Raju paid income tax on non-existent FD interest

18 Apr 2009, ET Bureau

NEW DELHI: Satyam Computer Services’ disgraced founder B Ramalinga Raju had transferred the company’s fictitious wealth, running into hundreds of crores, from several current accounts to fake fixed deposits in banks and also paid income tax on the imaginary interest earned, the Serious Fraud Investigation Office (SFIO) findings have revealed. The move was aimed to give the company’s fictitious earnings a transparent look.

SFIO, which on Monday (April 13) submitted its final report on the Satyam financial scandal to government, has said the beleaguered software major paid tax on imaginary interest on fixed deposits that were non-existent. The investigating authorities reasoned that the idea behind the move was to show that fake earnings, as shown in its accounts, are clean.

“The idea behind such fund transfers was to highlight a prudent business practice wherein companies usually move their money, if kept in current accounts, to fixed deposit accounts so as to yield a higher rate of interest,” a government official, on condition of anonymity, told ET.

For this offence, SFIO has found Raju guilty under various sections of the Indian Penal Code including 409, which talks of breach of trust. Apart from Ramalinga Raju, SFIO has levelled allegations against two more company executives apart from Price Waterhouse’s S Gopalakrishnan and Srinivas Talluri. The official said while the first four have been found being directly involved, PW’s auditors are guilty of ‘gross negligence’.

According to agency reports, the investigating agency has concluded that independent directors of Satyam were not involved in the multi-crore accounting fraud in the IT company and were kept in the dark by founder-chairman B Ramalinga Raju.