Section 37
What the Satyam fraud case teaches about honest books
What happens when a company's reported profits and cash are not real?
- case
- Failure
- years
- 2009-2017
- ₹5,040 crore
- Non-existent cash and bank balance stated in the letter · 2009
- ₹1,849 crore
- Unlawful gains SEBI ordered returned · 2014
- 7 years' rigorous imprisonment
- Prison sentence by CBI special court · 2015
- 01
The situation
On 7 January 2009, a letter in the name of Satyam's chairman B. Ramalinga Raju stated that the balance sheet as of 30 September 2008 carried an inflated, non-existent cash and bank balance of Rs 5,040 crore, along with other false figures. In July 2010 Raju's lawyers told the court that he had not written the letter.
- 02
The decision
Regulators and investigators acted. On 15 July 2014 the Securities and Exchange Board of India (SEBI) barred Raju and four others from the securities market for 14 years and ordered them to return Rs 1,849 crore of unlawful gains with 12 per cent annual interest from 7 January 2009.
- 03
The outcome
On 9 April 2015 a CBI special court in Hyderabad convicted Raju and nine others in the case brought by the Central Bureau of Investigation, sentenced them to seven years' rigorous imprisonment, and fined Raju and his brother B. Rama Raju Rs 5 crore each. In May 2017 the Securities Appellate Tribunal agreed with SEBI's findings on the violations but asked SEBI to reconsider the uniform 14-year ban.