Moneycontrol Bureau
The Hyderabad Special Court probing the Satyam Computer Services accounting fraud today sentenced the company’s founder B Ramalinga Raju to a seven-year jail term while holding him guilty on charges of cheating, forgery and criminal breach of trust.
The court also fined Raju Rs 5.5 crore and other 9 co-accused Rs 50 lakh each.
The court also held nine others guilty of the same charges applied to Raju. These were Ramalinga Raju’s brothers B Rama Raju and Suryanarayana Raju, former CFO Vadlamani Srinivas, former PwC auditors Subramani Gopalakrishnan and T Srinivas, ex-Satyam internal auditor VS Prabhakar Gupta, and former Satyam employees G Ramakrishna, D Venkatpathi Raju and C Srisailam.
In July last year, the Securities and Exchange Board of India had fined Satyam founders Raju brothers-Ramalingam and Rama-and three former senior executives a total of Rs 1849 crore for their role in the accounting fraud that eventually led the company being sold to Tech Mahindra.
The three former Satyam executives penalized by Sebi were Vadlamani Srinivas, G Ramakrishna, and VS Prabhakara Gupta.
They were also charged another Rs 1220 crore by way of interest charges at 12 percent per annum from January 7, 2009; the day when the Satyam chairman B Ramalinga Raju confessed to inflating the company’s earnings. Raju’s admission had triggered a collapse in Satyam shares and sent shockwaves through corporate India and the stock market.
In addition, all five were charged with insider trading and barred from the securities market for 14 years.
In September, the Securities Appellate Tribunal stayed the Sebi decision on penalty, but upheld the order banning the five from capital market.
EXPERT TAKE
JN Gupta, Former Executive Director, Sebi
Any other verdict would have been very surprising. Here it was a very simple case where this gentleman committed fraud and admitted it in front of media and everybody else and at the moment accepted with regulators. He later retracted the statement saying I did no wrong. This will not be taken by the court as truth.
On expected lines, this is a landmark judgment. It will make sure that in future such things are brought to justice. The only problem is it took very long. If we remember, the admission was sometime in January 2009 and we are in April 2015. Over six years have passed. I think there is a need that system should be improved and justice should be done in timely manner.
I believe that punishment meted out to the person who does wrong should be exemplary so that future instances don’t occur.
PR Ramesh, Former ED, SEBI
It is a good order but came in quite late. This is a case where there has been admission and after such a long time order is coming and even if the punishment is exemplary or not we don’t know.
The system has taken lot of time to come up with a conclusion on the offence that was contested. This actually creates a need for fast track courts (FTCs) for this type of corporate frauds. Like we have the Securities Appellate Tribunal (SAT) for the Securities and Exchange Board of India (SEBI) matters, I think the government has to seriously look ahead FTCs where in one or two year penalty should be handed out.
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