Agencies nail fund diversion at Satyam

16 Feb 2009,

HYDERABAD: Investigating agencies probing the Satyam Computer Services scam have proof that money was diverted into Maytas Infra, Maytas Properties and various front companies linked to B Ramalinga Raju, the disgraced promoter of the software firm, and his family members.

Key agencies, including the Serious Frauds Investigation Office (SFIO), will soon assess the quantum of diversion, based on records seized from these firms.

SFIO's interrogation of Raju, his brother Rama Raju and former Satyam CFO Vadlamani Srinivas on Saturday and two auditors of Price Waterhouse on Sunday could provide clues on the modus operandi.

The investigating agency is understood to have questioned Raju and his brother Rama Raju on the mystery of the missing Rs 1,700 crore from the company's account in an overseas branch of a state-owned bank.

Raju's elder son Teja Raju runs Maytas Infra while his younger son, Rama Raju Jr, runs Maytas Properties. Besides this, Raju and his family also floated 350-odd front companies, mainly for land deals.


"Investigations show that the inter-corporate loans and investments made by Maytas Infrastructure and Maytas Properties far outstripped the limits laid down under the Companies Act, raising suspicion on diversion of funds to benefit the promoters' companies," said an official involved in the investigation.

Under the Companies Act, a firm needs shareholders' approval to make any loan or investment, give a guarantee or provide security beyond 60% of its paid-up capital and free reserves, or 100% of its free reserves, whichever is higher.

Maytas Properties had a paid-up capital of only Rs 5 lakh. However, in 2007-08, the firm made investments to the tune of Rs 90 crore and had loans and advances totalling Rs 419.63 crore. The company had also received funds through unsecured loans for around Rs 600 crore. It used the borrowed funds for inter-corporate investments and loans.