Mumbai: In a fresh order in the nearly seven-year old Satyam scam case, regulator Sebi on September 10 asked 10 entities linked to the main accused B Ramalinga Raju -- including his mother, brother and son -- to disgorge over Rs 1,800 crore worth of illegal gains made by them.
Besides, they will also have to pay close to Rs 1,500 crore as interest on the disgorgement amount, as the penalty has been levied with effect from January 7, 2009 -- the day Satyam Computer's founder and then Chairman B Ramalinga Raju admitted to a massive long-running fraud at the company.
The latest penalties for insider trading follows an earlier disgorgement order passed by Sebi in July last year, wherein the regulator had barred Raju and four others from the markets for 14 years and also asked them to return Rs 1,849 crore worth of unlawful gains with interest.
That order was against Ramlinga Raju himself, his brother B Rama Raju (then Managing Director of Satyam), Vadlamani Srinivas (ex-CFO), G Ramakrishna (ex-vice president) and VS Prabhakara Gupta (Ex-Head of Internal Audit).
In the order, Sebi has also fixed individual liability of Raju, his two brothers and other individuals and companies related to the promoter family. Those against whom the latest order has been passed include SRSR Holdings (controlled by Raju brothers), IL&FS Engineering and Construction (formerly known as Maytas Infra that was controlled by Raju and his two sons), Raju's mother B Appalanarasamma, his two sons -- Teja Raju and Rama Raju Jr, his brother Suryanarayana Raju, B Jhansi Rani (wife of Suryanarayana), Chintalapati Srinivasa (then Director of Satyam) and his father Anjiraju Chintalapati (since deceased), as also Chintalapati Holdings Pvt Ltd.
With regard to IL&FS Engineering and Construction (IECCL), Sebi however said it was neither an insider in Satyam Computers and Maytas, nor did it have access to the 'unpublished price sensitive information', and therefore it has been spared of any debarment action.
Taking note of the fact that IECCL had acquired Maytas at a later stage, Sebi said it did not have any role or involvement in the insider trading of Maytas Infra. "It had stepped in as a promoter of Maytas under special circumstances much after the impugned insider trading by Maytas. Considering the special facts and circumstances as of the present matter, I am of the view that any direction by way of restraint/debarment against IECCL at this stage is not necessary.
"However, the unlawful gains made on account of insider trading by Maytas and lying with IECCL cannot be allowed to be retained by it as it would amount to unjust/unlawful enrichment," Sebi's Whole-Time Member Rajeev Agarwal said in his order. Sebi, in its 39-page order effective immediately, said that the amount needs to be paid with interest of 12 per cent per annum from January 7, 2009, till the date of payment, within 45 days.
Ramalinga and Rama Raju have to jointly and severally disgorge over Rs 56 crore which they had earned by sale or transfer of shares held by them in Satyam Computers. SRSR Holdings has been asked to disgorge the wrongful gain of Rs 1,258.88 crore jointly and severally with the two brothers.
The third brother Suryanarayana Raju has been asked to disgorge nearly Rs 90 crore and his wife Rani would have to pay Rs 8.5 crore. Mother Appalanarasamma has to disgorge Rs 8 crore, while the unlawful gains made by Raju's two sons are estimated at about Rs 95 crore. Sebi said that SRSR Holdings served as a front for the promoter group and the Raju brothers to obtain funds through pledge of shares of Satyam Computers with active involvement and the direct or indirect connivance or collusion of Ramalinga and Rama Raju who were its directors and also 'insiders' in Satyam Computers and in possession of the 'unpublished price-sensitive information' in this case.
At the same time, Anjiraju Chintalapati (since deceased), the Raju family matriarch Appalanarasamma and other family members and related companies also made unlawful gain on account of sale or transfer of shares while in possession of 'unpublished price-sensitive information' with complicity and involvement of the two Raju brothers.
On January 7, 2009, Raju - the then Chairman of Satyam Computer - had sent an email to the Sebi, wherein he admitted and confessed to inflating the cash and bank balances of the company, besides understating liabilities and other financial mis-statements. After the fraud came to the light, the government had ordered an auction for sale of the company in the interest of investors and employees of what was known at that time as the country's fourth largest IT firm. The company was acquired by Tech Mahindra, then renamed as Mahindra Satyam and eventually it was merged with Tech Mahindra.
