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Satyam staff intimidated I-T officials in 2002, says govt report
January, 31st 2009

Proof of disgraced Satyam founder Ramalinga Rajus political influence an issue that is being widely discussed following his January 7 confessions of fraud was strongly in evidence as far back as 2002, when his company was at the height of its success.

A 2002 report filed by the deputy director, investigations in the Income Tax (I-T) department S Padmaja suggests that Satyam staff obstructed and harassed her and her team and refused to cooperate when they visited the office for investigations.

The investigations at Satyam followed inquiries into a maze of money transfers, bank deposits and share transactions upon which Padmaja stumbled on after a sudden rise in the number of H-15 forms, which is an instruction by senior citizens to banks not to deduct tax on the interest they had earned on the deposit. The investigation in to H-15 forms led to benami accounts, or accounts held under fraudulent names, held by the members of the extended Raju family and money transfers and share transactions.

According to her report, filed on June 21, 2002, Padmaja reached Satyam's office at Mashallah Building, Prenderghat Road, Secunderabad on June 5 with four colleagues to inspect the shareholders register. Two Satyam staff members who received the officers locked them for over an hour in a room that could be opened only by an access control card.

After a while, two senior Satyam officials deputy general manager (corporate affairs) D Sridhar and location manager Ravishankar approached them and asked them to leave, saying they had no authority to ask for the shareholders' register.

After Padmaja pointed out that she was authorised under the I-T Act to ask for such documents, she and her staff were abused and then forced to leave. "They requested me to leave the premises as I had no authorisation. I then clarified that I was deputy director of Income Tax (Investigations) and was authorised by the I-T Act. The conduct of the employees was discourteous and non-cooperative. The language used was unparliamentary," Padmaja has said in her report.

The I-T team then repeatedly visited Satyam's office for the next three days but was not given access to the shareholders register.

Finally, on June 10, after keeping I-T officials waiting till 5 pm, the folio numbers of shares held by the Raju family were made available. The I-T team, however, insisted that it also needed details of shares sold by the Raju family to others and subsequent transactions by these transferees (since the latter were intermediaries who had not paid capital gains tax). A full search of these documents was not complete on June 11.

On June 12 Satyam's Managing Director B Rama Raju moved an application requesting that the search be suspended for a week because the employee concerned was unable to attend the office for personal reasons. However permission was not granted.

Subsequently, in the middle of the investigations Padmaja was transferred out of turn and replaced by Bhaskar Goswami.

Goswami submitted a report that broadly supplemented what Padmaja had said in her report. Both reports were, however, kept under wraps by the I-T department and no action was taken on them.

One significant sidelight to the incident was the fate of several bank deposits linked to the Raju family. In the course of investigations banks in which Padmaja and her team found fixed deposits in the name of members of Raju family amounting to Rs. 19.50 crore and these banks were asked to freeze these accounts.

In June 2004, however, these banks received an advisory from I-T department saying they were free to defreeze the account and return them to depositors when they matured.

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