Preliminary investigations into the Satyam scam point to several possibilities, including submission of fake Softex (software export forms) to the RBI and forgery of bank statements, besides diversion of funds from the IT major.
Significantly, the balance sheets of Satyam Computer Services Ltd have been fudged only in the last three years _ this coincides with the meteoric rise of its sister concerns, Maytas Properties and Maytas Infrastructure, lending credence to the widely held belief that funds from the IT major have been siphoned off.
Preliminary probe by the Registrar of Companies (ROC) has revealed discrepancies in the books from 2004-05 to 2007-08, exactly the period during which Maytas Properties went on acquiring lands and the YS Rajasekhara Reddy Government was more than benevolent in awarding huge infrastructure projects, including the Rs 12,000-crore Metro Rail, to Maytas Infrastructure.
HNN has access to contents of the 10-page report submitted to the Union Commerce Ministry a few days ago, and based on that, a further probe by the Serious Frauds Investigation Office (SFIO) was ordered.
The key aspects raised by the ROC are: 1) There is need for investigation of fake Softex forms which appear to have been submitted by Satyam to the RBI; 2) Valuation of the two Maytas companies, which were sought to be taken over by Satyam, was not done by an outside agency; valuations are doubtful and need detailed investigation; 3) Serious possibility of forgery of most of the bank statements; 4) The books for the years 2005-08 were signed by Vadlamani Srinivas as Director and Vice-president (Finance) whereas he was not on the Satyam board (Srinivas has been arrested along with Ramalinga Raju and his brother Rama Raju).
Interestingly, the ROC points out that no unsecured loan from promoters was shown in the balance sheet while Ramalinga Raju claimed in his e-mail that he had infused Rs 1,230 crore into the company from out of his personal resources to save the IT major. The report also suggests the possibility of forgery of bank statements and wonders how nothing was found out by the banks (there were almost 200 accounts) or in the audit. This might not have happened without the collusion of banks, auditors and the management, more so because huge cash reserves and bank balances (mostly non-existent) were shown either in the current accounts of scheduled and unscheduled banks or in the form of fixed deposits. ICICI bank on Monday confirmed that it had detected forgery of fixed deposits in the name of the bank in the last couple of years.
The ROC report also raises the possibility of Satyam’s Softex forms (an exchange control mechanism to monitor receipt of export receivables) not being in order. In the normal course, if the export receivables are not received within the stipulated time-frame (normally 90 days), authorized dealers, which happen to be banks, report the delay to the RBI and the exporters too have to submit documents seeking extension of time. If ROC’s doubts are proved, it would amount to failure of banks and the RBI to whom apparently fake Softex forms have been submitted.
According to the report, the figure of sundry debtors (money receivable) as shown in the books stood at Rs 2,651 crore while Ramalinga Raju said it was Rs 2,161 crore, a difference of Rs 490 crore. The question that arises is: if it is a genuine export receivable, is it held abroad but unaccounted for in the books of the company in India or is it a fictitious receivable developed in the balance sheet as Raju stated? What is surprising is that only the CID wing of the AP police, which hardly has any expertise in probing such massive economic frauds, has seized almost all the documents and managed to get custody of Ramalinga Raju. SEBI officials are virtually groping in the dark having failed to interrogate him so far. In fact, it was only after SEBI issued summons to Raju to appear before it that the Satyam founder chose to surrender probably because he thought it would be safer to be in the custody of the State police than central investigating agencies. The proper course would have been to form a joint team comprising officials from various agencies including CBI and IT. Only then, there is scope for the truth to come out, an investigating officer said.
WHAT CID IS DOING
Almost all the records have been seized by the CID, an agency that works under the control of the State Government which has shown an overzealous attitude towards Maytas in awarding massive projects, brushing aside objections raised on different occasions. So far, no other central agency has been able to talk to Ramalinga Raju or his associaties who are in police custody. SEBI did not even file a case on the ground that it cannot do so unless the probe is complete. The investigation is revolving only around Raju and not going beyond to check whether external forces are responsible for the diversion of funds.
THE LIES
At the controversial December 16 board meeting of Satyam when Maytas buyout was discussed, the board members were informed that Ernst & Young did the valuation while Delhi-based law firm, Luthra and Luthra, carried out title diligence. Both have denied the same.
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