Market regulator may finally get to grill Satyam ex-chief

HYDERABAD - Market regulator Securities and Exchange Board of India (SEBI), probing the Rs.70-billion ($1.43 billion) fraud in Satyam Computer Services, may finally get an opportunity to grill the company’s disgraced former chairman B. Ramalinga Raju when the matter comes up before a court here Friday.

SEBI sought the court’s permission Jan 12 to question Ramalinga Raju, who is currently in judicial custody. But the court adjourned the hearing to Jan 16 as Raju sought more time to file a counter plea.

The bail petitions of Raju, his brother and former managing director B. Rama Raju and former chief financial officer Vadlamani Srinivas, as well as the petition of the Criminal Investigation Department (CID) seeking their custody for 15 days will also come up for hearing Friday.

SEBI officials hope that they would get the permission to question Ramalinga Raju if the court puts him in CID custody.

Though SEBI launched investigations a day after Raju quit as chairman Jan 7 while confessing the biggest-ever corporate fraud in India, it has not been able to question him.

The market regulator’s lawyer Pradyumna K. Reddy told a television channel that Raju was evading SEBI officials and was thus hampering the probe.

SEBI started checking Satyam’s accounts and other records Jan 8 and served summons on him the next day to appear before the investigators. Since Raju was not available, the summons were handed over to security guards at his residence.

Raju’s lawyer S. Bharat Kumar immediately met SEBI officials and sought a day’s time on behalf of his client. He said Raju would appear before a SEBI team at 4 pm Jan 10.

A few hours later, the CID, which took no action for two days, booked a case of cheating and fraud against Raju. Soon after, the Raju brothers surrendered to the police.

The CID grilled them for almost 24 hours before producing them at a magistrate’s residence Jan 10, who remanded them to judicial custody till Jan 23.

Bharat Kumar said the same day that SEBI would have to approach court to seek permission to question his client. The CID action have raised suspicions that Raju used his political connections to avoid a SEBI grilling.

However, the state government denied this. ‘The CID inquiry in no way prevents other law enforcement agencies from carrying out their probe. They can question the accused and get their custody,’ Chief Minister Y.S. Rajasekhara Reddy has said.

Bharat Kumar also denied his client was trying to avoid a SEBI probe. ‘There is a clear procedure for everything. They have already sought court’s permission and we will be filing our counter,’ he said.

Raju, in his letter to Satyam board, admitted that the company cooked its books resulting in an ‘inflated (non-existent) cash and bank balances’ over several years. He has also confessed committing the fraud to CID.

CID, SEBI, Serious Fraud Investigation Office (SFIO) and Registrar of Companies are separately probing the scam.

CID officials are also looking into documents seized from Satyam’s auditors PricewaterhouseCoopers (PwC).