Andhra CM pushed into a corner, seeks CBI probe

10 Feb 2009, ET Bureau

HYDERABAD: With the Satyam issue rocking the Andhra Pradesh assembly, the Congress government virtually conceded defeat in handling the politically sensitive case. Chief minister Y S Rajasekhara Reddy sought a probe by the CBI into the Satyam scam and the software firm’s operations in around 60 countries.

“It would be appropriate if the CBI takes over the investigations into the Satyam scam, so that coordination between various agencies, including Satyam’s overseas operations, can be achieved,” the chief minister said in a letter to PM.

The communication was sent few hours after Reddy’s rival and Telugu Desam head N Chandrababu Naidu alleged that Raju funded the businesses of the chief minister’s son Jaganmohan Reddy. Naidu accused Jagan of floating more than a dozen benami companies to launder over Rs 125 crore through Mauritius route and sought a judicial probe into the matter.

Reddy had said, last month, that the state was open to a CBI probe. The Centre has not responded as yet. The second letter to the prime minister comes amid reports that investigations are raising more questions on how the accounts were inflated and Raju managed to get away for such as long period.

“The Andhra Pradesh police and state CID will fully cooperate with the CBI, once it takes over,” Reddy said. Reddy said the investigations pointed to insider trading. “The company also raised money from NBFCs by pledging shares. More than 300 companies were started by Raju, with close relatives as directors and promoters, and this facilitated insider trading,” Reddy said in his letter.

The probe has revealed “embellishment of bank accounts by the company for several years and the inflation of current account balances is testified by bank officials concerned,” he added.

But the letter was silent on the scope of investigations having been widened to cover Maytas. Naidu had pointed to links between Satyam and the companies floated by the chief minister’s son.

Defending the Criminal Investigation Department, Reddy said the agency was in regular touch with other investigating agencies.

“But there are several issues that need to be looked into by central government organizations such as Sebi, income tax, enforcement directorate, ministry of company affairs and the Serious Frauds Investigation Office,” he pointed out.

SEBI has questioned Raju and Rama Raju, but the SFIO is yet to make any headway.