Raju, Satyam Directors could face a ten-year jail term [India]

A team of officials from market regulator Securities and Exchange Board of India (SEBI) will arrive in Hyderabad on Thursday to begin a probe amid speculation that police might arrest Mr. Raju, but nobody knows his whereabouts. Mr. Raju became incommunicado after sending a letter to the Satyam Board of Directors on Wednesday morning. There was utter confusion after a TV channel reported that he had left either for the US or Dubai.

Mr. Raju is believed to have met nobody in the last two days. It is also possible that he might have handed over his letter to company officials before becoming incommunicado.
Some of the more serious penalties that Raju and others are likely to face under various laws are:
* Section 23 of the securities contract regulation Act 1956, that imposes a penalty of imprisonment up to 10 years and fine up to Rs 25 crore. The adjudicating officer of Sebi is empowered to award such punishment to directors and management executives for violating the listing agreement by making false and inaccurate disclosures in the company's quarterly and annual results. The penalty is severe because of the enormous damage that the investors are liable to suffer on account of false disclosures.
* Section 24 of the Sebi Act 1992 that imposes a penalty of imprisonment up to one year for infringement of any provisions of the law or rules and regulations, including fraudulent and unfair trade practices (FUTP).
* Section 477-A of the Indian Penal Code, that imposes a penalty of imprisonment up to seven years. The police may on their own or on the recommendation of the serious fraud investigation office (SFIO) invoke this IPC provision meant to punish those found to have falsified accounts "...willfully and with intent to defraud."
* Section 211 of the Companies Act that imposes a penalty of imprisonment up to six months. The company law board is empowered to punish those who are found to have "willfully" failed to comply with the requirements of law relating to the annual financial statement.

Significantly, the job of the prosecuting agencies has been made easier by the damaging admissions made by Raju in his resignation letter to the board. Having taken responsibility for cooking the Satyam books to the tune of Rs 7,136 crore, it is just as well that Raju said, "I am now prepared to subject myself to the laws of the land and face the consequences thereof." For all his exertions in his resignation letter to save the skin of other directors, they have reason to worry because the Companies Act does not only hold the board to account for any such failure of due diligence, it also makes no distinction in the liability of executive and non-executive or independent directors. The onus is on them to prove the action they had taken to discharge their fiduciary responsibility.

Corporate India, Regulators 'stunned' by Satyam fraud [India]

Terming disclosures of financial wrong-doings at Satyam as an event of 'horrifying magnitude,' the Securities and Exchange Board of India on Wednesday said it would take all steps under the law for which it has started discussions with government and bourses. "We are in touch with Ministry of Corporate Affairs. We are also in discussion with them as to what steps need to be taken from the perspective of power they have under the law and Sebi has under the law," Sebi chairman C B Bhave said.

Sebi was also forwarding the letter written by Satyam's chairman B Ramalinga Raju on his stepping down with the confession that the profits in the company were inflated over the years, leading to wide gap between real and imaginary assets.

Govt to refer Satyam case to Serious Fraud Investigation Office
The government has decided to refer the Satyam case to Serious Fraud Investigation Office, an official of the Ministry of Corporate Affairs said.
All regulators and government agencies will make coordinated efforts to get to the bottom of the Satyam wrongdoings, the official said, adding that the 'company management not been fair to the shareholders'.

Satyam plunges to all-time low
Meanwhile, the Satyam Computer stock nosedived nearly 70 per cent to an all-time low of Rs 58, following the resignation of the company's chairman B Ramalinga Raju and Managing Director B Rama Raju.

Shares of Satyam plunged as much as 67.71 per cent to a low of Rs 58, but was later trading at Rs 73.50, down 58.96 per cent in the afternoon trade on the Bombay Stock Exchange.
The scrip, which had opened at Rs 179.10, plunged within minutes of Satyam chairman and managing director tendering their resignation.

Raju had been under attack over the $1.6-billion acquisition fiasco of firms promoted by his family. The counter saw frantic selling after the announcement and nearly 13 crore (130 million) shares had changed hands on both the bourses within an hour.
Satyam stock holds a 1.56 per cent weight in the 30-share bluechip index Sensex. Following the same, the benchmark index also plunged over 400 points and was trading down nearly 4 per cent at 9,922 points in the noon trade on the BSE.

On the National Stock Exchange, the scrip plunged 55.63 per cent to an all time low of Rs 79.40. It was later trading at Rs 80, down 55.29 per cent in the afternoon trade.
In a regulatory filing, the company said Raju would continue to be the chairman till the board is expanded.

Satyam Chairman Raju resigns, admits to fraud [India]

Satyam Computers founder and chairman Ramalinga Raju had resigned from the Satyam board.
Raju has written a letter to the board giving details of the balance sheet. Balance Sheet has inflated cash balances of Rs 5040 crore and accrued interest of Rs 376 crore is non-existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books.

While Ram Myanpati will act as Interim CEO, Merrill Lynch can be entrusted to explore. As per the revelations, second Quarter numbers were inflated to Rs 2700 crore vs Rs 2112 crore actual numbers. No board member had any knowledge of the real situation of the books. Shares in Satyam Computer shed all gains to turn negative after the embattled Indian outsourcer said its chairman has resigned from the board. Shares were down 16.81 percent at 149 rupees. (11.22 a.m.)