Raju's baby reborn & growing even as those accused stay on bail

The arguments in the case are still continuing and none is in a position to say when they will be concluded.

Five years have passed since India witnessed the unfolding of the Satyam Computer Services’ scam, termed the biggest corporate fraud in the country till date. On January 7, 2009, B Ramalinga Raju, founder-head of the company, confessed he’d for years been falsifying the earnings and assets of Satyam, then the country’s fourth largest information technology and outsourcing entity. Despite all this time having elapsed, the special court which is hearing the massive accounting fraud case is yet to give a verdict. The arguments in the case continue and none can say when these will be concluded. All the 10 accused, including Raju, are out of jail on bail — the Supreme Court had granted this to them on November 4, 2011.   

The countdown to the exposure for Satyam and its founder began on December 16, 2008, when it had announced an intent to acquire a 51 per cent stake in Maytas Infra and a 100 per cent stake in Maytas Properties, both promoted by Raju’s sons, Teja Raju and Rama Raju, for around Rs 7,000 crore. This was severely opposed by other investors in the company, forcing Raju to call off the proposed acquisition within a day of the announcement, on December 17.

Background
Raju’s confessional letter to the company’s board said he tried to sell the two promoter-related firms to Satyam in a final attempt to plug the Rs 5,500 crore of “fictitious” cash on the balance sheet. Two days after the confession, Raju and his brother, then Managing Director Rama Raju, were arrested. Satyam’s shares plummeted to Rs 11.50 on January 10, 2009, the lowest since March 1998, as compared to a high of Rs 544 each in 2008. On January 14, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam could have rendered its audit reports “inaccurate and unreliable”.

The central government had swung into swift action to save Satyam. On January 10, 2009, the Company Law Board (CLB) decided to bar Satyam’s board from functioning and nominated banker Deepak Parekh, former Nasscom president Kiran Karnik and former Sebi member C Achuthan to its board. On February 5, 2009, the six-member board appointed by the Centre had named A S Murthy, an electrical engineer who has been with Satyam since January 1994 and was then heading its global delivery division the new chief executive officer. On February 11, the board met to finalise the criteria on selecting bidders for selling a 51 per cent stake in the company, so that it could raise sufficient funds to meet its working capital requirements and liabilities from various class-action suits. Larsen and Toubro, Tech Mahindra, Aegis BPO, iGATE and B K Modi’s Spice Group joined the race. On April 13, the decision was made; the government-appointed board announced Venturbay Consultants, a subsidiary of Tech Mahindra, the highest bidder for the controlling stake, subject to CLB approval. TechM had offered Rs 58 a share for 31 per cent and acquired the stake in an all-cash deal, followed by an open offer for 20 per cent more.

FROM THE PEAK TO THE PIT AND BACK

2009

• Jan 7: B Ramalinga Raju, founder and chairman of Satyam Computer Services Limited, confesses to fudging of accounts to the extent of about Rs 7,000 crore in a letter to the board
• Jan 9: Raju and his brother, B Rama Raju (managing director of erstwhile Satyam) were arrested by the Andhra Pradesh police on charges of forgery and cheating; central govt supersedes Satyam’s board
• Jan 10: The Company Law Board (CLB) bars the Satyam board from functioning; govt nominates Deepak Parekh, Kiran Karnik and C Achuthan to the board
• Jan 13: Govt orders Serious Fraud Investigation Office (SFIO) to probe the scandal
• Feb 2: Mahindra & Mahindra (M&M) expresses interest in acquiring Satyam
• Feb 5: Govt-appointed board names A S Murthy as the new chief executive
• Feb 11: The new board meets to select prospective bidders for 51% stake in Satyam
• Feb 17: Satyam case handed over to the Central Bureau of Investigation (CBI)
• Feb 18: Govt asks CLB to supersede the boards of the Mytas Infra and Mytas Properties
• Mar 6: The Securities and Exchange Board of India (Sebi) gives approval to sell 51% in Satyam
• Apr 4: CBI files its first charge sheet
• Apr 13: Tech Mahindra, through its subsidiary Venturebay Consultants, acquires Satyam
• Nov 22: CBI files its second charge sheet

2010

• Jan 7: CBI files the third charge sheet
• Feb 2011-April 2012: Mahindra Satyam pays $125 million and $68 million to settle US law suits and Aberdeen UK claim, respectively
• Oct 25: Trial court frames charges in the case
• Nov 2: Trial begins

2011

• Nov 4: Ramalinga Raju, along with two other accused, gets bail from the Supreme Court as CBI fails to file the chargesheet even after more than 33 months of Raju being arrested

2013

• Jun 25: Mahindra Satyam merged with Tech Mahindra, creating a new entity with revenues of $2.7 billion

Forward
Taking questions from apprehensive employees of Satyam a day after the acquisition announcement, TechM chairman Anand Mahindra said the aim of the acquisition was to go well beyond the legacy. A S Murty, who after the acquisition continued as the CEO of Satyam, said: “It is a rebirth for all of us. Together, we will make our dreams come true and continue to focus on customer retention and gain back some portion of the business that was lost. Please continue the delivery excellence. Tightening our belts is the need of the hour. We should tune expenses in line with our revenues.” In line with its new strategy and to also erase everything related to Ramalinga Raju, the new management had in June 2009 terminated lease contracts of four facilities in Hyderabad, three offices in Bangalore and two in Chennai, the lease rental papers of which were reportedly signed by Raju during the real estate boom in 2007-08.

Also, on June 11, 2009, Satyam’s new management had announced a Virtual Pool Programme, a one-time initiative aimed at addressing ‘non-billable’ staff costs while retaining talent. Close to 10,000 ‘associates’, their preferred term for employees, got sabbatical letters, settling for a ‘basic’ pay in addition to provident fund and medical insurance.

After battling a spate of legal cases in India and abroad through February 2011 to April 2012, Satyam (rebranded as Mahindra Satyam in June 2009) has paid $125 million to settle US lawsuits and $68 million to settle a claim in the UK.

And, after several rounds of cosmetic surgeries and medication over five years, the ‘recuperated patient’ (Satyam) was merged with TechM on June 25, 2013. Now called Tech Mahindra, the entity is the country’s fifth largest IT company, with annual revenue of $2.7 billion. TechM aims to almost double the turnover to $5 billion by 2015, with focus on telecom, manufacturing and BFSI (banking, financial services, insurance).

“Today we have fulfilled the commitment made in 2009, when we acquired Satyam, to jointly become one of the largest, diversified players, leveraging technology for business solutions,” Anand Mahindra, group chairman, Mahindra & Mahindra, had said after announcing the final merger.

Glacial courts
Simultaneously, the Central Bureau of Investigation (CBI) continued its probe into the fraud case and filed three chargesheets. It filed 160,000 documents pertaining to the case and cited a total of 613 witnesses. Following this, the trial court framed charges on October 25, 2010. The trial commenced on November 2, 2010.

In all, the prosecution has examined 226 essential witnesses, instead of the 613 mentioned in the chargesheets. The defence has yet to examine any..