RBI scanner on Raju’s front companies

HYDERABAD: The Reserve Bank of India (RBI) has initiated action against some of the front companies floated by Satyam founder B Ramalinga Raju and his brothers Rama Raju and Suryanarayana Raju, the Enforcement Directorate (ED) probing the Satyam scam has informed the trial court.
Companies like SRSR Holdings Ltd., floated and run by Suryanarayana Raju, had actually performed the role of a non-banking financial company (NBFC) and they never obtained the required licence from RBI for these transactions, the ED has said in its chargesheet filed recently.
The ED, which filed its case against 213 accused that include Raju, his relatives, associates and their companies, said 327 front companies were floated to launder the Satyam scam money in order to provide a corporate veil to their criminal activities. It also said that the Rajus made nearly Rs 2,300 crore illegal gain in the scam, and purchased more than 1,060 properties and held them in various benami names and front companies.
SRSR Holdings played a key role in promising the Rajus’ Satyam shares with NBFCs and in obtaining Rs 2,171 crore as loan, ED authorities said in the chargesheet.
Immediately after this, Raju declared bonus shares to all shareholders of Satyam and with this the number of shares of Raju and his kin held in the company rose to 5.5 crore. They could retain half of this, after selling away their shares held prior to the bonus issue, ED said.
What SRSR Holdings performed in the process was the role of an NBFC for which it acquired no registration or licence from RBI, the ED officials charged. The accused took care to ensure that no one knew about the promoters of Satyam selling en masse their shares in the company or that properties were being bought for them, it said in the chargesheet.
Interestingly, the ED recorded scores of statements of the employees of SRSR Holdings and various other front companies, who have unequivocally told the authorities that it was Satyam money that was being laundered and all the properties were being bought only for the three Rajus, namely Ramalinga, Rama and Suryanarayana.
Even more interesting was how ED proved Ramalinga Raju wrong. Raju in his deposition before ED maintained that he only transferred the shares held by him and his kin to their company SRSR Holdings and it did not amount to selling of shares. What ED did was to track the subsequent developments like SRSR mortgaging them which later stood sold to outsiders.
On Tuesday, all the accused, including Ramalinga Raju, his kin and representatives of various front companies appeared before the ED court. The court posted the case for further hearing to January 21.
It can be recalled that the infamous confession of Raju on the Satyam scam was made on January 7, 2009 and corporate India is entering into its 7th year post Satyam along with all the lessons, whether learnt or not.