M. Chander Yadav, T. Mukesh Singh," the bench clerk announces. The peon outside repeats. The two men come in, bow before the judge, while their lawyers submit their respective applications. The judge hears them for about 90 seconds before giving the next date for appearance. The bench clerk repeats the date; the parties bow their heads with folded palms and walk out. The process is repeated. One after the other, names are called out—Aman Singh Thakur, Hanuman Das, Yadagiri Goud, P. Bhoopathi Rao.
Raju silently watches the proceedings. Some 15 minutes later, his name is called out. He stands up and walks towards the open end of the palisade. Teja escorts his father. Rama Raju follows. As the names of the other accused are called out, all of them troop inside the courtroom. While the others are quiet, Teja strikes up a conversation with a representative from the legal department of IL&FS Engineering and Construction Co. Ltd, the successor of Maytas Infra Ltd, a company he once headed. The two discuss the status of a few real estate projects. The executive is visibly delighted to be recognized by his former boss. (Maytas was renamed after it was taken over by Infrastructure Leasing and Financial Services Ltd in the aftermath of the Satyam crisis).
The judge asks all the accused to stand in the order their names were called. They do, with a bit of nervous shuffling. The clerk reads out their names again, just to be sure. Proceedings begin.
The lawyers of the accused, almost 10 of them, crowd around the judge’s high table to present their contention. They speak in a low voice. The judge listens to them, then says something to one of his clerks seated on his right, before focusing on the lawyers again. Ramakrishna Raju is doing most of the talking. It is taking a while. Throughout, Raju stands still, hands behind his back. Staring at the group of lawyers and the judge. The others look around the room, their gaze drifting without making eye contact. While the other cases were disposed in less than five minutes each, the Satyam fraud case goes on for about 20 minutes.
And just like that, things quieten down further; the judge has made his decision. He orders each of the accused to furnish a personal bond of ₹ 20,000 and sureties for a similar amount. The deadline is 22 December, the date when the next hearing will take place.
Raju seems relieved. A little smile escapes his lips for an instant, his eyes lighting up. A slight hum returns to the court room and the hall outside. Everyone, including the lawyers and accused leave the room. Smiling and chatting. While the others get busy with their legal aides to sign the bond papers, Teja and his brother strike a conversation with their uncle B. Rama Raju, but senior Raju doesn’t hang around. He waves to his brother and leaves the court hall, heading straight towards his car. There’s a man waiting for him, to open the door. Raju steps inside. And it is most likely that he is headed home. To his bungalow at Plot No. 1,242, Road No. 62, Jubilee Hills.
Raju has been home for the last three years. Since November 2011. Leading a quiet, normal life. In a way, quite similar to his days when he was at the helm of Satyam.
Even now, he is an early riser, sometimes waking up as early as 5 in the morning. He exercises daily. He spends a large part of his day though attending to legal matters, but that’s more out of necessity than choice. After all, his life revolves around the Metropolitan Court and the various cases against him and some of his family members; there’s the Central Bureau of Investigation (CBI) case to start with, then cases by the Enforcement Directorate (ED), Serious Frauds Investigation Office (SFIO) and Sebi. To get him through this, he has a team of lawyers, the best in Hyderabad and perhaps the country. They report to him on a daily basis, so much so that a close aide compares Raju’s legal team to that of a corporate office.
There have been other bumps in the last few years; some serious ones especially in the health department. Raju suffers from Hepatitis C, a liver disease. He suffered quite a bit when he was in jail. It was partly the reason why he was granted bail in late 2011. Back then the doctors tried quite a few traditional drugs but they weren’t working. Raju lost a lot of weight. In early 2013 the doctors administered an experimental drug, which is still not approved in India, and is in the Food and Drug Administration trial stage in the US. Raju wanted to take the risk. “He had to take 14 injections week after week," says a close family friend who requested not to be identified. “At the time, he couldn’t eat and was only on liquid diet. It was a tough phase but Raju was in touch with close friends. Early this year those drugs started showing results."
Those setbacks, notwithstanding, Raju leads a comfortable life. If there’s one thing he used to love and still does, it is books. Something that didn’t change when he was at Satyam, two years in jail or now at home. In fact, Raju has a huge library in the basement of his bungalow. So reading is a part of his daily routine and his interests include genetics, biology, particle management, physics, astronomy, management and economics. A few months back, he completed Capital in the Twenty-First Century, the globally acclaimed book by French economist Thomas Piketty. He quite liked it and recommended it to his close friends.
He doesn’t step out much though. While he was always an introvert, in the heydays of Satyam, Raju was on the road quite a bit. And there were plenty of invitations for social dos. Those have come down. He has also become a bit choosy, and attends marriages and other functions of only relatives or close friends. One such was the wedding of the daughter of P. Murali Krishnam Raju, founder of MAA Television. Another was the wedding of director Ram Gopal Varma’s daughter.
Early this year, he also attended “Bidda", a ceremony held by the kshatriya Raju community in Hyderabad.
He is pretty thick with his friends though, especially three dating back to his college days in Vijayawada. Two are doctors at Hyderabad’s Care Hospitals, the third is an IAS officer and they drop by at his place often. It is with them that Raju feels comfortable—often cracking jokes and discussing the next big thing that will change the world, a recurring theme of his conversations. Sometimes, all of them go out for a movie, although Raju has to be persuaded to do this, says a person close to Raju, who spoke on condition of anonymity.
Raju’s friends insist that he has never been the flashy and flamboyant businessman he was made out to be. They say that while he might have erred, he is at heart a “simple person with simple tastes." So he never had the 1,000 designer suits, 321 pairs of shoes, or 310 belts some reports said he had. In fact, Raju’s former colleagues say, they had a tough time convincing their boss to suit up appropriately. “Our biggest problem used to be to get him to wear new suits. I am not exaggerating," a former colleague who now works for one of the top five IT firms in the country said.
The only things that made Raju happy were Satyam being called “the biggest company from Andhra Pradesh or being a top employer" a person close to Raju said.
His former associates describe him as a visionary and innovative thinker who had a powerful influence on them. Raju, they say, is someone who sets the agenda for the next 10-15 years. For instance, he foresaw an opportunity in e-commerce in India way back in 1999-2000. Raju commissioned a project in supply chain and management education space to set up a world-class school focused on e-commerce. A person who worked on the project and didn’t want to be identified says Raju envisaged the Satyam Institute of E-business exactly on the lines of the Indian School of Business. The idea was shelved a few years later.
“He is a dreamer. He dreams only big things," said the person close to Raju. He spoke on the condition of anonymity. “But now he knows the limitations." Raju, according to this person, is helping his children start their lives all over again. The family believes the court ruling, whichever way it goes, will enable the two sons, Teja and Rama Raju junior to move on.
In fact, the two siblings have already begun work on an ambitious project. They are building a technology platform that integrates different players in the healthcare ecosystem: doctors, diagnostic service providers, pharmacists, nurses, and paramedics. The company, CallHealth Services Pvt. Ltd, will bring end-to-end medical services to the doorsteps of patients—a sort of telemedicine model. A 22-member recruiter team is aggressively hiring management and ground staff for the past six months. About 700 customer care executives and nurses are undergoing training at a facility in the Kompally locality in Secunderabad, people with knowledge of the matter said.
Teja Raju declined multiple requests for an interview. So did his father Ramalinga Raju.
It is another matter altogether that in Hyderabad, few people find this unusual—a man accused of carrying out one of the biggest financial frauds in the country, to the tune of more than ₹ 7,000 crore, enjoying a life of peace and comfort. The common refrain among businessmen and those close to Raju goes thus: “Sure, he did what he did. But he didn’t kill anyone. Didn’t deceive anyone. Didn’t steal anyone’s money. In fact, he did a whole lot of social good for Hyderabad (the EMRI ambulance service comes up often in such conversations) and for Andhra Pradesh, through the Byrraju Foundation, christened after his family name. What he did at Satyam was benign—accounting fraud."
Still, his life, as it is right now, could change on 23 December. If judge B.V.L.N. Chakravarthi, who is hearing the CBI’s case against Raju, decides he is guilty. Or not.
CBI vs Ramalinga Raju (and eight other accused) is a classic criminal case.
CBI has charged that on 7 January 2009, Raju sent a voluntary confession letter disclosing the covert and the overt acts committed by him. That he conspired with other accused over the period 2001-08 to fraudulently and dishonestly inflate cash and bank balances. To be able to do that, they forged fixed deposit receipts (FDRs) of various scheduled banks along with monthly bank statements. They also inflated sales by generating 7,561 false invoices. In 18 quarters, starting Q1 2004-05 to Q2 2008-09, sales were inflated to the tune of ₹ 4,257 crore.
By doing all of this, the accused lured prospective customers and deceived them by showing that the company was carrying such huge volume of business. The accused also deceived innocent investors into buying the shares of Satyam Computer Services by continuously publishing false and inflated financial statements, thereby causing wrongful loss to the investors (when the fraud came to light) while Raju got the shares of family members offloaded at opportune times and gained.
So Raju has committed offences punishable under section 120-B r/w 420 (punishment of criminal conspiracy), 467 (forgery of valuable security/will), 468 (forgery for purpose of cheating), 471 (using as genuine a forged document or electronic record), 477A (falsification of accounts) and 201 (causing disappearance of evidence of offence, or giving false evidence to screen offender) of the Indian Penal Code (IPC).
Except that Raju has denied everything. All of it. So have all the other accused. Now the onus to prove that Raju committed the fraud is on the public prosecutor.
It is another matter altogether that Raju’s lawyers have a simple view of the case. The man is innocent. On 20 September, Mint spent some time with a few lawyers representing the accused, K. Ravinder Reddy and V. Rami Reddy. Here’s how the conversation went:
Mint: Sir, did he retract his confession letter?
Ravinder Reddy: What confession? Do you know what confession means? There is only one confession. The one you make before God.
Mint: Okay. But he confessed, right?
Ravinder Reddy: It was just a letter.
Mint: Yeah. But it was a letter to the stock market and directors where he said that he had done all those things.
Ravinder Reddy: So it was a letter. See, it is you guys who used the term confession.
Mint: But he had done all those things.
Ravinder Reddy: How can you say that? Where is the proof? Can CBI prove that it was he who sent it? No. It could be anyone who had access to his computer. You guys should ask the question why the lady made money.
Mint: Which lady?
Ravinder Reddy: The one on whose FIR CBI filed the case. How come this lady (Leena Mangat) made money while the other investors did not? They should have listened to the company’s shareholders.
Mint: Ok.
Ravinder Reddy: See you guys are the ones who have blown everything out of proportion.
It would be fair to say that in the last five years, the case has gone through many twists and turns. The most recent one happened late in October; when Raju’s lawyers argued that electronic evidence submitted by CBI did not comply with section 65B of the Evidence Act. Section 65B details the procedure under which electronic evidence should be offered in a court. It requires the person responsible for the computer on which the electronic record was created or stored to issue a certificate establishing the authenticity of electronic evidence. The defence said that about 950 documents are inadmissible. Most of these relate to statement of accounts retrieved from different computers. “They are saying that the documents have to be rejected," says K. Surender, the CBI special public prosecutor. “According to them, if the evidence is inadmissible then there is no case."
Now what about the confession letter? The defence has argued that Raju never sent that letter. That it was some sort of a hoax or prank. There’s more. Raju had no idea of the content of that letter. And that if there are any irregularities then it must have cropped up on account of any of his subordinates at Satyam, some 50,000 of them. So if the books have been cooked then he cannot be taken to task because he was not directly involved. There were employees and team leaders, whose job it was to prepare accounts. Not his. “So they are saying that there is no way he is directly connected with accounting plus raising of invoices," said Surender. “Because the functioning of the company, he had left to various employees."
“Where is the evidence that he sent that mail?" asks E. Uma Maheshwar Rao, who represented Raju during trial. Rao also defended mining baron Gali Janardhan Reddy and YSR Congress president Y.S. Jagan Mohan Reddy in the same court complex. “Why should he prove that he has written that letter?"
The burden of proof, beyond reasonable doubt, is always on the prosecution. Scientific (or forensic) evidence on the confession letter has not been produced by CBI. It was missed in the heady initial days of the investigation. But Surender believes that some of these are minor, trivial details. That Leena Mangat made money on the stock is inconsequential. She made it over a period of time.
Surender said that the prosecution has a strong case, thanks to the fake FDRs and witness testimonies, for instance, from banks who testified that they never issued FDRs. A total of 216 witnesses and 3,038 documents were examined during the hearing of the case.
The idea is to shift the burden in defence—that Raju and the other accused signed, year after year on the company’s financial statements, annual reports and investor presentations, then the documents claim that Satyam had all this money. “Now the burden is on them to prove that such money existed," said Surender. “And we are talking about ₹ 5,000 crore. They need to substantiate where the money is." If it never existed then it is a clear case of wilful fraud.
On 30 October, judge Chakravarthi said he would deliver his verdict in the case on 23 December in all likelihood. Whatever the outcome of the judgement, both sides are clear on what follows next. If CBI wins, the defence will appeal the verdict in the high court. If the defence wins, then CBI appeals. The case is most likely going to continue, for a while.
Regardless of the outcome on 23 December, sometime back, a family friend reached out to Raju with a suggestion—to make a public confession. To call for a press conference, go on television, and accept that he had made a mistake. And to ask for forgiveness. This, the friend said, would win Raju some respect from the public, and give the issue a sense of closure. And more importantly, help Raju’s family move on. “The public is forgiving," said this person who asked not to be identified. “Once you accept your mistake, they move on with their lives. And you move on with yours."
How did Raju take the suggestion? “He didn’t say anything."
But does he feel guilty?
We wouldn’t know. Not yet.
On 21 November, as Raju leaves the court after a hearing of the Enforcement Directorate case, a Mint reporter manages to get close enough to throw a question at him.
“Mr. Raju, I have just one question to ask."
He turns around, assessing the situation for a second or two in the noisy parking lot of the Metropolitan Court complex. “No, I have nothing to…"
He leaves the sentence incomplete and walks to his car.
yogendra.k@livemint.com
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
