Accounting scandal
Raju resigned from the Satyam board after Satyam Scandal, admitting to falsifying revenues, margins and over ₹5,000 crore of cash balances at the company. The Indian affiliate of PricewaterhouseCoopers, the company's auditors, appears to have certified the company had $1.1 billion in cash when the real number was $78 million.[16]
Just a few months before the scandal broke, Raju tried to persuade investors by claiming that the company is sound and that past October he surprised analysts with better-than-expected results, claiming that "the company had achieved this in a challenging global macroeconomic environment, and amidst the volatile currency scenario that became reality".[17]
A botched acquisition attempt involving Maytas in December 2008 led to corporate governance concerns among Indian investors and plunge in the share price of Satyam. In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years.[18] Total assets on Satyam's balance sheet tripled during 2003–07 to $2.2 billion.[19] He confessed to an accounting fraud to the tune of ₹7,000 crore or $1.5 billion and resigned from the Satyam board on 7 January 2009.[20][21] Satyam was purchased by Tech Mahindra in April 2009 and renamed Mahindra Satyam.
In his letter, Raju explained his modus operandi to something that started as a single lie but led to another as "What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years. It has attained unmanageable proportions as the size of the company's operations grew over the years."[17] Raju described how an initial cover-up for a poor quarterly performance escalated: "It was like riding a tiger, not knowing how to get off without being eaten."[22]
Raju and his brother, B Rama Raju, were then arrested by the CID Andhra Pradesh police headed by V S K Kaumudi, IPS on charges of breach of trust, conspiracy, cheating, falsification of records. Raju may face life imprisonment if convicted of misleading investors.[23] Raju had also used dummy accounts to trade in Satyam's shares, violating the insider trading norm.[24]
The Government of Andhra Pradesh attached 44 properties belonging to the family members of the promoters of Satyam Computers in the case against Raju.[25]
It has now been alleged that these accounts may have been the means of siphoning off the missing funds. Raju has admitted to overstating the company's cash reserves by USD$ 1.5 billion.[26][27] Raju was hospitalized in September 2009 following a minor heart attack and underwent angioplasty. Raju was granted bail on condition that he should report to the local police station once a day and that he should not attempt to tamper with the current evidence. This bail was revoked on 26 October 2010 by the Supreme Court of India and he has been ordered to surrender by 8 November 2010.[28]
