Ramalinga Raju’s sentence

Satyam Computers’ profits and reserves were largely on paper. Raju had been cooking up the ledgers for years

Six months is not a long time in jail, especially if you are charged with fraud to the tune of Rs 5,000 crore. But that is the sentence meted out by an economic offences wing court to Ramalinga Raju, erstwhile CEO of the erstwhile company Satyam Computers.

Satyam, it must be remembered, used to be one of India’s biggest infotech companies, mentioned in the same breath as Infosys and Wipro. Every time analysts looked at its balance sheet, they saw a billion US dollars in free cash. The profit margins were also delicious and such a strong bottomline meant that a lot of people were putting money in Satyam stocks. Except that the company’s profits and reserves were largely on paper. Raju had been cooking up the ledgers for years until it became impossible to lie anymore.

In his resignation letter to the board, he said, ‘The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years… What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years.’ He started small to impress the market and then in order to keep the facade had to continue concocting bigger numbers until there was no way out of the trap. And to do that, he forged invoices and fooled banks, auditors and his own employees.

Satyam was taken over by the infotech arm of the Mahindra Group in April 2009, but not before numerous jobs were lost and much investor money went down the drain. Six months seem too little for a scam of this magnitude, but there is another case registered by the CBI for accounting fraud that comes up for judgment later this month. Hopefully, the verdict there will be commensurate with the crime.

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