tpt1

Satyam Company Services Ltd. was incorporated on June 24, 1987

Promoters holding of the shares in 1992 was 18.78%

Main business of the company was IT related fields and it came into prominence after Y2K problem

In 1991, it was in a rented house having 10 Engineers.

Company was listed in Bombay Stock Exchange in 1992

company bags its first fortune 500 client John Deere & Co

Formed the joint venture with Dun & Bradstreet for IT services

Listing in NASDAQ, USA- 1999 Listed on New York Stock Exchange- 2001 Revenue crossed $1 Billion-2006 Ramalinga Raju got the Ernst & Young

Entrepreneur of the Year Award -2007

Revenue crossed $2 Billion -2008

B. Ramalinga Raju – Born on 16.09.1954 at Garagaparru village of Andhra Pradesh. He got commerce degree from Loyola College and headed to Ohio University, USA for MBA , Vice Chairman, NASSCOM, Chairman of IT Committee in FICCI, Awarded Corporate Citizen of the Year Award-2002, IT Man of the Year Award-2001 and he was the Chairman of the company

B. Rama Raju – He was the Co-founder and MD of the company. He did a MA(Eco.) from Loyola College, Chennai and MBA from Loredo State University Texas, USA and he is the younger brother of Ramalinga Raju

V. P. Rama Rao- He was an IAS officer and he was a member of Satyam’s Board from July 1991

Mrs. Mangalam Srinivasan- She was a member of the Board since July 1991. A senior fellow at Havard University. Expert in International Financial Management.

Vinod K. Dham- He was on the Board from 2003.Inventor of Pentium chip

Krishna G. Palepu- He was a member of Board from January, 2003, Professor of Business Administration at Harvard School and expert in Corporate Governance

M. Mohan Rao- He was dean of Indian Business School, Hyderabad and expert in Corporate Finance and Financial Derivatives. He was appointed to the Board on July, 2005

Ram Mynampati – He was inducted on the Board as whole time Director in August, 2006. He was in- charge of half of the Sales Portfolio of the company

V. S. Raju- He was appointed as Directors in April 2007 . He was Chairman of DRDO and Director of the IIT, Delhi

T.R. Prasad- He was appointed as member of the Board in April 2007 and was the ex. Cabinet Secretary, Government of India

The case was initially registered by CB-CID, Andhra Pradesh on January 9, 2009 on a complaint received from Smt. Leela Mangat, a retd. employee of Syndicate Bank stating that she had invested her retirement benefits for purchase of the shares of the company on seeing the performance of the company. She purchased 100 shares for a sum of Rs. 19000. She filed the complaint after the confessional letter of the chairman made public

The case was handed over to CBI on February 16, 2009 by Government of India under section 5 of DSPE Act and notification under 6 of DSPE Act by the Government of Andhra Pradesh. ACB Hyderabad re-registered the case and investigation was started

The confession letter by B. Ramalinga Raju was submitted to SEBI/BSE and to the Board of Directors on January 7, 2009 which stated that balance sheet as on 30.09.2008, cash and bank balance, interest accrued on fixed deposits, debtors were overstated and liabilities were understated Company inflated operating profit. The gap in balance sheet was on account of inflated profits shown over a period

Whistle Blower E-mail dated 18.12.2008 from Joe

Abraham to Mr. Krishna G. Palepu and subsequently circulated to other Board Members wherein misdeed of the chairman/company was narrated

Subsequently, Hemant Kothari, Non Executive Chairman of DSP, Marril lynch Ltd. after having discussion with B. Ramalinga Raju forced him to confess as during the discussion it was revealed that there was a big hole in the balance sheet.

The brief discretion: Inflated non-existent cash – Rs. 5040 crore Accrued interest – Rs. 376 crore Understand liability- Rs. 1230 crore Over stated debtors position - Rs. 490 crore Operative margin 24% as against actual of 3% Every attempt made to eliminate the gap failed. It

was like riding a Tiger, not knowing how to get off without being eaten

Aborted MAYTAS acquisition deal was the last attempt to fill the fictitious assets with real ones

Neither he nor the MD took any money from the company

Board of Directors were not aware of the fraud

Management Information systems Manpower Management Sales Cash and bank balances Selling of shares Role of Statutory Auditors Role of Internal Auditors Board of Directors Purchase of land Floatation of 327 companies Acquisitions Income Tax Liability

All the directors were sponsored by B. Ramalinga Raju

The Audit Committee members were not serious in analyzing the financial position of the company

The directors were failed to perform their duties The Directors got hand-sum remuneration, stock

options at Rs. 2 against the market price of Rs. 500. The directors acted as a rubber stamp and not even in a single dissent note was recorded

Meetings were conducted in perfunctory manner In the meetings the promoters were always present

to influence the decision There was not open discussions

6000 acres of land purchased by 327 front companies Promoters also purchased land and flats Land ceiling act was circumvented by floating the

companies Proceed of sale of shares and receipt of the dividends were

used for purchase of the land Lands were purchased in the names of the close relatives

also Majority of land was agricultural land Land purchased were spread over AP. TN, Bangalore and

Nagpur

The company had availed short term loans and

advances from Banks and Institutions during the

period between 2000 and 2008 on the basis of false

and fabricated board resolutions and majority of the

loans were not shown in the books. They have taken

loans from the HDFC, HSBC, Citi Bank, BNP Paribas,

ICICI Bank, Fincity/Higrace and Elem Investments

Pvt. Ltd.

The company had paid interest of 37.62 crore

and availed 1493.84 crore loan from banks without

accounted in the books.

The auditor did not confirm the bank balances independently

The various protocols were violated Two set of Confirmation No sample checking of invoices Liability against tax not reported Extra-ordinary payment of audit fee Not verifying the accrue interest on fake FDs Not verifying the TDS on accrued interest Not doing end to end audit Systems were found to be lax and same was not

taken up for rectification

The auditor did not do beginning to end transactions verification

Cash and bank balances were not verified Fake invoices were ignored The matter was not reported to Audit Committee The audit plans were prepared on the basis of the

approval of the promoters Serious findings of the auditing team were ignored

by the audit team leader

The Auditors did not follow the minimum protocols.

The connection to OF was disconnected and it was not

taken up for connectivity. Mr. V.P.S. Gupta was given stock

option and off-loaded the shares and received Rs. 5.30

crore. The company switched to process audit from the

transaction base audit . However end to end verification

was not done even for sample selected on the basis of

random sampling. The auditors were more faithful to

promoters rather than to the company.

The companies were divided into three groups.

Group 1 owned by B. Ramalinga Raju and his family.

Group 2 owned by B. Suryanarayana Raju and his

family. Group 3 owned by B. Ramanraju and his family.

There were 12 addresses of 327 companies. The

relatives and loyal employees were Directors

in these companies. By these companies the promoters

had purchased land, layered funds, borrowed the

money against the share for Satyam.

The company had taken Rs. 1230

crore loan from the front companies

and these were not shown in the

books. The loan amounts were used

for payment of salaries, acquisition

and payment of dividends. The amount

of loan were raised against the shares

of the promoters

The cash and bank balances shown in various banks in the form of current account and Fixed Deposit ws Rs. 5160.34 crores for the period 2002 to 2008. While actual balances was only 139.78 crore. Thus, there was a difference of Rs. 5020.55 crore. The company was having account with 36 banks in India and 7 banks overseas. The certificate shown to the auditors did not carry details of Fixed Deposit number

No actual physical Fixed Deposit existed , balance conformation letter did not tally the amount actually maintained with banks, balance did not contained account number, no mention about signatories name and employment number etc.

The company has shown accrued

Interest on fictitious FDRs.

The amount shown as on Sept., 2008

was Rs. 375.53 crore wherein actual

interest was only 7.42 lakh

The quantum of law suffered by various

institutions and the investors was 14162.25 crore

on the basis of actual law suffered by various

institutional investors, loss suffered on account of

slide in share price was average price. As on

01/09/2009 price was Rs. 19.76 and average price

as on 16.12.2008 was Rs. 227.55.

The sales were inflated and in order to

get the benefit the tax paid overseas were

shown and deductions were obtained in India.

The tax assessment was made without

actual verification of the records

Fake TDS Rs. 60.84 crore Actual TDS Rs. 20 crore Actual interest Rs. 1 crore Fake interest Rs. 269.01 crore Fictitious sales were shown as off shore

exports Other income as a part of income of USA

but actually not included False claim in overseas tax payments

Rs. 329.59 crore

B. Ramalinga Raju. B. Ramaraju V. Srinivas Gopalakrishnan T. Srinivas B. Suryanarayana Raju G. Ramakrishna D. Venkatapathi Raju Srisailam Chetkuru VS P Gupta

120-B -Criminal conspiracy to commit an offence

409 -Criminal breach of trust 420 -Cheating 467 -Forgery of a valuable security 468 -Forgery for the purpose of cheating 471- Using as genuine a forged

documents which is known to be forged 477 A- Falsification of accounts

First charge sheet was filed on April 7, 2009

Supplementary charge sheet filed on November 22, 2009

Additional Charge sheet filed on January 7, 2010

All charge sheet have been clubbed together for faster trail

The case is with Additional Chief Metropolitan Magistrate which has been approved by High Court of AP on 17 February 2010

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