B Ramalinga Raju, the former chairman and founder of Satyam Computer Services, and nine others have been found guilty in one of India’s biggest ever corporate scandals, a Hyderabad court has ruled.
Byrraju Ramalinga Raju, who founded the software services giant, denied charges of conspiracy, cheating and forgery but admitted to accounting malpractices.
The special court in Hyderabad is expected to pass sentences on April 10.
The collapse of Satyam Computers in 2009 cost shareholders more than $2 billion and rocked India’s IT industry.
It is the biggest fraud at a listed company in India; its collapse was called India’s Enron.
Another Indian company, Tech Mahindra, bought a controlling stake in Satyam in April 2009.
“All the accused have been convicted of almost all charges,” prosecutor K Surender told reporters outside court.
All 10 people accused in the case were convicted – they include two brothers of B Ramalinga Raju and seven others. B Ramalinga Raju could face life in prison, prosecutors say.
The scandal emerged in January 2009 when B Ramalinga 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 $1.15 billion.
In a letter to the board B Ramalinga Raju claimed he had fudged the numbers in order to be in the top four of the Indian IT industry.
“The concern was that poor performance would result in a takeover,” he told shareholders.
“It was like riding a tiger, not knowing how to get off without being eaten.”
Prosecutors say that when the scam unraveled, it cost shareholders $2.3 billion at today’s rates.
The scam had been going on for nine years and the confession sent shockwaves across the industry.
Court papers filed by India’s stock market regulator said that B Ramalinga Raju along with 13 other friends and family made about $400 millio in illegal wealth in the scam – by cashing in on a surging share price – offloading stakes in the company at a high price and making substantial profits despite knowing that accounts were overstated.
B Ramalinga Raju was arrested in January 2009 and jailed before being bailed two years later. He also spent nearly a year in hospital being treated for hepatitis.
Satyam had been one of the biggest players in the booming Indian IT software market, supplying back-office services to companies from around the world, including General Electric and Qantas Airways.