Nine insurance and asset management companies incurred loss of over Rs 1,474 cr due to Satyam fraud

Apart from several thousand investors, nine insurance and asset management companies, too, suffered huge losses in the accounting fraud at the erstwhile Satyam Computer Services Limited (SCSL).

According to the prosecution in the six-year-old case, ICICI Prudential Life Insurance suffered the highest loss of Rs 698.67 crore, followed by HDFC Standard Life insurance (Rs 218.07 crore), HDFC Asset Management Company Limited (Rs 190.45 crore), Birla Sun Life Asset Management (Rs 111.87 crore), Franklin Templeton Asset Management Company (Rs 100.37 crore), UTI Mutual Funds (Rs 85.97 crore), Metlife Insurance Company (Rs 23.75 crore), SBI Life Insurance Company (Rs 22.84 crore), and ICICI Prudential Asset Management (Rs 22.67 crore).

The prosecution contended the companies made investments in Satyam believing the financial statements and annual reports of the then fourth-largest IT company in the country. “Later, on account of the statement made by accused A1 (Satyam founder B Ramalinga Raju) on 07-01-2009 disclosing falsification of accounts in M/s SCSL over a period, the share value of M/s SCSL fell drastically and as a result, the investors as well as financial institutions sustained a loss of about Rs 14,000 crore.”

The accused in the case, however, denied the charges.

According to the copy of the judgment delivered on Thursday, Raju’s contention was that he has “nothing to do with the e-mail (statement) dated 07-01-2009 and it is not for him to determine whether any losses were suffered by the investors and M/s SCSL never stated investment criteria in the annual statements".

The accused A2 (B Rama Raju, managing director) and A3 (Vadlamani Srinivas, Satyam chief financial officer) contended they were in no way connected with “alleged letter dated 07-01-2009”. The accused also questioned the locus standi and competence of some of the witnesses as well as the admissibility of some of the documents as evidence.

The additional chief metropolitan magistrate, B V L N Chakravarthi, who delivered the judgment, however, stated he “did not find any reason to disbelieve the evidence of the above witnesses relating to investors”.

“Here it is pertinent to note down that the money invested by the above said companies belongs to lakhs of innocent people who invested their money in the funds managed by the said companies with a fond hope that their money will be safe if invested in companies like M/s SCSL but unfortunately their trust and belief was betrayed by the accused by publishing false financials with inflated profits,” the judge further stated.

For the record, the judge has sentenced all the accused in the case to seven years’ imprisonment and imposed varying amounts of fines on them.