In one of India’s largest-ever cases of corporate fraud, the founder and chairman of failed outsourcing giant Satyam Computer Services and nine other defendants have been sentenced to seven years in prison on charges of stealing millions from shareholders.
An Indian court in the country’s tech hub, Hyderabad, ruled Thursday that B. Ramalinga Raju, his two brothers and seven other officials of Satyam — which collapsed in 2009 — used forged documents and fake bank accounts in a scheme that cost the company’s shareholders $2.28 billion.
They were convicted of criminal conspiracy and fraud and Raju was also fined the equivalent of $806,000 in what has been touted as the country’s biggest accounting fraud.
According to the BBC:
“The scandal emerged in January 2009 when Mr Raju, one of the pioneers in the Indian IT industry and Satyam’s founder and then chairman, confessed to manipulating his company’s accounts and inflating profits over many years to the tune of about $1.15bn.
“In a letter to the board he claimed he had fudged the numbers in order to be in the top four of the Indian IT industry.”
The Associated Press adds: “Satyam — which means ‘truth’ in Sanskrit — was once India’s fourth-largest software services company, counting a third of Fortune 500 companies and the U.S. government among its clients.”
In a special court overseen by India’s Central Bureau of Investigation, roughly equivalent of the FBI, the agency “accused Raju and associates of inflating revenues, faking fixed deposits, falsifying accounts and fabricating invoices in a bid to project the company as enjoying sound financial health and deceive the investors,” The Economic Times of India writes.
In 2010, what was left of Satyam was sold off to software services company Tech Mahindra Ltd.