CID takes custody of Rajus, begins grilling

Saturday, January 17, 2009

HYDERABAD - Disgraced founder and former chairman of Satyam Computer Services B. Ramalinga Raju and two other former top executives were Sunday taken into police custody for further interrogation in connection with the Rs.70 billion (Rs.7,000 crore/$1.43 billion) fraud.

This followed Saturday’s court order, remanding the three accused to custody of the Crime Investigation Department (CID) of Andhra Pradesh police for four days from Jan 18 to Jan 22.

A team of CID officials reached Chanchalguda central jail here Sunday morning and took Ramalinga Raju, his brother and former managing director B. Rama Raju and former chief financial officer Vadlamani Srinivas into custody.

They were taken to the CID office, where the officials began questioning them.

The Raju brothers were arrested Jan 9, two days after Ramalinga Raju admitted to the massive fraud. Srinivas was arrested the next day. A court sent all the three to judicial custody till Jan 23.

Sleuths of CID will question the accused in the presence of their lawyers as directed by sixth additional chief metropolitan magistrate D. Ramakrishna, who also directed the probe agency not to interrogate them during night time and not to use third degree methods (torture).

The lawyers of the accused said they will challenge the magistrate’s order for CID custody in a higher court.

The CID officials hope their interrogation would help take forward the investigations. The public prosecutor told the court during the hearing of arguments Friday that the CID wanted to ‘dig out the truth’ behind the fraud.

The CID will try to find out from Ramalinga Raju if he siphoned off the company’s money by diverting the same to Maytas Infra and other companies promoted by his family. It doubts the veracity of Raju’s Jan 7 statement in which he stated that the company inflated its accounts for seven years and showed ‘non-existent’ cash and bank balances.

The CID will also try to find out from the accused about the properties and assets of Satyam, in view of doubts that the same might have been mortgaged by the former bosses to raise money.

Ramalinga Raju will also be questioned about the lands held by him, his family members and the companies promoted by them in Hyderabad, other parts of the state and the country. The investigators will try to ascertain the facts in view of the suspicion that he might have diverted Satyam money to buy prime lands.

The CID will also question him and others with regard to the role played by other directors and company officials in the massive fraud. A CID official said the scope of the investigations could widen if the names of others surface during the interrogation.

The investigators have reportedly prepared a long questionnaire with the help of experts in finance, accounts and taxes to grill the accused.

Nearly two weeks after Raju admitted the massive fraud, nobody knows how he did it or if the money, which he referred to in his statement, existed or not. During the CID interrogation on Jan 9-10, he only reiterated what he stated in his letter to the board of directors on Jan 7.

Though former CFO Srinivas, in his statement before CID on Jan 10, denied his involvement in the fraud, the officials would grill him further to know the role played by him and other employees in accounts department.

Market regulator Securities and Exchanges Board of India (SEBI) is still waiting for an opportunity to question Raju. Its petition seeking the court’s permission for questioning him will come up before the magistrate Monday. However, CID sources said SEBI would not get permission till Jan 22, when the CID custody of the accused will lapse.

Since the judicial custody of the accused is also lapsing Jan 23, the SEBI may have to wait till the same is extended by the court. The SEBI counsel has already claimed that Ramalinga Raju was trying to avoid grilling by the market watchdog.

SEBI had served summons on Raju Jan 9 and his lawyer had told SEBI that he would appear the next day. However, a couple of hours later the Raju brothers surrendered before the CID, denying SEBI an opportunity to question them.

Registrar of Companies and Serious Fraud Investigation Office (SFIO) are also continuing their probe into the fraud. They have already seized documents from Satyam offices.

Filed under: India, Satyam

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