Rajus used 17 aides to manipulate demat accounts

25 Apr 2009, ET Bureau

HYDERABAD: Seventeen trusted lieutenants of B Ramalinga Raju, the defamed promoter of Satyam Computer Services, and his family were made to open demat accounts to fraudulently trade in shares of the promoters of the beleaguered IT firm.

Investigations by the Central Bureau of Investigation (CBI) reveal that the promoters of Satyam — Raju’s mother Applanarasamma, his brother Suryanarayana Raju and his wife Jhansi Rani — sold their shares in 1999 to 17 employees and made a killing in the market. The modus operandi shows the promoters transferred the physical shares through endorsement in the names of these 17 individuals, who, in turn, deposited the same in their demat accounts and then sold these shares through five investment companies.

The investment companies, floated by Raju and his family, included Elam Investment, High Grace Investments, Fincity Investments, High Sound Investments and Veeyes Investments. Later, these investment companies sold these shares in the market.

The money was transferred to the individual accounts of these 17 employees and their families. The latter, in turn, transferred the funds to the promoters and the transfers were done through cheques.

In 2000-01 the promoter’s family got around Rs 75 crore, of which Raju’s mother received Rs 5.5 crore, Suryanarayana Raju got around Rs 12.78 crore and his wife Jhansi Rani Rs 24.84 crore .

In the same year, these promoters also sold shares through the investment company and gifted the money to some of the family members. Featuring in this list are Ramalinga Raju (Rs 27.91 crore) and his brother Rama Raju (Rs 26.89 crore). Ramalinga Raju’s wife Nandini Raju received Rs 10.20 crore, while Rama Raju’s wife Radha Raju got Rs 9.70 crore. Ramalinga Raju’s son Rama Raju Jr was also a beneficiary and received Rs 1.97 crore.

Over the years, the promoters sold their shares in the open market and made around Rs 715 crore even though Satyam was not performing well. “The accused made hay when the sun was shining by off-loading the shares, while other investors may have been holding on to the shares with the false hope that their value would rise,” said the CBI in its charge-sheet.

From September 2006, the promoters of Satyam held their shares in a corporate entity SRSR Holdings. Suryanarayana Raju, the director of SRSR holdings, began pledging them as security with various non-banking companies on behalf of the 327 front companies floated by Raju and his family. He appointed several trusted employees as directors of these front companies to mask the fraud.

Ramalinga Raju admitted to fudging the books of Satyam in January this year. The CBI has charged him and eight others of conspiracy, cheating, falsifying accounts, generating forged valuable securities and tampering evidence.
Capital market regulator Sebi is also probing into insider trading of shares and has given inputs to other investigating agencies, said people familiar with the development.