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Just a few months before the scandal broke out, Mr. Raju tried to persuade investors by claiming that the company is sound and that past October he surprised analysts with better-than-expected results, claiming that "the company had achieved this in a challenging global macroencomic environment, and amidst the volatile currency scenario that became reality" <ref name="nytimes.com">http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html?_r=0</ref>
Just a few months before the scandal broke out, Mr. Raju tried to persuade investors by claiming that the company is sound and that past October he surprised analysts with better-than-expected results, claiming that "the company had achieved this in a challenging global macroencomic environment, and amidst the volatile currency scenario that became reality" <ref name="nytimes.com">http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html?_r=0</ref>


A botched acquisition attempt involving [[Maytas]] in December 2008 led to a plunge in the share price of Satyam.<ref name=ft1/> In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years.<ref name=ft1>{{cite journal |author=Joe Leahy |url=http://www.ft.com/cms/s/0/24e4d8d4-dcf1-11dd-a2a9-000077b07658.html |title=The $1bn black hole at the heart of company's finances | journal=[[Financial Times]] | date=08-01-2009}}</ref> He admitted to an accounting dupery to the tune of 7000 [[crore]] [[rupees]] or 1.5 Billion [[United States dollar|US Dollars]] and resigned from the Satyam board on January 7, 2009.<ref>{{cite news|url=http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5469536.ece|title=B. Ramalinga Raju, chairman of Satyam, admits £1bn fraud and quits|last=Blakely|first=Rhys|date=8 January 2009|work=The Times (London)|publisher=News International Limited|accessdate=2009-01-08}}</ref><ref>{{cite news|url=http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/07.01.09_ramalingarajuletter.pdf|title=Mr Raju's resignation letter|date=7 January 2009|work=BBC News|publisher=BBC|accessdate=2009-01-08}}</ref>
A botched acquisition attempt involving [[Maytas]] in December 2008 led to a plunge in the share price of Satyam.<ref name=ft1/> In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years.<ref name=ft1>{{cite journal |author=Joe Leahy |url=http://www.ft.com/cms/s/0/24e4d8d4-dcf1-11dd-a2a9-000077b07658.html |title=The $1bn black hole at the heart of company's finances | journal=[[Financial Times]] | date=08-01-2009}}</ref> He admitted to an accounting dupery to the tune of 7000 [[crore]] [[rupees]] or 1.5 Billion [[United States dollar|US Dollars]] and resigned from the Satyam board on January 7, 2009.<ref>{{cite news|url=http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5469536.ece|title=B. Ramalinga Raju, chairman of Satyam, admits £1bn fraud and quits|last=Blakely|first=Rhys|date=8 January 2009|work=The Times (London)|publisher=News International Limited|accessdate=2009-01-08}}</ref><ref>{{cite news|url=http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/07.01.09_ramalingarajuletter.pdf|title=Mr Raju's resignation letter|date=7 January 2009|work=BBC News|publisher=BBC|accessdate=2009-01-08}}</ref> Satyam was purchased by [[Tech Mahindra]] in April 2009 and renamed Mahindra Satyam.<ref name="supreme" />


In his letter, Raju explained his modus operandi to something that started as a single lie but led to another as "What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years. It has attained unmanageable proportions as the size of the company’s operations grew over the years.".<ref name="nytimes.com"/> Raju described how an initial cover-up for a poor quarterly performance escalated: "It was like riding a tiger, not knowing how to get off without being eaten.".<ref name="Satyam stunner: Highs and lows of Raju's career">{{cite news|url=http://ibnlive.in.com/news/satyam-stunner-highs-and-lows-of-rajus-career/82183-7.html?from=rssfeed|title=Satyam stunner: Highs and lows of Raju's career|date=January 7, 2009|work=Reuters|publisher=CNN-IBN|accessdate=2009-01-07}}</ref>
In his letter, Raju explained his modus operandi to something that started as a single lie but led to another as "What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years. It has attained unmanageable proportions as the size of the company’s operations grew over the years.".<ref name="nytimes.com"/> Raju described how an initial cover-up for a poor quarterly performance escalated: "It was like riding a tiger, not knowing how to get off without being eaten.".<ref name="Satyam stunner: Highs and lows of Raju's career">{{cite news|url=http://ibnlive.in.com/news/satyam-stunner-highs-and-lows-of-rajus-career/82183-7.html?from=rssfeed|title=Satyam stunner: Highs and lows of Raju's career|date=January 7, 2009|work=Reuters|publisher=CNN-IBN|accessdate=2009-01-07}}</ref>

Revision as of 21:54, 25 October 2013

Ramalinga Raju
Born (1954-09-16) September 16, 1954 (age 69)
Bhimavaram, Andhra Pradesh, India
NationalityIndian
Occupationformer Chairman of Satyam Computer Services
SpouseNandhini

Ramalinga Raju is a former Founder-Chairman of Satyam Computer Services which he founded in 1987 and chaired till January 7, 2009. Stepping down admitting to faking financial figures of the company to the tune of Rs 7,136 crore (approximately $1.5Billion USD), including Rs 5,040 crore (approximately $1 Billion USD) of non-existent cash and bank balances.[1][2]

Early life

Ramalinga Raju was born on September 16, 1954 in a family of farmers. He did his B. Com from Andhra Loyola College at Vijayawada and subsequently did his MBA from Ohio University, USA. He was enrolled in the Executive Owner/President Management Program (OPM) at Harvard Business School.[3]

Career

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.[4] Sify was later sold to Mr. Raju Vegesna.

Philanthropy

Mr. Raju was instrumental in setting up Byrraju Foundation in 2001 with the mission of building progressive self-reliant rural communities by providing services in the area of healthcare, sanitation, primary eduction, adult literacy.[5][6]

Accounting scandal

Ramalinga Raju resigned from the Satyam board after admitting to falsfiying revenues, margins and over Rs 50 billion of cash balances as the company. The Indian affiliate of PricewaterhouseCoopers, the company's auditors, appears to have certified the company had $1.1 Billion in cash when the real number was $78 million.[7]

Just a few months before the scandal broke out, Mr. Raju tried to persuade investors by claiming that the company is sound and that past October he surprised analysts with better-than-expected results, claiming that "the company had achieved this in a challenging global macroencomic environment, and amidst the volatile currency scenario that became reality" [8]

A botched acquisition attempt involving Maytas in December 2008 led to a plunge in the share price of Satyam.[9] In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years.[9] He admitted to an accounting dupery to the tune of 7000 crore rupees or 1.5 Billion US Dollars and resigned from the Satyam board on January 7, 2009.[10][11] Satyam was purchased by Tech Mahindra in April 2009 and renamed Mahindra Satyam.[12]

In his letter, Raju explained his modus operandi to something that started as a single lie but led to another as "What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years. It has attained unmanageable proportions as the size of the company’s operations grew over the years.".[8] Raju described how an initial cover-up for a poor quarterly performance escalated: "It was like riding a tiger, not knowing how to get off without being eaten.".[13]

Raju and his brother, B Rama Raju, were then arrested by the CID Andhra Pradesh police headed by Mr. V S K Kaumudi, IPS on charges of breach of trust, conspiracy, cheating, falsification of records. Raju may face life imprisonment if convicted of misleading investors.[14] Raju had also used dummy accounts to trade in Satyam's shares, violating the insider trading norm.[15]

The Andhra Pradesh government attached 44 properties belonging to the family members of the promoters of Satyam Computers in the case against the founder Chairman Mr.B.Ramalinga Raju [16]

It has now been alleged that these accounts may have been the means of siphoning off the missing funds.[17] Raju has admitted to overstating the company's cash reserves by USD$ 1.5 billion.[17][18] Raju was hospitalized in September 2009 following a minor heart attack and underwent angioplasty. Raju was granted bail on condition that he should report to the local police station once a day and that he shouldn't attempt to tamper with the current evidence. This bail was revoked on 26 October 2010 by the Supreme Court of India and he has been ordered to surrender by 8 November 2010.[19] The people of his native village, Garagaparru, hail the development works undertaken by the Byrraju Foundation, the charitable arm of Satyam.[20] Ramalinga Raju was Granted a bail by the supreme court on 4 November 2011 after the Central Bureau of Investigation failed to chargesheet Raju within the statutory period.[21]

Investigation by the authorities has revealed that Ramalinga Raju led a lavish lifestyle including 321 pairs of shoes, 310 belts, 13 cars including Mercedes and BMW's. His house contained telescope worth £140,000. He is also credited to have donated huge quantities of gold to temples in Andhra pradesh and possessed vilas and properties in 63 countries.[22]

Supreme Court Proceedings

In November 2010, he surrendered after the Supreme Court in August cancelled a bail granted to him by a lower court in Hyderabad, where Satyam is based.

The Supreme Court on November 4, 2011 granted bail to Mr. Raju, founder and former chairman of outsourcing firm Satyam Computer Services Ltd, in a $1.5 billion financial fraud case, since the Central Bureau of Investigation (CBI) failed to file charges on time. According to Indian law, charge-sheet against an accused must be filed within 90 days of arrest.[12]

References

  1. ^ "Satyam's chairman Ramalinga Raju resigns, admits fraud". The Times of India. Jan 7, 2009. Retrieved 2013-10-20.
  2. ^ http://www.thehindubusinessline.com/todays-paper/rs-7000crore-fraud/article1039285.ece
  3. ^ Matthew Fox. "Satyam's Aversion to Imitation Fuels Growth" (PDF). Rotman Magazine (Winter 2005): 68. Retrieved 2012-12-22.
  4. ^ "Ramalinga Raju (Satyam) Full Details – Start, Success and Fall Down". Wisdom Talks. January 20, 2009. Retrieved 2013-10-20.
  5. ^ http://www.iisc.ernet.in/centenary-conf/Prof_V_S_Raju.pdf
  6. ^ http://www.rockefellerfoundation.org/uploads/files/2b053b2b-8feb-46ea-adbd-f89068d59785-impact.pdf
  7. ^ http://economix.blogs.nytimes.com/2009/01/07/a-corporate-hero-admits-fraud/?ref=worldbusiness
  8. ^ a b http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html?_r=0
  9. ^ a b Joe Leahy (08-01-2009). "The $1bn black hole at the heart of company's finances". Financial Times. {{cite journal}}: Check date values in: |date= (help)
  10. ^ Blakely, Rhys (8 January 2009). "B. Ramalinga Raju, chairman of Satyam, admits £1bn fraud and quits". The Times (London). News International Limited. Retrieved 2009-01-08.
  11. ^ "Mr Raju's resignation letter" (PDF). BBC News. BBC. 7 January 2009. Retrieved 2009-01-08.
  12. ^ a b "Supreme Court grants bail to Satyam founder Raju". Reuters. 2011-11-04.
  13. ^ "Satyam stunner: Highs and lows of Raju's career". Reuters. CNN-IBN. January 7, 2009. Retrieved 2009-01-07.
  14. ^ Blakely, Rhys (January 10, 2009). "Raju brothers charged with forgery in $1bn Satyam case". The Times (London). News International Limited. Retrieved 2009-01-10.
  15. ^ "Raju had opened multiple benami accounts: I-T probe". NDTV. NDTV. Retrieved 2009-01-15.
  16. ^ http://www.thehindubusinessline.com/industry-and-economy/info-tech/satyam-case-properties-of-promoters-family-attached/article3501627.ece
  17. ^ a b "Indian Executive Is Said to Have Siphoned Cash, New York Times, January 17, 2009
  18. ^ "Indian IT scandal boss arrested". BBC News. BBC. 9 January 2009. Retrieved 2009-01-10.
  19. ^ "Satyam boss Raju's bail cancelled". BBC News. 26 October 2010.
  20. ^ "Ramalinga Raju's village still blesses him". Indianexpress.com. 2009-01-09. Retrieved 2011-04-13.
  21. ^ "Supreme Court grants bail to Satyam founder Raju". in.reuters.com. 2011-11-04. Retrieved 2011-11-04.
  22. ^ http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/4526660/Disgraced-former-Satyam-chairman-Ramalinga-Raju-had-1000-designer-suits.html

External links

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