Jump to content

Ramalinga Raju

From Wikipedia, the free encyclopedia

Ramalinga Raju
Born
Byrraju Ramalinga Raju

(1954-09-16) 16 September 1954 (age 70)
Bhimavaram, Andhra State (present-day Andhra Pradesh), India
OccupationBusinessman YPS22
Known forFounder and former Chairman of Satyam Computer Services
Criminal penaltyConvicted to 7 years prison
Spouse
Nandhini
​
(m. 1976)​
Children2 (Teja Raju, Rama Raju)

Byrraju Ramalinga Raju (born 16 September 1954) is an Indian businessman. He is the founder of Satyam Computer Services and served as its chairman and CEO from 1987 until 2009. Raju stepped down following his admission to embezzlement from the company to the tune of ₹7,136 crores (approximately US$1.5 billion),[1] including ₹5040 crores (approximately US$1 billion) of non-existent cash and bank balances.[2][3] In 2015, he was convicted of corporate fraud, which led to the collapse of Satyam Computers.[4]

Early life

[edit]

Ramalinga Raju, the eldest of four children, was born on 16 September 1954.[5][6] He earned a Bachelor of Commerce degree from Andhra Loyola College at Vijayawada and subsequently earned an MBA from Ohio University in the United States.[7] After returning to India in 1977, Raju married at the age of twenty two. He ventured into many businesses including Dhanunjaya Hotels; and a cotton spinning mill named Sri Satyam Spinning, funded by Andhra Pradesh Industrial Development Corporation (APIDC), with an investment of ₹ 9 crore (worth almost $7 million in 1983 prices). As the businesses failed Raju moved into real estate and started a construction company named Maytas Infra Limited.[7][8]

Family

[edit]

Ramalinga Raju is married to Nandini and the couple had two children Teja Raju, and Rama Raju. Teja Raju is married to Divya, a Bharatanatyam dancer, while Rama Raju married Sandhya Raju, the daughter of P. R. Venkatarama Raju, managing director of Ramco Cements. [9][10]

Career

[edit]

In 1987, Raju incubated Satyam Computer Services along with one of his brothers-in-law, DVS Raju at P&T colony in Secunderabad and 20 employees. In 1991, Satyam won its first fortune 500 client – John Deere. Raju navigated Indian bureaucracy to obtain the required clearance to transmit data from India[citation needed]. The company went public in 1992. Raju was enrolled in the Owner/President Management (OPM) program at Harvard Business School in the 1990s.[11] In an interview with Deccan Chronicle way back in 1998, Raju was talking about Satyam's ambition of operating out of 50 countries with an employee count of more than 50,000. In 1999, Raju launched Satyam Infoway (Sify) as Satyam's internet subsidiary, thereby becoming an early participant in the Indian internet service market.[7] Sify was later sold to Raju Vegesna.

Business and politics

[edit]

In September 1995, as Raju was building Satyam, Andhra Pradesh had a new Chief Minister, Chandra Babu Naidu, who wanted to bring in change. Naidu saw IT as a strategic industry to focus on and Raju became instrumental in shaping the state's information technology initiatives like 'Mee Kosam' ("For you" in Telugu). Raju had unfettered access to the chief Minister of Andhra Pradesh at a very personal level. Research into his life has exposed close links between business and politics.[12]

Philanthropy

[edit]

The major philanthropic foundations he has founded and grown to large scale between 2000 and 2008 are:

Byrraju Foundation:

The Byrraju Foundation, a family run philanthropic organization, was started in July 2001 by him and his 2 brothers in the memory of his father Late Byrraju Satyanarayana Raju. The Foundation adopted 200 villages in 6 districts of Andhra Pradesh namely East Godavari, West Godavari, Krishna, Guntur, Ranga Reddy and Visakhapatnam. The foundation built progressive self-reliant rural communities by adopting a holistic approach. It provided 40 different programs like healthcare, environment improvement, sanitation, primary education, adult literacy and skills development .,[13][14] GramIT etc. which impacted over 3 million people. Some significant achievements of the foundation are: Over 7 million patient visits, 53,250 persons made literate, 89,000 toilets built in rural homes, Livelihood skill training and certification for over 26,000 unemployed rural youth, setting up 61 drinking water plants and 4 GramIT Centres which employed 500 rural youth.

Currently, after the Satyam episode, the foundation has 117 adopted villages where it runs 110 health centers with the help of CARE foundation and operates 18 water plants.

The local people across the region hail the development works undertaken by the Byrraju Foundation and are appreciative of the positive impact it had on them.[15]

Emergency Management and Research Institute (EMRI 108):

Raju also set up a state of the art and first of its kind 24X7 emergency service named Emergency Management and Research Institute (EMRI 108) in August 2005. It was modelled after the 911 service in America and had an aim of giving citizens in an emergency the benefit of getting timely attention and support. This was done by providing a single toll-free number accessible from mobile and land line. Recently Forbs magazine has published an Article about the "Emergency Management System in US".[16]

Initially started with just 75 ambulances, EMRI has currently expanded to 10,697 ambulances covering 15 states and 2 union territories, serving over 26,710 emergencies per day, covering a population of 75 Crores (increasing reach of health care in rural, hilly & tribal areas). EMRI has more than 45,000 employees on its rolls. Till date 4.7 crore beneficiaries have availed these services, 4.38 lakh deliveries were assisted, and 18.56 lakh lives were saved since inception.

All the call-centre activities and support activities for emergency handling were automated. While state Governments were providing most of the funding, EMRI part funded and managed the services in PPP mode. After the Satyam episode, Raju resigned from the Board of Directors. The GVK group then took responsibility to run the institute. It now runs as a free service as a very successful public private partnership (PPP) model.

Accounting scandal

[edit]

Raju resigned from the Satyam board after Satyam Scandal, admitting to falsifying revenues, margins and over ₹5,000 crore of cash balances at the company. The Indian affiliate of PricewaterhouseCoopers, the company's auditors, appears to have certified the company had $1.1 Billion in cash when the real number was $78 million.[17]

Just a few months before the scandal broke out, Raju tried to persuade investors by claiming that the company is sound and that past October he surprised analysts with better-than-expected results, claiming that "the company had achieved this in a challenging global macroeconomic environment, and amidst the volatile currency scenario that became reality"[18]

A botched acquisition attempt involving Maytas in December 2008 led to corporate governance concerns among Indian investors and plunge in the share price of Satyam.[19] In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years.[19] Total assets on Satyam's balance sheet tripled during 2003–07 to $2.2 billion.[20] He confessed to an accounting fraud to the tune of ₹7,000 crore or $1.5 billion and resigned from the Satyam board on 7 January 2009.[21][22] Satyam was purchased by Tech Mahindra in April 2009 and renamed Mahindra Satyam.[23]

In his letter, Raju explained his modus operandi to something that started as a single lie but led to another as "What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years. It has attained unmanageable proportions as the size of the company's operations grew over the years."[18] Raju described how an initial cover-up for a poor quarterly performance escalated: "It was like riding a tiger, not knowing how to get off without being eaten."[24]

Raju and his brother, B Rama Raju, were then arrested by the CID Andhra Pradesh police headed by V S K Kaumudi, IPS on charges of breach of trust, conspiracy, cheating, falsification of records. Raju may face life imprisonment if convicted of misleading investors.[25] Raju had also used dummy accounts to trade in Satyam's shares, violating the insider trading norm.[26]

The Government of Andhra Pradesh attached 44 properties belonging to the family members of the promoters of Satyam Computers in the case against Raju.[27]

It has now been alleged that these accounts may have been the means of siphoning off the missing funds.[28] Raju has admitted to overstating the company's cash reserves by USD$ 1.5 billion.[28][29] Raju was hospitalized in September 2009 following a minor heart attack and underwent angioplasty. Raju was granted bail on condition that he should report to the local police station once a day and that he should not attempt to tamper with the current evidence. This bail was revoked on 26 October 2010 by the Supreme Court of India and he has been ordered to surrender by 8 November 2010.[30]

Court proceedings

[edit]

In November 2010, Raju surrendered after the Supreme Court in August cancelled the bail granted to him by a lower court in Hyderabad, where Satyam is based.

The Supreme Court on 4 November 2011 granted bail to Raju since the Central Bureau of Investigation (CBI) failed to file charges on time. According to Indian law, if a chargesheet is not filed within 90 days, then the accused person has a right to obtain Default Bail.[23]

On 28 October 2013, the Enforcement directorate filed a chargesheet against Raju and 212 others. The filed report states that "it transpires that the accused resorted to inter-connected transactions, so as to ensure that crime proceeds were distanced from its initial beneficiaries, and laundered the said proceeds under the cover of the corporate veil, with an ulterior motive to project the properties so acquired as untainted ones". [31]

On 9 April 2015, Ramalinga Raju and his brothers were sentenced to 7 years in jail, fined ₹5.5 crore. [32]

On 11 May 2015, within a month of being convicted, Ramalinga Raju and all others who were found guilty were granted bail by a special court in Hyderabad. The bail amount for R. Raju and his brother was set at ₹10,00,000 and the other convicts was set at ₹50,000 only.[33]

On 10 January 2018 India's capital market regulator has banned global auditing firm Price Waterhouse (PW) from auditing listed companies in India for two years for its alleged role of collusion with the directors and employees of erstwhile Satyam Computer Services, in perpetrating the country's biggest corporate accounting scandal.[34]

[edit]

References

[edit]
  1. ^ 1 Billion equals to 100 crores in Indian rupees
  2. ^ "Satyam's chairman Ramalinga Raju resigns, admits fraud". The Times of India. 7 January 2009. Retrieved 20 October 2013.
  3. ^ Rs 7,000-crore fraud. The Hindu Business Line. Retrieved on 27 December 2013.
  4. ^ "India Satyam Computers: B Ramalinga Raju jailed for fraud". BBC News. 9 April 2015. Retrieved 1 September 2024.
  5. ^ "CASTE IN STONE". Bangalore Mirror. 10 January 2009. Retrieved 18 October 2021.
  6. ^ Reporter, B. S. (7 January 2014). "What is Raju doing now?". Business Standard India. Retrieved 18 October 2021.
  7. ^ a b c Anjum, Zafar (10 October 2012). The Resurgence of Satyam: The Global IT Giant. Random House India. p. 1990. ISBN 978-81-8400-340-6.
  8. ^ "Business News Today: Read Latest Business news, India Business News Live, Share Market & Economy News". The Economic Times. Retrieved 18 October 2021.
  9. ^ Dey, Dasarath Reddy & Sudipto (5 January 2019). "10 years after Satyam, Raju remains patriarch of family-run business empire". Business Standard India. Retrieved 30 December 2021.
  10. ^ "Ramalinga Raju's family gets back into business". Business Today. 20 August 2015. Retrieved 30 December 2021.
  11. ^ Matthew Fox. "Satyam's Aversion to Imitation Fuels Growth" (PDF). Rotman Magazine. No. Winter 2005. p. 68. Retrieved 22 December 2012.
  12. ^ Bhandari, Bhupesh (2009). The Satyam Saga. Business Standard Books. p. 92. ISBN 978-81-905735-7-3.
  13. ^ Raju, V.S. Byrraju Foundation is Initiatives and Experiences in Rural Villages. Byrraju Foundation
  14. ^ Impact Investments. J.P. Morgan. 29 November 2010
  15. ^ "Ramalinga Raju's village still blesses him". The Indian Express. 9 January 2009. Retrieved 13 April 2011.
  16. ^ Haseltine, William A. "What The U.S. Can Learn From India's Emergency Response System". Forbes. Retrieved 19 April 2024.
  17. ^ Norris, Floyd (7 January 2009) A Corporate Hero Admits Fraud. New York Times
  18. ^ a b Timmons, Heather and Wassener, Betina (7 January 2009) Satyam Chief Admits Huge Fraud. New York Times
  19. ^ a b Joe Leahy (8 January 2009). "The $1bn black hole at the heart of company's finances". Financial Times.
  20. ^ Satyam's balance sheet tripled within 4 years
  21. ^ Blakely, Rhys (8 January 2009). "B. Ramalinga Raju, chairman of Satyam, admits £1bn fraud and quits". The Times (London). News International Limited. Archived from the original on 12 June 2011. Retrieved 8 January 2009.
  22. ^ "Mr Raju's resignation letter" (PDF). BBC News. BBC. 7 January 2009. Retrieved 8 January 2009.
  23. ^ a b "Section 167 of the Code of Criminal Procedure, 1973". Eastern Book Company. 16 November 2020. Retrieved 16 November 2020.
  24. ^ "Satyam stunner: Highs and lows of Raju's career". CNN-IBN. Reuters. 7 January 2009. Archived from the original on 23 September 2009. Retrieved 7 January 2009.
  25. ^ Blakely, Rhys (10 January 2009). "Raju brothers charged with forgery in $1bn Satyam case". The Times (London). News International Limited. Retrieved 10 January 2009.[dead link]
  26. ^ "Raju had opened multiple benami accounts: I-T probe". NDTV. NDTV. Archived from the original on 22 January 2009. Retrieved 15 January 2009.
  27. ^ Satyam case: Properties of promoter's family attached | Business Line. Thehindubusinessline.com (7 June 2012). Retrieved on 27 December 2013.
  28. ^ a b Timmons, Heather (17 January 2009) "Indian Executive Is Said to Have Siphoned Cash", New York Times
  29. ^ "Indian IT scandal boss arrested". BBC News. BBC. 9 January 2009. Retrieved 10 January 2009.
  30. ^ "Satyam boss Raju's bail cancelled". BBC News. 26 October 2010.
  31. ^ ED files complaint of money-laundering against Satyam accused. The Hindu (28 October 2013). Retrieved on 27 December 2013.
  32. ^ [1]. The Hindu (10 April 2015). Retrieved on 10 April 2015.
  33. ^ "Satyam's Ramalinga Raju, 9 others get bail, sentences suspended by court - Times of India". The Times of India. 11 May 2015.
  34. ^ "Price Waterhouse gets 2-year ban in Satyam case". The Economic Times. 11 January 2018.
  35. ^ "Bad Boy Billionaires India trailer: An in-depth look at the controversial cases of Vijay Mallya, Nirav Modi and others". The Indian Express. 25 August 2020. Retrieved 11 February 2021.
  36. ^ "Nagesh Kukunoor to direct web series on Satyam CEO Ramalinga Raju". India Today. 11 February 2021. Retrieved 11 February 2021.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Ramalinga_Raju&oldid=1247995949"