Hyderabad: The Central Bureau of Investigation (CBI) has found evidence of an additional Rs4,739 crore corporate fraud in Satyam Computer Services Ltd, perpetrated by its founder R. Ramalinga Raju and his associates, the agency said in a supplementary charge sheet filed on Tuesday.
The agency also estimates the overall fraud suffered by investors in the company to be at least Rs14,000 crore during the period of the fraud.
CBI found the evidence while probing into what’s already been billed India’s largest accounting fraud, after Raju confessed in January to overstating the software outsourcer’s accounts by Rs7,136 crore. Tech Mahindra Ltd, a part of the Mahindra and Mahindra group, has since gained a controlling stake in Satyam in an auction conducted in April.
The new evidence takes the overall extent of the Satyam fraud to Rs11,875 crore.
CBI deputy inspector general V.V. Laxmi Narayana, speaking to the media outside a local court, said the new charges related to Rs1,931 crore Raju and other key accused in the case had obtained by pledging their shares at an inflated value; Rs1,220 crore of loans raised by forging board resolutions; and Rs748 crore gained by off-loading stocks in the market, again at higher values.
The accused had also drawn Rs230 crore in dividends on inflated profits; inflated revenue to the tune of Rs430 crore by generating fake invoices and customers; and falsified the accounts to the tune of Rs180 crore while acquiring Nipuna Services Ltd, a business process outsourcing firm, he said.
“The accused have resorted to criminal breach of trust and falsified the accounts in the matter pertaining to acquisition of shares of Nipuna Services Ltd,” Narayana said.
India’s federal investigation agency, which had filed its first charge sheet on 7 April, also filed on Tuesday a supplementary charge sheet against 10 people accused in the case, a list that now includes V.S. Prabhakar Gupta, previously internal audit head at the software firm.
The charges include criminal conspiracy, cheating, forgery, falsification of accounts and criminal breach of trust.
Gupta was arrested on 21 November and remanded to judicial custody. He was accused of wilful suppression of auditing irregularities and for his role in the conspiracy.
Sridhar Maturi, a spokesman for Satyam, said: “We don’t have any comments to offer on the findings of the investigating agencies.” Tech Mahindra, too, declined comment. A spokesperson for the firm said: “The issue is sub judice and it is not appropriate for us to comment on the issue.”
Anurag Purohit, an analyst with Religare Securities Ltd, said the new evidence would hurt Satyam’s investors further. “The new legal angles being brought in by CBI is likely to have a negative impact on investor sentiments. Currently, it is the legal issues that is the biggest hurdle preventing the company shares from getting fair valuation.”
Not everyone agrees with that. “Such negative news may have a short-term impact on the firm’s share price, but ultimately it is the company’s performance that matters in the long run,” Anil Advani, head of research at SBICAP Securities Ltd, said.
The fraud-hit Satyam took a big hit after Raju’s confessions, and gained some ground only after a government-appointed board initiated a revival that eventually resulted in Tech Mahindra acquiring a controlling stake in the company.
CBI’s Narayana said the agency is continuing its probe into possible diversion of funds from Satyam and is awaiting additional information from six countries. It will file separate charge sheets on this shortly and is contemplating another set of charge sheets related to tax evasions, he added.
Narayana also said that “further evidence collected revealed the role of statutory auditors S. Gopalakrishnan and Srinivas Talluri (of Price Waterhouse) in the fraud.” He didn’t provide further details.
Including wrongful gains by the accused and losses suffered by investors during the period of the fraud, overall losses suffered by investors would be at least Rs14,000 crore, he added. “The huge assets acquired by the accused with the fraud amounts have been identified. A total of 1,065 properties whose documented value is Rs350 crore have been identified, which includes around 6,000 acres of land, 40,000 square yards of housing plots and 90,000 sq. ft of built-up areas.”
The supplementary charge sheet has also brought out “the conspiracy amongst the accused to cover the accounting scam in Satyam Computer through Satyam-Maytas acquisition deal and in the process also cheating the investors of Maytas Infra Ltd and Maytas Properties Ltd”.
Last December, Raju had proposed acquiring Maytas Infra and Maytas Properties, both run by his son, but gave up the idea after investors protested. The collapse of this deal set off a train of events that resulted in his confession in January.
Narayana said CBI has not identified other people linked to the scam and no other arrests are in the offing for now. “As far as the accounting scam is concerned, the investigation is over and we are ready for the trial to begin,” he said.
The accused in the first charge sheet of CBI include Raju, his elder brother and then managing director B. Rama Raju, younger brother and director of SRSR Advisory Services Pvt. Ltd B. Suryanarayana Raju, then chief financial officer Srinivas Vadlamani and Satyam’s auditors Price Waterhouse partners Gopalakrishnan and Talluri.
The other accused include three former senior officials of Satyam—vice-president G. Ramakrishna, senior manager D. Venkatapathi Raju, and assistant manager C. Srisailam.
All the accused except Suryanarayana Raju, who had obtained bail, are in judicial custody in the Chanchalguda Central Prison in Hyderabad.
Lison Joseph in Mumbai contributed to this story.