Satyam's Raju: From small spinning unit to spinning big lies
Hyderabad, Apr 9 : Before falling from grace by admitting to India's biggest accounting fraud, B Ramalinga Raju was a poster boy of the Indian IT industry who rose to fame with a solution for the highly-feared Y2K crisis at the turn of 20th century for the entire world.
Interestingly, his first business venture was a spinning and weaving mill, named Sri Satyam, while his undoing came in form of spinning a fraud to the tune of Rs 7,000 crore at Satyam Computer -- a company he founded and nurtured although with inflated profits and falsified books.
60-year-old Raju, who was sentenced by a CBI court today to 7 years in jail with a fine of Rs 5 crore, founded Satyam in 1987 and made it into what came to be known as India's fourth largest IT firm, which reaped huge profits after making software solutions to tackle the famous Y2K crisis.
It was feared at that time that a worldwide bug would crash computer systems across the world, due to abbreviating a four-digit year to two digits, on January 1, 2000, as the systems did not recognise the year 2000 from the year 1900.
However, post Y2K Satyam business began drying up with and Harvard-educated Raju started dressing up the books to attract new clients.
Through family members, he also floated other firms with the name 'Maytas', while putting alphabets in 'Satyam' in the reverse order.
It was eventually a financial engineering proposed by him for acquisition of two Maytas firms by Satyam, a Sanskrit word for 'truth', that eventually called his bluff.
This is the second major penalty imposed by Raju, as also on his family members and other accomplices in the fraud that continued for years and came to light after his own admission over six years ago in January 2009.
Regulator Sebi has barred them from markets for 14 years and has asked them to return Rs 1,849 crore of unlawful gains with interest, which totals to over Rs 3,000 crore.
The crime was "a sophisticated white collar financial fraud with pre-meditated and well thought of plan and deliberate design for personal gains and to the detriment of the company and investors".
On January 7, 2009, Raju - the then Chairman of Satyam Computer - sent off an email to Sebi and stock exchanges, wherein he admitted and confessed to inflating the cash and bank balances of the company, besides understating liabilities and other financial mis-statements.
Weeks before the scam began to unravel with his famous statement that he was riding a tiger and did not know how to get off without being eaten, Raju had told PTI in an interview that Satyam had cash balance of Rs 4,000 crore and could leverage it further to raise another Rs 15,000-20,000 crore.
But on January 9, 2009, he admitted that Satyam balance sheet was 'inflated' to the tune of Rs 5,040 crore.