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The inside story of how Satyam scam unfolded

CNN-IBN
Jan 20, 2009 at 03:32am IST

New Delhi/Hyderabad: The Serious Fraud Investigation Office will probe also Maytas infrastructure as part of the Satyam financial scam probe.

Corporate affairs minister P C Gupta said on Monday evening that initial investigations suggest a clear nexus between Satyam, Maytas properties and Maytas infrastructure

ALSO SEE Cyber experts to help CID in Satyam probe

Earlier, the Andhra High Court dismissed Ramalinga Raju's revision petition against his police custody. But SEBI still did not get to question Raju on Monday as a court order on the body's petition to question him was postponed till January 22.

Meanwhile the CID is questioning the Raju brothers and former Satyam CFO Vadlamani Srinivas .

They are also looking into their e-mails and phone records over the last one month.

Meanwhile, Andhra chief minister Y S R Reddy reiterated his government did not flout any rule in awarding the Hyderabad metro rail project to Maytas.

But how deep and how wide is the rot inside India's fourth largest software company?

Sources tell CNN-IBN the company is facing serious money crunch, and needs Rs 1,110 crore to tide over the crisis and Rs 500 crore to pay the January salary to employees.

Meanwhile a search is also on for a new CEO for the embattled IT firm. Network-18 learns that the board is looking at a 10-day time period to pick someone to head the company. Over 40 applications have come in so far.

There is now also a question mark on the number of employees Satyam has. It is reported that Satyam has 53,000 employees.

How they did it

Investigators are now reportedly coming across evidence of insider trading by the promoters even before the scandal broke.

The big takeaway from the Registrar of Companies report is that the top management of Satyam - the directors and senior officials - sold shares ahead of the Big Bang revelation by Raju.

The reports say Satyam books have been overstated by Rs 5,000 to Rs 6,000 crore, leading to an inflated stock price that helped the top management make money.

Who sold what?

Raju has claimed that no one else in the company was privy to the fudging of accounts. But exclusive information with CNN-IBN suggests insider trading.

BSE figures show a number of senior people in the company, including Raju and CFO Vadlamani were reportedly selling Satyam's shares over the last 22 quarters.

In June 2001, Raju had nearly 23 per cent shares. By December that year, his share was down to 22.4 per cent.

In September 2002, it fell to 21.6 per cent which fell a year later to just over 19 per cent.

In 2004, Raju's holding was 16 per cent which fell to 14 per cent in 2005, 11 per cent in 2006. In 2007 it was in single digit.

By September 2008 Raju's share was just 8.27 per cent.

BSE figure also show Vadlamani sold 92,538 shares while the then CEO Ram Mynampati sold 700,000 shares plus 2,50,000 ADRs.

Apart from these, other senior officials also reportedly sold large number of shares. Sources say they include one Kiran Cavale who reportedly sold 400,000 shares and 10,000 ADRs and one Rajan Nagarajan who reportedly sold 430,000 shares and 70,000 ADRs.

(Inputs from Shaik Ahmed Ali and Karma Paljor)

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