Satyam Scam - Politics, Media & Lies

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It's been more than a month since Satyam scam came to light. On Jan.7, Ramalinga Raju confessed about the accounting fraud in Satyam Computers and two days later he was arrested by the CID. So far, I must have filed over two dozen stories about the entire scam related to Raju's fraudulent methods, his benami companies, bank accounts, properties and the role of investigating agencies. Like all other journalists, I used to react on each and every bit of information that came to me. But now I feel bored reporting about Satyam. I no more feel excited when any new information comes to me about the scam. I treat that info as routine and try to ignore it. Same is the case with many other journalists who were regularly tracking Satyam scam.

For the last few days, most of the journalists have confined their reporting to the happenings in the Nampally criminal court. With elections round the corner, I feel that Satyam will get very little space in both television and print media in near future. But I suspect that 'some people' also planned this 'loss of interest' by media. They wanted to hush up the country's biggest corporate fraud and they knew the limitations of media. They were aware that every time media would look for new information or some 'masala'.

In the initial days, it was easier for the media to explore different angles to report. But once one aspect of the scam is reported, then that news was dead forever. In the initial days there were reports about how Raju might have diverted funds, bought properties, floated over 300 companies and so on. But soon, all that information became stale due to lack of new elements. There was no official briefing by any investigating agency including the Crime Investigating Department or the SFIO or SEBI and therefore, media remained clueless about the new developments happening in the case.

More and more agencies joined the queue to question Ramalinga Raju's gang and politicians started making statements that ensured that media's attention gets diverted from the original scam. At one side, media is primarily focused on the investigations being done by the CID, SFIO, SEBI, Enforcement Directorate, and Income Tax Department and now even ICAI. Secondly, the political statements are drawing media's attention. While central ministers including Pranab Mukherjee and P.Chidambaram are making statements saying that the Satyam scam would be fully unraveled, opposition leader L.K.Advani has been demanding a judicial probe. Andhra politicians, especially the chief Minister Y.S.Rajasekhara Reddy and opposition leader N.Chandrababu Naidu used Satyam case to accuse each other's sons of having enjoyed Ramalinga Raju's money. Lastly, the new board is hitting headlines for their 'save Satyam' initiatives.

Amidst all these developments, large number of journalist are spending their time in Nampally criminal court tracking the outcome of different petitions being filed by CID, SFIO, SEBI, ED and IT departments and also the bail and anticipatory bail petitions being filed by different accused and suspects.

A close observation of the statements made by the relevant people indicates that each of them tried to divert the media attention. Several lies were told and repeated by many high profile individuals. Instead of facing the media in press conferences, most of them issued printed statements to avoid any questioning by the media. Though all these developments look different, but I strongly believe, they are all connected right from the day one. I may be wrong, but I see lot of politics behind this right from handing over the case to the CID to the constitution of new board for Satyam. Let's have a look at the chronology of Satyam-related developments and the how big people made contradictory statements.

After Raju's confession on Jan.7, besides announcing that CB-CID will probe the Satyam case, on the same night (Jan.7) Andhra Pradesh Chief Minister Rajasekhara Reddy wrote a letter to the Prime Minister asking him to constitute a 'management team' to run Satyam. He suggested in his letter," I urge you to kindly constitute a management team with immediate effect comprising of personalities of globally known integrity and competence viz., Sri Azim Premji, Sri Narayana Murthy and Sri Ramdorai to manage affairs of the company to restore the confidence of the global customers in its business continuity, so that the interests of the employees and other stakeholders are protected till an alternative credible management is put in place for the company."

This was not a suggestion, but a very clear demand. Therefore, it was YSR, and not the center, which came out with an unprecedented formula of 'saving' or 'reviving' a scam-hit company. On Jan.9, at 8 pm Central Government disbanded Satyam's board. Exactly at the same time CID registered a case against Ramalinga Raju. Two days later on Jan.11, addressing separate press conferences, Corporate Affairs Minister PC Gupta announced the appointment of three new board members while YSR clarified his stance on Satyam and Maytas. Interestingly, Jan.11 was a Sunday and both the press conferences were held at the same time at 12 noon. This may be just a coincident.

But on Jan.11, YSR made a contradictory statement about Raju's arrest. Entire media knew and even the CID officials later confirmed that Raju himself came to the Police Headquarters and surrendered. But YSR claimed that, "DGP spoke to me at about 9 pm saying that a police team has been sent to pick them up." On the other side, on Jan.9 itself Raju's lawyer Bharat Kumar told media that, "Raju got a communication from CID at 8.30 pm summoning him for a case." This raises a suspicion that either DGP SSP Yadav lied to the Chief Minister or YSR was lying to the media. Whatever is the truth, the statements about the Satyam case started with lies?

The new board members too were not behind making tall statements about the Satyam Computers. Soon after their appointment, they started giving an impression that Satyam was a genuine company, with genuine employees, genuine clients and genuine revenues. If they are right, then there should be no doubts that Ramalinga Raju siphoned off Satyam's money from company's accounts. But sometimes their tone matched with Raju's claims. On the day when Public Prosecutor told Nampally Criminal Court that Satyam's headcount of 53,000 was not genuine and there were over 10,000 fictitious employees, Ramalinga Raju issued a statement through his lawyer saying that the headcount figure of 53,000 was correct.

The next day, new board issued the following statement, "Commenting on the serious doubts raised regarding the head count in the company by external authorities, the Board has confirmed that prima facie, there appears to be no basis to doubt the same. The independent investigation process is expected to reaffirm this fact, in the coming weeks." This statement raises a question as to why did the board confirmed that 'prima facie' headcount was correct without even waiting for the reports of 'independent investigation process'. Are they trying to defend Raju? There are several other questions that deserve answers.

Why Satyam, as a company, did not file any police complaint against its former chairman who himself admitted of having committed the fraud? To this, new board member C.Achutan on Jan.12 answered, "To file a complaint there should be some sort of a material evidence, at this stage on the basis of hearsay we couldn't do anything. If we are getting enough material then definitely we will be doing it." He further said, "Chairman's statement alone cannot be relied upon, the court will ask you for supporting corroborating evidence, he can retract the statement when he goes to the court." Even after one month, the board is not clear whether or not it would lodge a formal complaint against its former chairman.

Similarly, within a week after their appointment, new board members started praising Satyam. Deepak Parekh even claimed that Satyam has receivables of Rs.1700 crore. Exactly three days after his appointment, Parekh claimed, "The company on its book, as of today, has a large amounts of receivables due, if these receivables come on time, on due date, the company has adequate liquidity, the loans against these receivable are minimal. But we have to get the numbers authenticated and verified." How did he know about it within three days after his appointment and after spending just 6 hours in Satyam's campus?

Further, new board members did not object to Ram Mynampati and other top management fleeing India despite knowing that they may be wanted by investigating agencies may be just for questioning. In fact, they issued a statement denying that Ram and others "flee" India, but they only "returned" to their base. Now the CID wants to question Ram Mynampati about Satyam case and it has reportedly approached the new board asking it call him back from the US. Can the new board members bring Ram Mynampati back from the US and will he listen to them?

The new board has not made any major changes in the management, even in the accounts and finance departments. They are still working with the same teams that were formed by Raju. Even VS Murthy was part of the Task Force formed by Ramalinga Raju after aborted Satyam-Maytas deal. The new board also issued statements denying that the top management was involved in "insider trading" although SEBI is yet to complete its investigations. Interestingly, none of the people including Ram Mynampati whose names were reported in the media for "insider trading" refuted the charges directly.

In the last one month the new board met six times and to my understanding, it did not take any major decision. To avoid questioning by the media, the board members stopped addressing press conferences after the first board meeting on Jan.12. Their decision to appoint VS Murthy too turned controversial as he sold his shares immediately after the controversial Satyam-Maytas deal was aborted on Dec.16. The board members hyped the appointment of CEO claiming that they received 40 applications. But the board never clarified whether Murthy was one of the applicants.

The board has also appointed some independent auditors to restate the company's accounts. But the question is how will those agencies do the restatement? All the documents, even computers, related to Satyam's finance and accounts departments have been seized by the CID, SFIO and SEBI and nobody on behalf of Satyam approached these agencies for a copy of seized documents. No body knows since when the accounts were being fudged. So what will be the basic criteria that will be adopted to restate the accounts? On what grounds, the company's assets and liabilities would be ascertained? How this company would be valued which would facilitate its sale?

Further, there were some reports saying that Satyam has added 15 new clients in January. First of all, we need to know the companies which are signing contracts during recession period, that to unusually in the month of January, and instead of going to other clean companies like Infosys, Wipro or TCS, why they want to do business with a scam-hit company Satyam? The constitution of new board has also complicated the investigation process and directly helped Raju. Debating on police remand petition, Raju's lawyer told the court that Raju is in no way connected to Satyam, as now the company is being run by a new board. Therefore, any complaint or issue related to Satyam Computers should be addressed to the new board.

On the political front, YSR wrote two letters to the Prime Minister asking for CBI probe. In the first letter on Jan.28, YSR said his government 'would welcome if the case is handed over the CBI, if deemed appropriate". In the second letter on Feb.9, he said, "It would be appropriate if the case is handed over to the CBI." YSR changed his stance in just 10 days. Surprisingly, the Centre has not responded to both the letters.

On the investigation side, the Central Government extended the SFIO's probe into Satyam scam to 350 entities. Some experts believe that this extension would only delay the outcome of SFIO's probe. Government had set a deadline of 3 months for the SFIO to complete the investigation. Initially, the SFIO's probe was confined to Satyam Computers, Maytas Infra and the Maytas Properties. One month is already over and SFIO is yet to get Raju for interrogation. With now the government extending the probe to 325 more companies and 25 individuals, the probe may be delayed. Presently an 8-member SFIO team is doing investigations and it lacks adequate resources to conduct this massive probe.

SFIO is a specialised investigating agency, but now it seems that the government is asking it to do what a regular investigating agency like CID do. Increase in number of companies to be probed indicates that the government may also extend the deadline for submitting the probe report to at least 6 months. But logistically speaking, even if SFIO dedicates one day to investigate about one company, then it will not be able to complete the entire probe in the next one year. Further, the ongoing pace of SFIO's investigation too is questionable. SFIO is yet to get permission from the court to interrogate Raju. But why it has not questioned other people who could be involved in the scam? Does it want to question all scamsters in descending order starting from Ramalinga Raju?

So far, CID has arrested only six people including Ramalinga Raju, Rama Raju and Srinivas Vadlamani who themselves came to the police headquarters along with their passports. One of the accused, the general manager of SRSR Advisory Services DV Gopala Krishnam Raju even got bail on Feb.6. Neither the CID nor the state Home Department briefed media even once about the status of the investigation into the country's biggest ever-corporate fraud. Media's entry into Police Headquarters is banned after Satyam's case. DGP SSP Yadav, Addl.DGP A.Shivanarayan and IG (Economic Offences Wing) VSK Kaumidi are not available for any official (or even off-the-record) comments. Therefore, the entire media has been doing just source-based reporting and have no specific clue as to whether or not the CID would arrest more people in this case or what will be its next move.

SEBI has recorded Raju's statement for three days with Supreme Court's permission. Now SFIO, Enforcement Directorate, Income Tax Department and ICAI have queued up in the Nampally Criminal Court seeking permission to question the accused in the case. SEBI too wants permission to question other accused including ex-CFO Srinivas Vadlamani. As of now it is not clear whether or not the case would be handed over to CBI. But if that happens, it would further delay the probe. The official transfer of case from CID to CBI may take at least one month. Then probably the case may be transferred from the present criminal court to Special Court for CBI Cases in Hyderabad. Then all agencies may have to file fresh petitions seeking Raju's custody or permission to interrogate him. This will ensure that no agency will come out even with their preliminary reports before the completion of election process and formation of new governments at both the Centre and the State.

On Jan.11, YSR made an interesting comment about 'saving Satyam', "So many IT professionals are there and out of them more than 50 per cent are Telugus, and we'll have to take care of their interest. So, I requested the Prime Minister to look into this as top priority." As asked by their chief minister, the Congress-led UPA Government started the process of 'saving Satyam'. Subsequently, the new board was constituted and it ensured that the employees get the salaries for months of January and February. I strongly believe that Satyam employees will surely get their March salaries too. By April end, the elections would be almost over and the government's 'save Satyam' initiative too may also come to an end. We should only pray that thousands of Satyam employees do not fall prey to this politics.

By this time, media will be too tired after covering general elections and will be busy speculating about the new government. Consequently, coverage of Satyam scam will also be buried unceremoniously and it may be placed in the category of some old and boring issues to be talked about. The same thing happened with many other scams and there are strong possibilities that media will soon forget the Satyam scam.