Former outsourcing tycoon 'bailed' in big fraud case

Aug 18, 2010 by P.S. Jayaram
Ramalinga Raju , founder and former chairman of fraud-hit Satyam, sits in a vehicle with former chief financial officer Vadlamani Srinivas in April 2009 as they are escorted from jail to a court appearance. Raju was granted bail on Wednesday, his lawyer said.

The founder of Indian outsourcing firm Satyam, who has been accused of staging India's biggest corporate fraud, was granted bail on Wednesday in the southern city of Hyderabad.

B. Ramalinga Raju, the former head of Satyam whose admission of falsifying profits in January 2009 plunged India's corporate world into turmoil, was given bail on health grounds by Justice Raja Elango.

"Raju has been given bail on the condition that he will remain in Hyderabad until further orders," his lawyer, Bharat Kumar, told reporters.

India's federal investigating agency, the Central Bureau of Investigation (CBI), said it would challenge the bail order.

Raju, who has been in hospital since September 2009 suffering from hepatitis, was bailed after posting surety of four million rupees (86,000 dollars).

The court stipulated that he should appear daily before the CBI once he is discharged from hospital.

He faces a slew of charges including conspiracy, cheating and forgery, and declared in a letter of confession that he had overstated profits for years and inflated the company's balance sheet by over one billion dollars.

"It was like riding a tiger, not knowing how to get off without being eaten," he wrote.

Raju and nine other suspects are accused of embezzling around three billion dollars from Satyam, one of India's largest outsourcing companies that worked for one-third of the Fortune 500 companies at the time of the scandal.

The court's action came after it granted bail last month to other accused former managers, including Raju's brother B. Rama Raju and the former chief financial officer of Satyam Computers, Vadlamani Srinivas.

All 10 accused in the case have now been granted bail.

The CBI had opposed bail, arguing Raju would seek to tamper with records and pressure hundreds of witnesses.

The agency, which earlier contested medical diagnoses that Raju's condition was "precarious" and that he should remain in hospital, said it would challenge the bail order before the Supreme Court.

Raju's lawyer said his client had been co-operating with investigators and would continue to do so.

"My client will abide by all the conditions set by the High Court," Kumar told AFP.

The scandal at Satyam -- dubbed "India's Enron" after the US energy firm that collapsed in 2001 amid a scandal over false accounting -- was described by Indian authorities as the country's largest corporate fraud.

Tech Mahindra, a unit of Indian vehicle and farm equipment manufacturer Mahindra and Mahindra, later bought Satyam, allaying fears about its survival.

The company has since been renamed Mahindra Satyam and won an image boost after successfully serving as the main IT services provider for the FIFA World Cup football tournament in South Africa.

Late last year, India's government announced a draft law to avert more corporate scandals of the kind that beset Satyam, which grew from a small family-run firm into a behemoth with 53,000 workers in nearly 70 countries.

The government said the measure would protect investors and make it binding for unscrupulous companies to pay damages to shareholders.

In the immediate aftermath of the scandal, Satyam shares lost close to 90 percent of their value.

Explore further: TCS, Mitsubishi to create new Japan IT services firm

add to favorites email to friend print save as pdf

Related Stories

India fraud office to prosecute Satyam founder

Nov 16, 2009

India's fraud office will file charges this month against the founder of outsourcer Satyam after he admitted to falsifying profits in the nation's biggest corporate fraud, a minister said Monday.

Satyam gets 'adequate bid response'

Mar 14, 2009

The board of swindled Indian outsourcing giant Satyam said it has received an "adequate response" to its invitation for bids, as a newspaper said Saturday that IBM had joined the race.

Third bidder joins race for Satyam

Mar 21, 2009

The board of India's Satyam Computer Services met Saturday to review a list of bidders for the fraud-hit outsourcer as a third company announced it had joined the race.

Recommended for you

TCS, Mitsubishi to create new Japan IT services firm

37 minutes ago

India's biggest outsourcing firm Tata Consultancy Services (TCS) and Japan's Mitsubishi Corp said Monday they are teaming up to create a Japanese software services provider with annual revenues of $600 million.

Chinese tech giant Alibaba set to make a splash with US IPO

16 hours ago

The largest tech IPO of the year will come from a company that many Americans have never heard of. Alibaba Group - a Chinese e-commerce behemoth - has decided to go public in the U.S. after months of speculation that it would ...

Ex-Apple chief plans mobile phone for India

Apr 19, 2014

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Apr 19, 2014

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

User comments : 0

More news stories

TCS, Mitsubishi to create new Japan IT services firm

India's biggest outsourcing firm Tata Consultancy Services (TCS) and Japan's Mitsubishi Corp said Monday they are teaming up to create a Japanese software services provider with annual revenues of $600 million.

Finnish inventor rethinks design of the axe

( —Finnish inventor Heikki Kärnä is the man behind the Vipukirves Leveraxe, which is a precision tool for splitting firewood. He designed the tool to make the job easier and more efficient, with ...

Atom probe assisted dating of oldest piece of earth

( —It's a scientific axiom: big claims require extra-solid evidence. So there were skeptics in 2001 when University of Wisconsin-Madison geoscience professor John Valley dated an ancient crystal ...