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Satyam fiasco: Lost Rs 950 crore
April, 10th 2009

If one were to put aside the magnitude of loss suffered by the investors in Satyam, the money with which the Raju brothers played in Satyam scam was to the tune of Rs 6,000 crore. Of this, the amount they cornered for themseleves and their family was Rs 2,580 crore. The whereabouts of this money and the properties they bought with it and the key persons that helped them in perpetrating this scam is yet to be known. This is the crux of the charge sheet filed by the CBI two days ago in the local CBI court in which nine persons including B Ramalinga Raju, B Rama Raju and B Suryanarayana Raju are the accused.

Interestingly, Life Insurance Corporation (LIC) has emerged as the single largest institutional investor which lost as much as Rs 950 crore. Others like Allahabad Bank, Union Bank of India, Punjab National Bank, Oriental Bank of Commerce, Corporation Bank etc have together lost only Rs 10 crore put together.

The core of the chargesheet, running into 75 pages, mentioned what the CBI understood so far about the scam. Some highlights: When the actual cash available with the company was only Rs 139 crore, the accused had shown an inflated figure of Rs 5,160 crore and also claimed an interest of Rs 375 crore on that while the actual interest accrued was only Rs 7 lakh. On this, the accused had claimed that they had paid a tax of Rs 30 crore whereas the tax that was deducted on this income was only Rs 1.5 lakh.

Amazingly the number of fake invoices they generated was 7,561 and Rs 5,117 crore in value. Sales of the company was also inflated by 18% from Rs 23,434 crore to Rs 27,691 crore and the figure under the debtors account was shown as Rs 481 crore.

The chargesheet said that the Raju brothers had first sold their shares for Rs 75 crore, which they gave as gifts to their wives and family members. Later, in 2002, they sold the Satyam shares held by their family members, earning Rs 707 crore and purchased several properties with that money. They cornered another Rs 115 crore as dividend.

Between 2006 and 2008, Raju brothers had mortgaged their shares and got Rs 1,744 crore as loans from several non banking financial institutions. The shares held by the Raju family in Satyam fell from 18 per cent in 1992 to 1.87 per cent by 2008 but was not noticed by anybody. The 327 frontal companies floated by Raju brothers as agro based companies did nothing related to agri industries but were busy rotating the money they swindled for purchasing real estate. Even the bench strength of the company is only 62 per cent and they inflated this to 75 per cent and though the growth of the company is only three per cent, the accused have shown 22 per cent as operating margin. They also suppressed a liability of Rs 1,230 crore they have to pay to various institutions.

The CBI also found fault with the auditors and held them as chief accomplices responsible for the largescale fraud. For nearly seven to eight years, these auditors were certifying all the fake FDRs and ignored their prime responsibility of verifying the realities, it said.

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