... while the Satyam fraudster and family pocketed Rs 2,743 cr
Geetanjali Minhas | July 21, 2010
Ramalinga Raju and his family pocketed Rs 2,743 crore from the Satyam Computers fraud while stakeholders of the company lost a whopping Rs 14.162 crore, CBI sources have revealed.
J L Negi, a RBI general manager on deputation to the CBI, said that the CBI used forensic accounting tools to detect evidence of the fraud.
The CBI discovered that manual entries were incorporated to facilitate fraudulent sales. Fake transacation were made using computers that could not be tracked. These fictious invoices were generated by a set of few people who were paid off by the promoter.
63 invoices valued at Rs. 430.66 crore were raised. Rs. 31.18 crore was booked as exchange profit by the company on account of these fictitious sales. Entry data at the company's swipe machines yielded this detail. “The level of organized crime can be gauged from here” points Negi.
Using the Invoice Management System, fictitious invoices were generated by manipulating 'show' and 'hide' options. 7561 fake invoices amounting Rs. 5118 crore were generated through Excel Porting , an option to port partial/consolidated bills .This manual mode was put in place to meet the emergency requirements to raise invoices , bypassing the regular application flow. 6,631 false invoices amounting to 4,766.20 crore were entered into the receivables module of Oracle Finance. A select few knew of the invoices being generated without purchase orders, bypassing regular procedure of audit trial.
Orders flew in from non –existing companies like Mobitel, Cellnet, E –care, Synony, Northsea, Autotech and Hargreaves. Fictitious domains were created in rediffmail to show as if it originated from these customers. 63 fake invoices valuing Rs. 430.66 crore were raised and 31.18 crore was booked as exchange profit by the company as sales during the fraud period.
The directors, sponsored by Raju, got stock options at Rs. 2 against the market price of Rs. 500 and acted as rubber stamps with not even a single instance of dissent recorded .
In 1991, the promoters held 18.78% shares ,while as on December 2008, the promoters share holding was only 2.18% . Shares were sold through various brokers and benami transactions and amount received by the promoters was Rs. 767.73 crore. With insider trading , the shares were unloaded through margin calls at the instance of Ramalinga Raju
The promoters received dividend to the extent of Rs. 27.08 crore for the year 2007- 08 and 2008 - 09 where the actual profit after adjustment of fake revenue was Rs. 176.12 crore in 2007-08 and 269.16 crore in 2008-09. As per Company Law section 205, the promoters were not eligible to get the dividend .
The promoters acquired 6000 acres of land floating 327 front companies with most of them having Raju’s gardener, cook and domestic helps on board of directors. A consolidated 935 properties on 5757.30 acres of land worth Rs. 3454.91 crore were acquired by the Raju’s during the fraud period. Land purchase spanned over Andhra Pradesh, Tamil Nadu, Bangalore and Nagpur
On the basis of false and fabricated board resolutions the company had availed short term loans and advances of 1493.84 crore from HDFC, HSBC, Citi Bank, BNP Paribas, ICICI Bank, Fincity/Higrace and Elem Investments Pvt. Ltd. The loan amount was raised against promoters shares and used to pay salaries, acquisitions , payments and dividends. Interest of 37.62 crore against loans was paid and majority of loans were not shown in the account books .
An equivalent amount was shown as amount being transferred from the accounts maintained at BOB New York. The fictitious sales were reported as realised and shown as deposited in the account of the company maintained with BOB, New York
The CBI revealed that minimum protocols were not followed by the auditors . V.P.S. Gupta the Chief Auditor was given stock option to off-load the shares and received Rs. 5.30 crore. The auditors were more faithful to promoters rather than to the compan
Against an actual bank balance of Rs 139.78 crore the company showed a balance of Rs 5160 .34 crore .The company had accounts with 36 banks in India and 7 banks overseas. The certificate shown to the auditors did not carry details of Fixed Deposit Number . Accrued interest of Rs 375.53 crore on fictitious FDRs was shown against an actual interest of 7.42 lakh .
37 of Raju's companies had given advances amounting to Rs. 1425 crore to Satyam . Of this , only Rs 194.60 crore has been returned back to 15 companies . The company claimed false overseas tax payments amounting to Rs 329.59 crore to claim deductions in India.
A team of 25 officers and another 40 investigators filed the chargesheet in benchmark 45 days Negi said ,and added “there will be one more chargesheet in this case apart from the supplementary chargesheet that has already been filed. The agencies including the Enforcement Directorate , are working on the properties that need to be attached under Prevention of Money Laundering Act. This includes those purchased with the proceeds of the crime.”
“ Under the Criminal Law Ordinance Act , 100 properties of 3 crore have been mapped till date .The other aspect includes the land that has been purchased, spanning various states.”
The agency will now approach the courts in the respective states to reach a judicial conclusion on them.”
Raju and his associates now face the following charges under various sections of IPC :
120-B Criminal conspiracy to commit an offence read with-
409 - Criminal breach of trust
420 - Cheating
467 - Forgery of a valuable security
468 - Forgery for the purpose of cheating
471- Using as genuine a forged documents which is known to be forged
477-A Falsification of accounts
“This probe has been satisfying as for the investigating agencies in India . It did offer a lot of insights on various levels. We are sending a note to the Ministry of Corporate Affairs to and the Institute of Chartered Accountants of India to ensure that they use the probe inputs and bring changes to their statutes ” added Negi.
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