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Raju made Rs 2,065 cr from shares

In 2005, Satyam Computer Services announced two acquisitions and showed a profit growth of 160 per cent in the October-December 2005. Shares doubled over 2005-06. In the first quarter of 2006-07, ousted, disgraced Chairman Ramalinga Raju and his associates sold 4.84 per cent at an average of Rs. 726 a share. Raju mopped up Rs 1,126 crore — in cash.

That is broadly how the promoters’ stake was brought down from 22.89 per cent to 8.74 per cent and garnered Rs 2,065 crore over the past seven years. Given the way one can raise loans by turning cash into equity and raising loans, this amount conceals more potential than might visible to the lay reader.

And still in his confession letter to the Bombay Stock Exchange admitting to India’s biggest corporate fraud, Raju said, “Neither myself, nor the managing director (including our spouses) sold any shares in the last eight years- excepting for a small proportion declared and sold for philanthropic purposes.”

After selling stakes amounting to about 14 per cent, Raju still held 8.74 per cent in the company as on March 2008 and its value in that quarter stood at 2,400 crore. But a lot of that was pledged to raise loans that eventually brought the house down on Raju.

The money mopped up through the stake sale by Raju would probably have allowed him to earn on investments, using a combination of debt and equity.

It is the general market belief that he invested a lot of money into his other family venture Maytas Infrastructure and Maytas Properties where the company has close to 7,000 acres of land. And thus the benefits generated by the strategic stake sale by possible manipulation of share prices would be much higher than the actual amount mopped up.

Given that Raju by his own admission committed fraud for six years, it is clear that the acquisitions in question that raised the share prices were part of the make-believe that he engineered to rig up prices.

25 lawyers to defend Ramalinga Raju

HYDERABAD: A battalion of 25 lawyers will defend disgraced former chairman of Satyam Computer Services B. Ramalinga Raju and two other accused in
the Rs.70 billion ($1.43 billion) fraud case.

This was announced by their lawyer S. Bharat Kumar Monday soon after a court adjourned the hearing on the bail petition of the disgraced former top brass of the company to Friday.

The court also adjourned the hearing on the petition of the Crime Investigation Department (CID) seeking their custody and another petition by market regulator Securities and Exchange Board of India (SEBI) seeking permission to question them for the massive fraud.

Additional Chief Metropolitan Magistrate D. Ramakrishna adjourned the hearing on all the three petitions to Friday.

Satyam's founder and former chairman B. Ramalinga Raju, his brother and former managing director B. Rama Raju and former chief financial officer Vadlamani Srinivas were remanded to judicial custody till Jan 23. They have been kept at Chanchalguda Central Jail here.

Bharat Kumar told reporters outside the Nampally Metropolitan Court Complex that the judge adjourned the hearing to allow Ramalinga Raju to file a counter to the SEBI petition.

"The court has granted us time to file to the counter," he said. Counsel also opposed the CID petition for Raju's custody, saying he was not well.

The lawyer announced that a team of 25 lawyers would take up the case before the court.

"I will be the face and voice of the team, which comprises eminent and senior lawyers," he said but declined to give names.

The Satyam Chronology

1987 : Ramalinga Raju establishes Satyam Computer Services Ltd.

1991 : Satyam gets listed on the Bombay Stock Exchange, IPO oversubscriber 17 times.

2006: Revenues cross '$1 billion.' Raju becomes Nasscom Chairman.

2007: Raju named Ernst & Young Entrepreneur of the Year.

2008:

September 23: Satyam awarded with Golden Peacock Award for Corporate Governance and Compliance.

December 16: Satyam Chairman Ramalinga Raju announces plan to buy Maytas Infra and Maytas Properties owned by his sons for $1.6 billion.

December 17: Raju does a U-turn because of negative investor reaction.

December 23: Satyam barred from business with the World Bank for 8 years for alleged malpractices in securing contracts. Shares fall to lowest in 4 years.

December 25 - Satyam asks World Bank to apologize.

December 26 – Board member Mangalam Srinivasan resigns followed by exits of members Vinod Dham, Krishna Palepu.

December 30 - One of Satyam's largest investors says it could sell its stake.More suitors join in the fray to acquire Satyam.

2009

January 2: Satyam says its founder's stake fell by a third to 5.13%.

January 6: Satyam's i-bank DSPML meets Sebi, informs about accounting irregularitites.

January 7: Ramalinga Raju resigns, discloses a Rs 7000-crore accounting fraud in balance sheets about cash which never existed in the company.

January 8: Satyam's bank Citibank freezes its 30 accounts. Interim CEO Ram Mynampati says company in severe cash crunch and may not be able to pay salaries. Satyam's auditor PwC faces ire.

January 9: Ramalinga Raju and his younger brother B Rama Raju arrested by Police. Central Govt disbands Satyam board, to appoint its own 10 directors.

January 10: Satyam's largest investor Lazard seeks a nomination board. SEBI grills Raju.

Raju and the law: Steps and mis-steps

Hyderabad (PTI): By giving himself over to the police, Satyam Computer's former Chairman B Ramalinga Raju may have pre-empted an extradition to the US, where several law suits have been filed against him, says a section of legal experts.

However, the decision to stay away from the SEBI authorities and send his lawyer instead may create more problems for B Ramalinga Raju, including a one-year jail term and a fine of Rs one crore. SEBI summoned Ramalinga Raju to appear in person before its investigating officials and present the records related to the Satyam scandal.

"His lawyer can appear only before the Appellate Tribunal and not the investigating authorities," they added.

Had he appeared before the SEBI investigating team, Raju would have escaped arrest because the SEBI Act has no provision to nab a person. But, Raju chose to get "arrested" by the police and charged under various provisions of the Indian Penal Code in what is being described by legal luminaries as "legal match-fixing."

Ramalinga Raju Profile

Born: September 16, 1954

Achievement: Founder and Chairman of Satyam Computer Services Ltd; Chosen as Ernst & Young Entrepreneur of the Year for Services in 1999

Ramalinga Raju is one of the pioneers of the Information Technology industry in India. He is the founder and Chairman of Satyam Computer Services Ltd.

Ramalinga Raju was born on September 16, 1954 in a family of farmers. He did his B. Com from Ramalinga RajuAndhra Loyola College at Vijayawada and subsequently did his MBA from Ohio University, USA. Ramalinga Raju had a stint at Harvard too. He attended the Owner / President course at Harvard.

After returning to India in 1977, Ramalinga Raju moved away from the traditional agriculture business and set up a spinning and weaving mill named Sri Satyam. . Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions. In 1987, Ramalinga Raju founded Satyam Computer Services along with one of his brothers-in-law, DVS Raju. The company went public in 1992. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market. Today, Satyam has a global presence and serves 44 Fortune 500 and over 390 multinational corporations.

Ramalinga Raju has won several awards and honors. These include Ernst & Young Entrepreneur of the Year for Services in 1999, Dataquest IT Man of the Year in 2000, and CNBC's Asian Business Leader - Corporate Citizen of the Year award in 2002.

And now.........?