It has been almost six years since B Ramalinga Raju, in his letter to the Securities and Exchange Board of India on January 7, 2009, admitted to cooking Satyam Computer Services’ books for years. His list of crimes:
• Inflation of cash and bank balance of Rs 5,040 crore
• Accrued interest of Rs 376 crore that did not exist
• Understatement of liabilities of Rs 1,230 crore
• Overstatement of debtors’ position of Rs 490 crore
• The company’s Q2 2008-09 revenues was stated as Rs 2,700 crore as against Rs 2,100 crore
• Operating profit margin was stated as 24 per cent as against actual 3 per cent
The impact was felt by 53,000 employees and millions of stock market investors. According to estimates by the Central Bureau of Investigation, investors in Satyam computers lost as much as Rs 14, 162 crore. The figure was based on the average share price fall after Raju’s confession.
So the sentence of 6 months and Rs 5-10 lakh fines by the Special Economic Offences Wing Court at Nampally, Hyderabad seems incredibly low. Other judgments are still awaited, such as the verdict on another case filed by the CBI that is expected today. The Securities Appellate Tribunal is also expected to give its decision on Sebi’s Rs 3,000 crore penalty on the promoters later this month.
The case, anyway, has gone on for too long. Let’s take the example of another man – former Nasdaq chairman Bernard ‘Bernie’ Madoff who confessed to running a Ponzi scheme in December 2008, around the same time as Raju’s confession. He was jailed immediately and sentenced to 150 years in less than a year.
In comparison, Raju also surrendered in January 2009. But within days, newspaper reports suggested that he was living a maharaja’s life in his special cell. His brother Rama Raju was cooking food with help from (former CFO) Srinivas Vadlamani. They are even allowed limited quantities of cake and biscuits. Reports suggested he even had a cook for some time!
Anyway, it has already taken the authorities almost six years to start penalising him for his crimes. But now that the courts and market regulator have found him guilty, it’s time that he and his co-accused take a serious hit. Cooking food is fine, cooking books isn’t.
(Joydeep Ghosh is Associate Editor at Business Standard)