Click to play videoNew Delhi: Former Satyam chairman Ramalinga Raju and his brother, former Satyam Managing Director Ram Raju surrendered before the Andhra Pradesh Director General of Police on Friday night and were subsequently arrested, police spokesperson said.
Ramalinga Raju has been charged under various sections of the Indian Penal Code including Section 120B for criminal conspiracy, under Section 409 for breach of trust, under Section 420 for cheating, and under Section 468 and Section 471 for forgery.
On Wednesday, Raju - Satyam's Founder and Chairman - resigned from the company after confessing to country's biggest financial fraud of Rs 7,000 crore and disclosing massive financial irregularities.
Fifty-four-year-old Raju will appear before a team of market regulator Securities and Exchange Board of India (SEBI) at Satyam's corporate office at 1600 hrs IST on Saturday, his lawyer S Bharat Kumar said earlier.
Raju faces up to 10 years imprisonment along with a fine, which may extend to Rs 25 crore in the financial fraud that led to erosion of investors wealth by whopping Rs 10,000 crore in a day.
SEBI has already ordered an enquiry into the issue to find out if Raju has violated the various regulations pertaining to dealings in securities market.
The police said that Valdamani Srinivas, Chief Financial Officer, will be arrested on Saturday.
When contacted, a Satyam spokesperson declined to comment on the development.
What happens now?
The regulator would look into various statutory violations, which include unfair trade practices, insider trading regulation and take over code. The enquiry would be conducted by a SEBI General Manager, Sunil Kumar, who had been designated as investigating authority.
Under the SEBI Act, imprisonment and monetary penalty could be awarded "if any person contravenes or attempts to contravene or abets the contravention of the provision of this Act or of any rules or regulations made there under".
This would mean that Raju could be punished for violating the securities regulation and as well as for abetting officers of Satyam to commit financial fraud, corporate law practitioners said.
Board disbanded, Govt takes over
On Friday, the Central Government sacked Satyam Computers' directors and announced it will appoint 10 new directors within seven days to run the company tottering on the brink of collapse.
With this move Saturday's meeting of the truncated board of the company stands cancelled.
The board has shrunk from nine to five members after four independent members quit in the wake of Raju's aborted bid Dec 16 to buy two cash-strapped firms, Maytas Properties and Maytas Infra, promoted by his two sons.
"The government wants to protect the interests of the employees (53,000) and other stakeholders," Company Affairs Minister Prem Chandra Gupta told reporters in New Delhi.
He said the Company Law Board has agreed to the government's proposal "to restrain Satyam board members to continue as members and appoint 10 new members".
The Big Deceit
Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share price.
Demanding trial by the jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by law firm Vianale & Vianale LLP on behalf of shareholders. Glancy Binkow & Goldberg, Federman & Sherwood, Harwood Feffer and Izard Nobel have filed their class action lawsuits in the United States District Court for the Southern District of New York.
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