Ex-insider blew the lid off Satyam scam

17 Apr 2009, ET Bureau

NEW DELHI: The shocking disclosure of the Rs 7,000-crore plus scam that nearly brought down Satyam Computer Services may have been announced to the world by its disgraced founder, but it now transpires that B Ramalinga Raju’s confession was prompted by whistleblower action.

A person who used a pseudonym of Jose Abraham, and claimed himself to be a former senior executive in Satyam involved with its contract with the World Bank, acted as the whistleblower whose email to a Satyam board member triggered a chain of events that culminated in erstwhile chairman Mr Raju’s decision to confess to the financial crime.

These revelations form part of a 14,000-page report submitted by the Serious Fraud Investigation Office (SFIO) to the government earlier this week, which estimated the scale of the Satyam scandal to be Rs 7,333 crore as of end-September last year.

Mr Abraham, who is understood to have used a pseudonym is his e-mails, had first written to the company’s independent director Krishna G Palepu on December 18, 2008 that Satyam did not have any liquid assets, and this fact could be independently confirmed from its banks, an official, who is privy to the confidential SFIO report told ET.

The email was sent a day after Mr Raju was forced to abort Satyam’s plans to buy two companies linked to his family, Maytas Infra and Maytas Properties, after it ran into a storm of investor protest.

The email sent to Mr Palepu spread quickly among the Satyam’s former board members, with Mr Palepu first forwarding the email to M Rammohan Rao, another independent director in the company, the official said. Mr Rao thereafter forwarded the email to other board members VS Raju and TR Prasad, Satyam’s statutory auditor S Gopalakrishnan of Price Waterhouse.

A copy of the email was also sent to B Ramalinga Raju, who had started receving calls from members of the board’s audit committee, but did not respond to any of them. The SFIO report says Mr Raju held meetings with company’s CFO and vice-president for finance G Ramakrishna, between last December 25 and January 7 to work out a plan to hide the fraud.

Failing to find a way out and concerned that he might be caught by capital market regulator SEBI and the US Securities Exchange Commission (SEC), Mr Raju issued his sensational confession in which he admitted to have cooked Satyam’s books for years, bringing the company to the brink of collapse.