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 A court in the southern Indian city of Hyderabad, where Satyam was
based, on Thursday pronounced Ramalinga Raju, a management graduate
from Ohio University who founded Satyam in 1987, guilty of forging
documents and falsifying accounts.
Raju admitted in January 2009 in a five-page letter that Satyam's
profits had been overstated for years and assets falsified in a
fraud allegedly worth over $1.5 billion, bringing the company to the
brink of collapse.
Satyam, which in Sanskrit means "truth", was sold the same year to
the smaller Indian rival Tech Mahindra Ltd in an auction. The
company was later merged with Tech Mahindra, a unit of conglomerate
Mahindra & Mahindra Ltd.
The Hyderabad court also found Raju's brother and ex-Satyam managing
director, B. Rama Raju, as well as eight others guilty and sentenced
them to seven years in prison, special public prosecutor K. Surender
said.
"The judgment given by the court will have far reaching consequences
in checking corporate frauds and shall also act as a severe
deterrent," said Rajesh Narain Gupta, managing partner at law firm
SNG & Partners.
All the accused in the case were charged with collaborating to
inflate the company's revenue, falsifying accounts and income tax
returns and fabricating invoices among other things, the prosecutor
said.
Raju and his brother were also fined by the court 55 million rupees
($883,960) each.
Uma Maheshwar Rao, a lawyer for Raju, told Reuters that the Satyam
founder would challenge the verdict in a higher court. He did not
give details. Some local media reported that an appeal could be
filed as soon as Monday.
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Softly spoken Raju, born into a family of farmers, was a poster boy
of Indian entrepreneurship after setting Satyam on a path of high
growth, hiring thousands of staff and bagging lucrative outsourcing
contracts from overseas clients.
"It was like riding a tiger, not knowing how to get off without
being eaten," he had written in his resignation letter in 2009,
detailing years of financial deception at the firm.
Satyam rose to prominence in the late 1990s when Raju was among the
first to spot outsourcing opportunities in the year 2000 rollover
problem, which saw the coming of age of the software outsourcing
industry.
The company, which was listed in New York as well as on the Indian
stock markets, specialized in business software and back-office
services for clients in the United States and Europe. ($1 = 62.2200
Indian rupees)
(Writing by Sumeet Chatterjee; Editing by Christopher Cushing and
Keith Weir)
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