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Long legal battle awaits Satyam-Maytas
September, 04th 2009

This portends to be a prolonged legal battle that is bound to test the acumen of the judge trying the case. On January 8, a day after Ramalinga Raju made his historical confession, his brother Suryanarayana Raju wrote to the management of Satyam that some of the privately owned companies of the Raju family had loaned out moolah to the IT company.

This amounted to over Rs 1,230 crore and Suryanarayana who holds the power of attorney for these privately owned companies, sought the money back.

Nearly eight months later as Maytas changes hands, the government appointed directors who continue on the board, say that the Infra company loaned out Rs 391 crore to Satyam. And obviously Maytas wants it back. What is more Maytas Properties - another Raju company that still remains with the family - had loaned out Rs 220 crore to Satyam.

Both the companies lent out money that reached Satyam via many intermediaries (which are the privately owned companies of the Raju family) and this sum presumably is part of the Rs 1,230 crore claimed by Suryanarayana Raju.

Where the rest of the money - Rs 620 crore - came from remains a mystery. But the Mahindras have categorically asserted that they found no evidence of any money from Maytas or any of these privately owned companies wending its way into Satyam. Pooh poohing this claim, Maytas' government directors say that a legal team working on this matter will soon raise a demand on Satyam.

However this is a grey area, because if the money went to Satyam (at all) via intermediaries, then Maytas can claim the money only from the company that it lent to (a privately owned Raju company). Only the last private company in the chain can raise a demand on Satyam.

Since the belief is that Ramalinga Raju destroyed a huge amount of Satyam records in the run up to his confession even if some money had made its way into Satyam, the papers relating to the transfer can never be found in the company.

But the matter is not simple because even if Satyam does not have records, the last company that 'lent' it money possibly has documentary evidence of the infusion.

Financial analysts familiar with the style of operations of Raju and his corporate governance standards aver that while the money went out of Maytas as inter corporate deposits it entered Satyam as "other income" in the books. "If Raju was trying to boost the flagging Satyam, then it is likely to be shown in the books of the IT company as "other incomes".

This is to prevent it being paid back which it would have to if the infusion was shown as a loan," says a top financial analyst of the city who is in the know of things.

The analyst adds: "This is going to be a case of confusion worst confounded because in the books of the last company the transaction will be a loan and in Satyam's books as other income. So how do you resolve this?" he asked.

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