Hearings begin in the trial of Raju and others accused of perpetrating India Inc’s biggest fraud.

A new phase in the Satyam Computers accounting fraud case will unfold on November 2, when the trial begins into the biggest scam in India’s corporate history. The legal noose has been tightening around the disgraced founder of Satyam Computers, B Ramalinga Raju, for nearly 22 months since he admitted in January last year to fudging the company’s accounts to the tune of Rs 7,200 crore. Raju has said he is prepared to “face the consequences”.

Raju, brother Rama Raju and their associates were out on bail for a brief period. But the Supreme Court recently cancelled their bail and asked them to surrender before the trial court by November 10. The apex court wants the special court in Hyderabad to complete the trial by July 31, 2011.

The special court constituted by the Andhra Pradesh High Court to try the Satyam cases had begun work from February 15. All records relating to the case have been transferred to it. Senior civil judge B V L N Chakravarthi, who earlier worked in the town of Ongole, will be hearing the case.

To meet the July 31 deadline, the Central Bureau of Investigation and Additional Chief Metropolitan Magistrate Chakravarti will have to race against time. So far, CBI has filed three charge-sheets running into 650 pages. Besides, it has filed over 3,000 supporting documents comprising more than 100,000 pages. The agency has named 697 witnesses in the charge-sheet.

A posse of lawyers representing Raju and his associates will cross examine the witnesses. With 10 lawyers representing the accused, it remains to be seen whether the trial concludes in the next nine months. CBI Deputy Inspector General V V Laxmi Narayana, however, is hopeful. “It is a day-to-day trial and most documents are public. This will reduce the number of witnesses to be examined to 300-350,” he told Business Standard.

Investigation into the case has not been easy for CBI or other organisations like the Securities & Exchange Board of India (Sebi), Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED) and income-tax department. After the accused were remanded into judicial custody within days of Raju’s confession on January 7, 2009, the agencies had to obtain the court’s permission to question the accused. Interrogating them was difficult. This probably prompted former Sebi chairman M Damodaran to comment that the Rajus were in “protective custody”.

Sebi received permission to interrogate the Raju brothers 25 days after they were sent to judicial custody. The CBI, the I-T department and the Institute of Chartered Accountants of India had to wait much longer to get court permission to question the accused. Although CBI was quick to file the charge-sheet and the state government was equally fast in setting up the special court, the trial was delayed with Raju developing medical complications that required hospitalisation.

On September 7, 2009, Raju was admitted to Nizam’s Institute of Medical Sciences complaining of chest pain. Nims said he had suffered a heart attack. He was also diagnosed with Hepatitis C and underwent treatment for 48 weeks. Raju repeatedly failed to appear before the court on health grounds. The judge then asked his counsel in July whether Raju could be examined via video conferencing. On July 12, Raju gave his consent to being examined on a questionnaire served on him on August 12 at Nims. He secured bail on August 18.

On October 25, the special court judge asked Raju and the other accused how they pleaded. With the accused, including Raju, pleading not guilty, he set November 2 as the date for trial. The very next day, even as Raju’s team of advocates prepared to go for trial, the Supreme Court cancelled the bail of Raju, Rama Raju, as well as former employees Srinivas Vadlamani, G Ramakrishna, Venkatapathi Raju and Chetkuru Srisailam. The court said the case affected a large number of shareholders, banks and financial institutions, and that the AP High Court bail could not be sustained.

On February 16, 2009, the government ordered a CBI probe into the Satyam fraud. On April 7, the CBI filed a charge-sheet against the Raju brothers, Vadlamani, PW auditors S Gopalakrishnan and Srinivas Talluri and employees Ramakrishna, Venkatapathi Raju and Srisailam. That the CBI was able to file a charge-sheet within two months of taking the case is considered a remarkable feat. Narayana said this was possible because of the multidisciplinary investigation team.

Besides deploying 16 officers headed by Narayana, CBI roped in auditors, bankers, a general manager of Reserve Bank of India, cost accountants from the Institute of Cost & Works Accountants of India, forensic experts, income-tax officials and others to investigate the gigantic fraud. This apart, the CBI worked in close liaison with Sebi, SFIO and ED, which have probed the case.

We gained a lot of insight, says CBI DIG
Investigation into the Satyam fraud case has been a great learning experience for CBI Deputy Inspector General V V Laxmi Narayana and his 16-member team. “Professionally, our team gained a lot of insight while investigating the case. We were hard pressed for time and worked under pressure,” Laxmi Narayana told Business Standard.

He said the Satyam case also saw a multidisciplinary investigation team put in place effectively for the first time in the country. Nevertheless, the 45-year-old IPS officer, who joined CBI in 2006, said the ensuing trial was going to be the most challenging part of the Satyam saga.

Satyam is the first corporate fraud case that Narayana has handled. “I have handled cheating and other fraud cases earlier. The difference between the other cases and Satyam is that the corporate fraud was committed in a more organised manner,” he said.

Narayana said the most difficult part of the investigation was detecting the false invoices and analysing their source code. Eventually, CBI established that Satyam had raised 7,561 false invoices worth Rs 5,117 crore.

According to him, Satyam is a Rs 24,000-crore scam. This comprises a Rs 14,000 crore loss incurred by investors in the company, a Rs 7,400-crore inflated amount and Rs 2,600 crore appropriated by Raju and his associates.

source: Business Standard

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