So, how long a term could Raju get in jail?

So, how long a term could Raju get in jail?
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First Published: Wed, Jan 21 2009. 09 24 PM IST

Updated: Wed, Jan 21 2009. 09 24 PM IST
New Delhi: At least three major Acts and several charges can be used to prosecute B. Ramalinga Raju, the former chairman of Satyam Computer Services Ltd who revealed on 7 January that he had fudged the company’s books, over the years, to the tune of at least Rs7,136 crore sparking a debate on the extent of imprisonment he could face.
Lawyers, police officials and experts say Raju can be prosecuted for violating several provisions of the Companies Act, 1956, the Sebi (Prevention of Fraudulent and Unfair Trade Practices) Regulations, 2003 punishable under Section 24(1) of the Securities and Exchange Board of India, or Sebi Act, 1992 and the Indian Penal Code (IPC).
Unlike in the US where sentences for different offences are aggregated or allowed to run consecutively, the practice in India has usually been to pick the crime that attracts the longest and harshest sentence and impose that. In Raju’s case, the Sebi regulation will apply for violating stock market laws, IPC for criminal offences such as forgery and fraud, and Companies Act for large-scale fudging of company’s books.
Thus, if the penalty under IPC is the highest, the Satyam founder will be punished under that.
Under IPC, Raju could be imprisoned for anything between a year and for life on charges including breach of trust, forgery and cheating.
For violating stock market laws, he could face up to 10 years in jail and a fine of up to Rs25 crore.
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“Under the Companies Act, 1956, the imprisonment can range between six months and seven years along with a fine under Sections 209, 628 and 629. Now we have to see under what charges does the ministry of corporate affairs book him,” said a Delhi-based company secretary who did not want to be identified.
Exception possible
Lawyers say punishments under the three acts could be added up as has been done by the Indian courts in a few criminal cases in recent years.
“Normally when various offences are involved, the court awards the maximum sentence. Only in rare and exceptional cases does the court, after laying down reasons for this, award consecutive (or cumulative) sentences.”
Sushil Kumar, a senior counsel at the Supreme Court, cites the verdict given in the 2005 Kamalanatha v. State of Tamil Nadu case. Then the Supreme Court upheld a Madras high court sentence of a double life sentence for a rape and murder.
Another lawyer, who did not want to be identified, said: “Though facts in the Kamalanatha case are different, it could well be a precedent for the Raju case.” Still, Kumar isn’t sure Raju will even be sentenced as proving the charges against him will be difficult.
Supreme Court lawyer Menaka Guruswamy said convicting Raju would not be a simple task and that India needs a law similar to the Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, that was enacted in the US in the wake of scandals such as Enron and WorldCom.
The legislation has introduced more stringent standards for all US public company boards, management, and public accounting firms.
In 2006, former chief executive of Enron Jeffrey K. Skilling was sentenced to 24 years in prison on 19 counts. In 2005, WorldCom’s former chief executive, Bernard J. Ebbers, was sentenced to 25 years for his involvement in an $11 billion corporate fraud.
“In America, the conviction in such cases is almost 60%. In India, we need a law that can comprehend this sort of a white-collar crime. Also, under our judicial system, the trial can be long and labourious. It could take minimum six to eight years to convict someone,” said Guruswamy.
Interestingly, as Satyam is listed on the New York Stock Exchange, Raju did sign the company’s financial statements as required by the Sarbanes-Oxley Act although it isn’t clear whether he can be prosecuted under this law.
sangeeta.s@livemint.com
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First Published: Wed, Jan 21 2009. 09 24 PM IST