Payoffs for projects were nigh. Pressure was rising with polls round the corner. With no cash in hand, was the admission with an eye on bailout for him and family?
Sources close to the B Ramalinga Raju family —- these are tracking him for sometime now —- say the roots of the fraud at Satyam Computer Services lie in real estate and the aspiration of the chairman to anchor his sons to safer shores.
It is a known fact that Rajus have their roots in real estate and construction.
“They (the Rajus) have pursued the property market more aggressively in the last few years. The Hyderabad metro project, the port project at Machilipatnam (in Andhra Pradesh) and several other irrigation projects taken up by the Congress government on a priority basis —- all these contracts have gone to the Maytas companies promoted by Raju’s sons. It is an open secret that these projects are not easy to come by except through some under-hand dealings. The takeaways that Raju promised to the powers-that-be seem to have come back to haunt him,” a source in the know told DNA Money.
He said the “thanksgiving package” of the Rajus to the dealmakers would be in the range of Rs 1,500 crore to Rs 2,000 crore for the projects handed.
With elections round the corner, the pressure on the Rajus to discharge their promises has been mounting.
“He had no option but to borrow money and pay them. The shares he and his family own have already been pledged. Hence, the fudging happened. The aborted deal with Maytas disturbed the business cycle,” the source explained.
By making a confession, Raju must have tried to bail himself out of the pressure for these payments, which have nothing to do with Satyam. By confessing, he has also bailed out his other family members including his wife Nandini Raju, his brother Rama Raju and his wife from the Maytas mess.
“First of all there was never any cash reserves in the company. With low profits, the company never had anything to plough back into reserves. Whatever the company had in the form of proceeds from the listing in the US or other forms of debt were used to keep the company operational and pay salaries of 53,000 employees,” a source in know of things in Satyam told DNA Money.
For the second quarter alone, the company had incurred Rs 1,721 crore expenditure towards salaries, which is about 61% of its reported revenues. If the Maytas companies’ acquisition deal was concluded, it would have provided answers to various questions Raju was struggling to answer, the source explained.
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