New Delhi/Hyderabad: The Supreme Court on Tuesday permitted markets regulator Securities and Exchange Board of India (Sebi) to question B. Ramalinga Raju, as part of a wide-ranging inquiry into India’s biggest corporate fraud.
A bench headed by Chief Justice of India K.G. Balakrishnan ordered the Andhra Pradesh government to allow A. Sunil Kumar, general manager of Sebi’s regional office in Chennai, to interrogate Raju and his brother B. Rama Raju according to the provisions of the Sebi Act, 1992, for three days starting on Wednesday.
Raju, former chairman of Satyam Computer Services Ltd, confessed on 7 January that he cooked the company’s books for several years to the tune of at least Rs7,136 crore.
The Raju brothers and Satyam’s former chief financial officer Srinivas Vadlamani are in custody in Hyderabad after being arrested. The Central government has ordered a probe into the scam by the Serious Fraud Investigation Office.
According to Akhil Hirani, partner at the Mumbai office of law firm Majmudar and Co., Sebi will now be able to investigate the nature of the fraud, besides its impact on markets and Satyam shareholders.
“Sebi could also find out if there were any other parties in the market like intermediaries and associate companies (involved in the fraud) along with the Raju brothers. Moreover, Sebi will look into the financial aspects of the fraud,” Hirani said.
“The police so far have been acting on complaints of cheating and fraud. Sebi will now look at the situation from a markets perspective,” he said.
Centre stage: Satyam’s founder B. Ramalinga Raju remains in custody in Hyderabad. Mahesh Kumar A / AP
Meanwhile, the six-member board of Satyam, appointed by the Central government, will meet on Wednesday to discuss the appointment of a chief executive officer and chief financial officer for the scam-tainted software services firm. The CEO is likely to be designated adviser, management operations, and the CFO as adviser, financial operations.
Officials from the US market regulator Securities and Exchange Commission are expected to meet Satyam’s board and Sebi officials on Thursday in connection with the swindle.
Earlier on Tuesday, solicitor general Ghoolam E. Vahanvati, who represented Sebi, told the apex court: “This is a self-confessed fraud. The whole system is in jeopardy. They (the Raju brothers) are in custody and Sebi should be permitted to interrogate them.”
Last Friday, Sebi’s plea hearing in the Andhra Pradesh high court to question Raju was adjourned to 9 February. The high court declined Sebi permission to question him, saying it would not pass an interim order without giving Raju an opportunity to be heard in the matter.
Sebi approached the high court in January after a magistrate’s court in Hyderabad held earlier that Indian laws do not grant Sebi the authority to interrogate Raju.
On Monday, Sebi told the Supreme Court that it had filed a petition against the high court order. The bench headed by Balakrishan decided to hear Sebi’s petition on Tuesday.
In its petition, Sebi argued that the high court was wrong in granting Raju “immunity” from interrogation. It also said Sebi should be allowed to do its “statutory duty” to quiz the Raju brothers as any delay could lead to tampering and destruction of evidence.