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From virtual to real: Raju brothers in prison

From virtual to real: Raju brothers in prison
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First Published: Sat, Jan 10 2009. 08 18 PM IST
Updated: Sat, Jan 10 2009. 08 18 PM IST
Hyderabad: Satyam Computer’s disgraced founder Ramalinga Raju and his brother Rama Raju were Saturday remanded to judicial custody till 23 January and would be lodged in the Chanchalguda central jail.
The Rajus, who were arrested Friday night and subjected to several hours of interrogation, were produced before the 6th Chief Metropolitan Magistrate at the judges’ quarters at Marredpally in Secunderabad Saturday evening.
Raju’s lawyer Bharat Kumar said his clients were remanded to judicial custody till 23 January. He said the court has directed medical treatment to be given by a government doctor to Raju, whose blood pressure was fluctuating abnormally.
Raju’s counsel said he will move a bail application on Monday for the disgraced software tycoon whose admission to wrongdoing prompted a near collapse of Satyam, which boasts high-profile clients in 65 countries.
After the magistrate’s order, the Rajus were whisked away in a van with tinted glasses to Chanchalguda jail located in the outskirts of Hyderabad while police kept the media away by barricading the area.
The police had subjected the Rajus to a lengthy interrogation process after their arrest, but Ramalinga Raju, 54, the elder of the two, had in the morning complained of chest pain and uneasiness -- following which doctors from private Care Hospital and a government hospital conducted a medical check-up.
A case has been filed against Raju under sections 120-b (criminal conspiracy), 406 (criminal breach of trust), 420 (cheating), 468 (forgery for cheating) and 477-a (fraudulent cancellation of securities) of IPC.
Raju had on Wednesday disclosed a financial fraud in the company to the tune of Rs7,000 crore by inflating profits and showing fictitious assets where none existed. The company’s scrip has fallen nearly 80% since the revelation was made.
Indian market regulator the Securities and Exchange Board of India, or Sebi, is also seeking to question Raju, one of the pioneers of India’s outsourcing boom and once the darling of international investment funds.
Satyam shares have gone into freefall, closing at Rs23.85 Friday compared to a value of around Rs180 before the scandal erupted.
The central government on Friday booted out Satyam’s directors’ board saying it will name representatives to manage the affairs of the company.
Before being dismissed, the interim Satyam board had pledged to try and keep the company running and rectify the mistakes.
It had also insisted it was unaware of the scam, which has prompted comparisons with the collapse of US energy giant Enron and generated fears over the impact on foreign investment in Indian business and on corporate governance standards.
At least two US shareholder lawsuits have been filed against Satyam earlier this week.
The law firm of Izard Nobel filed a suit seeking a class action in New York on behalf of people who purchased the American Depositary Receipts of Satyam Computer between 6 January 2004 and 6 January 2009.
Another lawsuit was filed in New York by the firm Vianale and Vianale, based in Florida, a statement from the law firm said.
Sebi meanwhile announced unprecedented steps to “boost investor confidence”.
Independent auditors will now scrutinise the last quarterly results and audited annual financial statements of companies which are listed on exchanges and form part of India’s key benchmark indices, the 30-share Sensex and 50-share Nifty, the regulator said.
“This exercise will be undertaken after the third quarter results and is expected to be completed by end of February this year,” an official statement said.
Regarding the constitutiion of a fresh Satyam board,Corporate Affairs Minister Prem Chand Gupta said the composition of the new board was still to be finalised.
“We are working on the names,” Gupta told reporters.
After dissolving the previous board on Friday, Gupta said the new 10-member board would meet within seven days but added there was no move to take over Satyam’s management.
On Saturday, Gupta said the government had received a letter from Lazard about representation on the new board, and said it was being looked into.
Stock exchange data showed that Lazard Asset Management held a 2.15% stake in Satyam as at 30 September 2008.
“Now that the government has decided to appoint a new board, then we would like the government to consult us on the appointment of the members to the board,” Hitesh Jain, Lazard’s lawyer, told a television channel, adding it also wanted to be consulted about other steps the government wanted to take on Satyam.
Hyderabad-based Satyam specialises in business software and back-office services for clients including General Electric and Nestle.
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First Published: Sat, Jan 10 2009. 08 18 PM IST
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