By Krishna Palepu
The ongoing investigations into the Satyam scam which made news early in 2009, showed that all not a single member on the board of directors opposed the fraud that the company was engaging in. The scam robbed investors of around 14,000 crores went unopposed even as the Managing directors and owners of the Company walked away with 2,700 crores.
Investigations show that several top level directors are also guilty of fraud.
The central bureau of Investigation (CBI) said in a report that the members of the Board of Directors had acted as “rubber stamps”, unwilling to oppose the fraud. Not a single not of dissent has been recorded in the minutes of the Board meetings.
The scam was unearthed when investigators found manual entries being made to record fraudulent sales. The investigators then set out to locate the authors of these “fake” invoices. Early into the investigations, the CBI found that the guilty were also extremely smart, tabulating balance sheets using computers that could not be tracked. Office data showed that a few officers would make entries late in the night, toward the last quarter of the month. The manipulated balance sheets were thus created.
The agency is has now called in the Enforcement Directorate to work on the issue of attaching the property of the accused. So far, an additional 100 different properties have been identified of a net worth of Rs. 3 crore. These also include property across the different states that the company acquired. This is in addition to the 425 and 444 properties identified earlier, covering a total land mass of 4533 acres. This has already been recovered by the Enforcement Directorate. This takes the total property up to 935, spread across 5,757 acres.
In addition to this, the Rajus also diverted cash to unconnected companies abroad. Apart from Ramalinga Raju, other accused include — Ramaraju, V Srinivas, S Gopalakrishnan, T Srinivas, B Suryanarayana Raju, G Ramakrishna, D Venkatapathi Raju, Srisailam Chetkuru and V S P Gupta.
(Krishna Palepu is the Professor, Senior Asssociate Dean Harvard Business School)