You are here: Home » Opinion » Special » On The Beat
Business Standard

Ratatouille Raju: Will he get his just desserts or just some desert?

Faster and harsher punishments will deter corporates from committing such crimes

Satyam Scam

Joydeep Ghosh  |  Mumbai 

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)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, December 23 2014. 08:00 IST