Funds were siphoned off

Investigators digging deep into the Satyam Computer Services scam are veering round to the view that funds were siphoned off —- it is not a case of there being no money.
Disgraced Satyam Computer Services chairman B Ramalinga Raju would have the world believe there were no funds and the management had fudged balancesheets to show non-existent cash.

Though the Criminal Investigation Department (CID) of Andhra Pradesh is interrogating the ex-chairman of Satyam, its former CEO Rama Raju and CFO Srinivas Vadlamani to prove the fraud they are believed to have committed, central authorities, including the Serious Frauds Investigation Office (SFIO) and the ministry of corporate affairs are engaged in the probe after finding prima facie a large-scale diversion of funds and not just fudging of records.

Sources say SFIO officials have collected 20 suitcases of documents and related material to go to the roots of the scam.

The eight-member team includes a software professional, two taxation experts, one HR professional and a criminal investigation expert. To their surprise, the sources said, they are discovering facts each time they go through a file or set of documents in their possession.

Raju has been found to have floated over 200 small companies though the objective of those companies is not known.

Most companies are promoted by female members of the Raju family. “They have used every possible name, from rivers to planets, to name the companies. They are all private limited companies and they seem to be shell firms set up with a design,” the source explained.

Some of the firms have been pressed into action by the Rajus to float non-convertible debentures to raise funds. SRSR Holdings, a firm in the list of such small firms, pledged shares of promoters of Satyam as collateral guarantee to the NCDs floated by these companies.

“The investigators are looking into every single company floated by the Rajus. Though there not many details to be looked into at this point, the intention of such an effort to float these companies has to be determined,” the source said.

The Raju team has floated 24 firms with the Maytas brand. While some are meant to be special purpose vehicles for SEZs or other such projects, many of those names are yet to come into the public domain.

Maytas Mineral Resources was one company that came to light recently after Maytas Infra disclosed to shareholders its intention to explore opportunities in mining.

Investigators feel the private companies floated by the Rajus are meant to serve the purpose of siphoning money from various sources into private accounts.

Another factor that is being looked at by the SFIO is the number of employees Satyam has. Though it has been officially stating it has about 53,000 employees, the reality seems to be something else.

The headcount is expected to be not more than 40,000 and the remaining employee details may have been fudged to get monetary benefit through salary accounts. “The probe is still not complete and we can’t make any declaration on the findings. But there is every scope for such an attempt to create dummy salary accounts to make money. As of now, the bench of about 10,000 people seems to be dubious,” a source explained.

While fudging is a different case, the reasons for indulging in fudging are something that is under the scanner now. “One thing is certain. Fudging of balance-sheets cannot be done for fun or creating a fake identity for the company. There are monetary benefits that were derived out of such fudging. There is a clear indication of siphoning though it’s still early days to quantify anything,” another source said. SFIO has 90 days to file its report with the ministry of corporate affairs.

Independent of the probe, sources point out that the quantum of real estate the promoters have and their IT returns show that there was an external source funding.

Except for the Rs600 crore private equity funding by Nimesh Kampani’s investment arm, there seems to be no official fund source for the Rajus to buy the properties.

Going by the declarations and confessions by Raju and his other associates, the promoters must have invested close to Rs5,000 crore on acquiring properties in various parts of the state. “Raju was accessing funds from various sources and Satyam seems to be one such source. Since the investigators have to prove it scientifically, connecting the dots to make it a circle will take some time,” the source said.