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Raju was riding a toothless tiger
April, 14th 2009

In the January 7 letter in which he confessed that Satyam Computer Services account books were a work of fiction, B Ramalinga Raju wrote that carrying on with the deceit was like riding a tiger, not knowing how to get off without being eaten.

Those who knew the Satyam founder well said he had mounted the beast when it was just a cub. In the early 1990s, a former close associate of Mr Raju was stunned by a tax demand for selling shares of Satyam that he purportedly held.

I was flabbergasted because I didnt own a single share in the company, he said. A few casual inquiries later it became obvious to him that several of his acquaintances were in the same positionbeing asked to pay tax for shares they didnt own or sell. It became pretty clear to me then that Satyam shares were being bought and sold benami. Knowing Mr Raju as well as I did, I saw his fingerprints all over the operation, he added.

Son of an affluent grape farmer, Mr Raju ran textile and construction firms before he converted his hobby, software, into a business. Satyam was established in 1987 and it went public in 1991. The same year, Satyam became the first Indian company to provide offshore services to a client through a satellite connection. In the mid-90s, Mr Raju saw a big opportunity in providing information through IT networks.

Satyam Infoway (later renamed Sify), was born in 1995. At the turn of the century, Mr Raju was riding a full-grown tiger. He was being lionised in his home state Andhra Pradesh and was even seated alongside Bill Clinton when the then US president visited Hyderabad.

The same year provided the first visible signs that he was slipping. Shareholders reacted with outrage after discovering that 8 lakh Satyam shares had been transferred to Ramalinga Rajus brother-in-law Srini Raju at Rs 10 per share while the stock was quoting at over Rs 1,500. Mr Raju got the benefit of doubt and escaped almost unscathed. Two years later, he was booked by the government for a series of alleged financial irregularities but that probe too petered out.

Over the next few years, Satyam made a series of small acquisitions and showed outlandish growth, posting revenues of $2 billion at the end of March 2008. On December 16 that year, Mr Raju proposed that Satyam should buy Maytas construction and real estate firms run by his sons for $1.6 billion. A few days after furious investors had had their say, Mr Raju came up with the tiger metaphor.

After over three months in police and judicial custody, Mr Raju has not deviated from his confession and investigators have yet been unable to establish money was siphoned out of Satyam. Maytas Infra and Maytas Properties have been spared a full investigation and key members of Mr Rajus family suspected of involvement in the fraud remain untouched.
Mr Raju, it seems, was only riding a toothless tiger.

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