Raju brothers remain in jail, bail plea to be heard Monday

HYDERABAD - Satyam Computer Services’ disgraced founder-chairman B. Ramalinga Raju and his brother B. Rama Raju will have to spend three more days behind bars as a court here deferred a decision on their bail plea till Monday.

The court will give its verdict Saturday on the police plea to hand over Raju, Rama Raju, who was Satyam’s managing director, and Satyam’s former chief financial officer Vadlamani Srinivas in their custody for interrogation.

On Monday the court will also decide on the plea of India’s market regulator Securities and Exchanges Board of India (SEBI) for permission to question Ramalinga Raju about the country’s biggest-ever corporate fraud.

Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna heard arguments of both sides on the pleas of the Crime Investigation Department (CID) of Andhra Pradesh Police and the SEBI and adjourned the hearing on bail petition till Monday.

Ramalinga Raju resigned as Satyam chairman Jan 7 after admitting to the country’s biggest financial fraud of Rs.70 billion (Rs. 7,000 crores). He and his brother were arrested Jan 9 and sent to jail till Jan 23.

The Raju brothers moved the court for bail Jan 12. Srinivas was arrested Jan 10. All three are lodged in Chanchalaguda jail here.

The hearing of all three petitions in the crowded court room in Nampally court complex lasted for almost the entire day. A battery of senior lawyers for Raju to argue against the petitions of both the SEBI and the CID.

Almost the entire national media and even a few international mediapersons descended on the court complex to cover the proceedings of the high-profile case.

The day began with Ramalinga Raju’s lawyer S.R. Ashok seeking special treatment for his client in the jail on the ground that he enjoyed a status in the society and is used to a certain life-style. Prosecution countered this by arguing that Raju had committed a fraud and did not deserve any special treatment. The judge reserved the orders on this plea.

On the petition of SEBI seeking access to Raju to question him, Ashok argued that it was not maintainable as the SEBI regional director Sunil Kumar was not authorised by the SEBI chairman to file the petition as required under SEBI Act.

‘My client is not in a physical state to appear before the SEBI. He is in a trauma. He is not in a free state, where he can recollect things from the birth of the company two decades ago without the assistance of records,’ he told the court.

Ashok argued that legally Raju was not bound to appear before the SEBI as he was no longer in possession of the records pertaining to the buying, selling and dealing with shares. He claimed that situation had changed since the SEBI served summons on Raju Jan 9 asking him to appear before it.

‘The government has appointed a new board superseding the earlier board. All the records are available with new directors. SEBI can visit company premises and see those records or take the assistance of CID, which has already seized many documents,’ he said.

SEBI counsel Bal Reddy told the court that the regulator wants to question Raju about the statement which he sent to SEBI Jan 7, admitting the massive fraud. After hearing both sides, the court adjourned the case to Monday.

Public prosecutor Ganga Raju Prasad urged the court to hand over the accused to the CID for seven days to interrogate them further to ‘dig out the truth’. ‘The hidden truth will not come out without the custodial interrogation of the accused,’ he said.

The prosecution said Ramalinga Raju had to be questioned further to find out if he actually inflated the profits of the company, causing huge losses to the shareholders, or diverted the money to companies promoted by his sons.

Seeking police custody of Raju, he said it was a monumental fraud amounting to Rs.78 billion as the accused manipulated records for seven years. ‘The manipulation was done every quarter and it totally comes to 28 times,’ he said and pointed out the documents seized by the CID run into ‘thousands of tonnes’.

Winding up his arguments, he said if the custodial interrogation of the accused was not allowed this would send wrong signals to the society and shake people’s confidence in the judiciary.

The lawyers of Raju brothers and former CFO Srinivas made a strong defence. They argued that the prosecution failed to make a strong case for giving the accused into CID custody. ‘The only purpose of seeking their custody appears to be using third degree methods on them to extract statements,’ said C. Padmanabh Reddy, counsel for Rama Raju.

The defence lawyers said the accused had already recorded their statements and three agencies, including CID, seized all the documents from their offices and residences. ‘Where is the question of diverting or siphoning off money when it did not exist?’ asked Ashok.

After hearing both sides, the magistrate posted the plea for orders to Saturday.