Satyam founder Ramalinga Raju was sentenced to seven years in jail today, hours after he was found guilty by of criminal cheating and conspiracy in what is described as India’s largest-ever corporate scandal. He has also been fined five crores.
Mr Raju, his brother B Rama Raju, and eight others have been convicted by a Hyderabad case in an accounting fraud case worth Rs 14,000 crores, according to investigators. Mr Raju is likely to appeal in a higher court against today’s verdict.
The 60-year-old, who was granted bail in 2011 after spending nearly three years in prison, was taken to a local jail today.
His trial has spanned six years, with the CBI handling the investigation against him.
Satyam Computer Services was at one time considered the gold standard for an outsourcing company. The scandal, which erupted during the IT industry’s early boom in India, forced the spotlight on corporate governance.
In 2009, Mr Raju, who founded Satyam as a family business with his brother and brother-in-law in 1987, said about $1 billion or 94 per cent of the cash on the company’s books was fictitious. Investors were shocked by the revelations that the firm’s profits had been overstated for years and assets falsified.
In a confessional letter to shareholders in 2009, Mr Raju wrote: “The concern was that poor performance would result in a takeover” and “It was like riding a tiger, not knowing how to get off without being eaten.” He later retracted that statement.
Satyam rose to prominence in the late 1990s when Mr Raju was among the first to spot outsourcing opportunities in the year 2000 rollover problem, which saw the coming of age of the software outsourcing industry.