Satyam Fraud Trial to Be Fast-Tracked, Minister Says
September, 11th 2009
Satyam Computer Services Ltd. founder B. Ramalinga Raju, accused of Indias biggest corporate fraud, will be tried in a one-time court within a year to circumvent a legal system with a backlog of 30.8 million cases.
We are waiting for the notification of the fast-track court and then we are in business, Corporate Affairs MinisterSalman Khurshid said in an interview in New Delhi. We dont have to give in to the traditional lethargy we suffer in the legal system. This we will be able to showcase in the Satyam trial as well and that will make quite a difference.
S. Bharat Kumar, Rajus lawyer, said he hasnt been informed about the fast-track hearing.
The government will try to show Satyam funds have been diverted and trace any real estate purchases and cash, Khurshid, 56, said yesterday. If wrongdoing is found, the funds can help pay for liabilities arising from a U.S. class-action suit, he said. Raju denies diverting funds and will respond to all charges in court, Kumar said.
Raju said in January he overstated the Hyderabad-based software providers assets by $1 billion, triggering a stock slump and government takeover. An expedited trial may help rebuild investor confidence after India slipped to 41st place, behind Mongolia, among the 183 nations ranked for protecting investors in the World Banks 2010 Doing Business Report.
If we can demonstrate to the world that we are serious in implementing the laws, that will bring in confidence, said Ashish K. Bhattacharyya, professor of finance and control at the Indian Institute of Management-Calcutta. It will help when the recession is over and India will be a desirable destination.
The one-time court would serve only for the Satyam trial, unlike regular courts where a case has to wait its turn.
At the moment there is no such necessity, Hyderabad- based Kumar said in a telephone interview.
There were 30.8 million cases pending in Indian courts at the end of March, according to the Web site of the Supreme Court of India. The top court had 50,163 cases, it said. More than half the criminal cases pending before the Delhi High Court were older than 10 years, it said in the annual report for the year ended March 31, 2008.
The former Satyam chairman was on Sept. 7 admitted to the Nizams Institute of Medical Sciences in Hyderabad, where he has been detained pending trial since his arrest in January, following a suspected heart attack. His illness wont have an impact on the trial, Khurshid said.
Satyam declined 0.7 percent to 120.15 rupees as of 12:13 p.m. in Mumbai trading, compared with a less than 0.1 percent gain in the Bombay Stock Exchanges benchmark Sensitive index.
Raju, who faces a maximum penalty of life in prison if convicted, on Jan. 7 said he falsified accounts that went undetected for years. His admission led to lawsuits from U.S. investors and new disclosure rules by Indian regulators. The Central Bureau of Investigation filed eight charges in a Hyderabad court on April 7 against Raju and eight other people.
Raju, 54, has been charged with offences including conspiracy, cheating and forgery, according to the bureau.
The Institute of Chartered Accountants of India has submitted its report from an inquiry conducted by the statutory agency and the government is studying the recommendations made, Khurshid said, without providing details.
Funds Diversion Probe
The Serious Fraud Investigation Office will submit its report to the Ministry of Corporate Affairs, Khurshid said, without providing a timeframe. The Directorate of Enforcement, under the Ministry of Finance, will continue its probe to see if any money has been diverted from Satyam, he said.
Tech Mahindra Ltd., partly owned by BT Group Plc and Indias largest maker of sport-utility vehicles Mahindra & Mahindra Ltd., gained control of Hyderabad-based Satyam in May after winning an auction held by a government-nominated board.
In the wake of the Satyam episode, the government has set up an early warning system to detect fraud and a pilot project with 50 companies is underway, Khurshid said.
The fact that people know this is in place would act as a deterrent, said Khurshid. The 50 companies participating in the project will provide feedback, he said.