Continuing its scrutiny of some 40 truckloads of documents in the Satyam Computer Services case, as well as electronic data that runs into terabytes recovered from personal laptops of Satyam founder B Ramalinga Raju his brother Rama Raju and former chief financial officer V Srinivas, along with the continued interrogation of key personnel, the Andhra Pradesh CID is uncovering more and more details of the modus operandi of the scam.
"The electronic data itself will take at least two months for our cyber experts to decipher. We have got all the land purchase and transactions records intact. We also have original bank statements which prove Raju's lies about fixed deposits," additional director general of police, CID, A Siva Narayana said. The CID's core investigation team has been joined by experts from the cyber crime cell and the AP State Forensic Laboratory. An official from Stamps and Registration office is helping the team in scrutinising the land records of the Raju family.
A member of the CID investigation team has that within 10 hours of his arrest on 9 January, Raju had revealed everything about the Satyam fraud: how he fudged the accounts from 2002 by inflating profits that started with Rs459 crore and reached Rs5,000 crore by 2007, though the equity remained at a constant of between 6 per cent to 6.2 per cent starting 2002, and forging bank certificates to show crores worth of non-existent fixed deposits in at least six banks.
The CID has also come across evidence of fund transfers which allowed the IT major to continue declaring huge profits and dividends to its shareholders, even though in a "confessional" statement on 7 January, Ramalinga Raju admitted to liabilities to the tune of Rs 1230 crore.
Raju had stated that this amount did not figure in Satyam's account books (or balance sheets) and that he had pledged all the family's promoter shares and raised funds from "known sources" to fill this yawning gap in accounts.
It now transpires that between 2006 and 2008, the company had been transferring huge funds back and forth between 10 "fund raising" companies floated by it along with 37 "front" companies - all ostensibly involved in the agro business. All these entities figure in the mega list of 327 companies, the antecedents and financial status of which are under scrutiny by various agencies, including the Serious Fraud Investigation Office (SFIO).
These 37 companies have had little paid-up capital or assets of their own; in fact, several were found to be running from one address while other addresses were found to be non-existent. Nineteen of them were being run from just one Hyderabad address - 203 Tulasi Apartments, Madhuranagar.
This is the residence of Datla Gopalakrishnan Raju, general manager of SRSR Advisory Services (one of the 10 fund-rotation companies) who is also a director of Maytas Infrastructure. The same address was recorded by him in all land deed documents registered and signed by him on behalf of the Rajus.
In his confessions spread over five days, Raju likened his professional and personal life to two ice cream cones. One cone was Satyam Computer Services Ltd which he nurtured since 1982 with the ambition of making it one of the top five IT players in India. He told the CID that his professional 'cone' reached its zenith when he started being seen with chief ministers of various states, union ministers, and finally former US President Bill Clinton.
His ambitions changed drastically after Clinton's visit, the CID notes in its report that will be the basis of an over 1,000-page chargesheet. The Raju family's land dealings passed unquestioned by the office of the Commissioner of Stamps and Registration, nor were the same names appearing in over 300 newly-opened companies with Hyderabad addresses questioned by the Registrar of Companies (RoC).
"The other cone, the personal one, was a parallel cobweb of 330 companies which were created by his second brother B Suryanaryana Raju who was director of SRSR Holdings Ltd and SRSR Advisory Services Ltd. This cone was originally set up to take care of the Raju family stake in Satyam Computer Services Ltd. But these companies and B Ramalinga Raju were enticed by the lure of insider trading that helped the family reap hundreds of crores.
The CID says that more than Ramalinga Raju, they are interested in interrogating his second brother B Suryanarayana Raju, who they confirm is responsible in helping Ramalinga set up the parallel network or the second cone. Suryanarayana Raju is at present absconding.
The companies floated by B Suryanaryana Raju traded only in Satyam shares, selling lakhs of company shares when the share prices went up and then buying them back when the prices fell. They utilised the money to buy acres and acres of land. But with the recession, Satyam's revenues started going down, and real estate was also hard hit.
With Satyam facing a cash crunch and Raju unable to encash the real estate investments for any worthwhile amount, he began fudging Satyam's accounts," the officer said. Raju knew very well that his 'personal cone' would not be affected by his confessions.
Based on Raju's revelations, the CID has raided a number of premises – reportedly as many as 36 – but officials were not forthcoming with details.
Raju gets jail privileges
After living as an ordinary inmate since his arrest on 9 January, Ramalinga Raju will now no longer have to eat watery dal and rice and share toilets with other prisoners. The Nampally Criminal Court in Hyderabad has granted him special status, entitling him to his own cell and home food.
Raju will also be allowed to read newspapers and books of his choice. His cell will be furnished with a cot, a table, and a chair and will also have a separate bathroom.
Though Andhra Pradesh Prison rules do allow allotment of special status to an accused from a respectable educational background and of a certain economic status, the jail superintendent confirmed to a newspaper that it was the first time in 20 years that the status has been awarded to an undertrail.
The prosecution had argued aggressively against conferring Raju with special status, saying that someone who managed a fraud of such a high magnitude cannot be treated as special. But the court ruled in Raju's favour.