Hyderabad: Chances of a speedy resolution to l’affaire Satyam receded on Wednesday with the Andhra Pradesh high court granting bail to the company’s founder and former chairman, B. Ramalinga Raju, freeing, albeit temporarily, the last of the accused in a corporate fraud that came to light in early 2009 with Raju’s confession and whose magnitude has since doubled to a claimed Rs14,000 crore.
Raju’s release is a setback for India’s federal investigating agency, the Central Bureau of Investigation (CBI), which is yet to produce him in court in person. Arrested on 9 January 2009, Raju has been undergoing treatment for Hepatitis C at Nizam’s Institute of Medical Sciences, Hyderabad.
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On 16 August, he retracted his confession in the trial court by responding in the negative to questions posed by the court about the fraud. The burden of proof for Raju’s fraud now rests with CBI. And now, he is out on bail—for two sureties of Rs20 lakh each.
India’s minister for corporate affairs Salman Khursheed insisted that Raju’s release would not “hamper the ongoing investigation”.
On 7 January 2009, Raju confessed to fudging the books of Satyam Computer Services Ltd to the tune of at least Rs7,136 crore over several years. The confession came a few weeks after investor ire had scuppered the proposed merger of Satyam with Maytas Properties Ltd, promoted by members of his family. Maytas’ assets would have helped hide the hole in Satyam’s books.
Since Raju’s confession, the ownership of Satyam Computer has changed hands, facilitated by a government-appointed board that helped the firm retain most of its customers and employees. The firm is now owned by the Mahindra Group’s Tech Mahindra Ltd.
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CBI, whose petition contesting Raju’s bail application was dismissed by the court, will now appeal in the Supreme Court, said V.V. Laxmi Narayana, deputy inspector general of the agency. “We have already moved the Supreme Court contesting the bails granted to other accused in the case recently and we will be filing a petition in the Supreme Court shortly opposing the bail granted to Ramalinga Raju today,” said the CBI official.
On Wednesday, CBI requested the high court to hold its judgement on the bail petition for at least 10 days since its petitions challenging bail granted to the other accused is expected to come up for hearing in the Supreme Court by then.
Raju’s release is another blow to CBI, said a person involved in the investigation into Raju’s doings at Satyam. Ye. Seshasai Babu, a chartered accountant who has also been helping the government’s Serious Fraud Investigation Office in its case against Satyam, said: “It is unlikely that CBI, which could not succeed in making Ramalinga Raju attend the court at least once during the past 19 months, will make him cooperate in the investigation or trial when he is out on bail.”
In its argument before the court on 16 August, CBI said Raju could tamper with evidence if released, and that his position as the CEO of the firm at the time of the fraud made him more accountable than the chief financial officer (CFO) and managing director, both of whom were granted bail earlier.
CBI’s additional solicitor general, H.P. Raval, emphasized the size of the fraud, terming it “economic terrorism” and said there were no new reasons for the bail to be granted.
However, defence counsel M. Natarajan argued that since Raju, CFO Srinivas Vadlamani, and managing director B. Rama Raju had been booked under the same section, they could not be treated differently by the court.
He also claimed that CBI could take as long as two years to frame one of its chargesheets against Raju, and not six months as claimed by the agency. Natarajan described Raju as a very ill man who could suffer internal bleeding or a heart attack at any moment and said he was in no position to tamper with evidence.
Speaking to the media, Raju’s lawyer S. Bharath Kumar said, “Raju would not have surrendered himself to police on 9 January 2009 and cooperated with the investigating agencies so far if he intended to influence the witnesses or tamper with any evidences.”
He added that Raju had no access to the records concerned with the investigation, which have been seized by various investigating agencies, including CBI. Satyam Computer Services is now under the control of a new management, so the question of influencing the witnesses or tampering with evidence does not arise, Kumar said.
Raju’s release is also likely to raise the hackles of legal activists, who claim that moneyed and powerful people always manage to get bail, while the not-so-fortunate ones continue to languish in jail. According to varying estimates by the law ministry and the National Crime Records Bureau, India has between 120,000 and 300,000 undertrials in prison.