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SEBI team reaches jail to question Rajus

A team of officials from the SEBI reached the Chanchalguda Central Jail in Hyderabad to begin questioning Satyam Computer Services founder B Ramalinga Raju and his brother B Rama Raju over the Rs 70-billion accounting fraud.

business Updated: Feb 04, 2009 13:02 IST

A team of officials from the Securities and Exchange Board of India (SEBI) reached the Chanchalguda Central Jail in Hyderabad on Wednesday to begin questioning Satyam Computer Services founder B Ramalinga Raju and his brother B Rama Raju over the Rs 70-billion accounting fraud.

Armed with permission from the Supreme Court to grill the accused, a three-member SEBI team led by general manager Sunil Kumar entered the jail around 10 am with a bunch of files.

The SEBI officials will first discuss with prison authorities the modalities for the three-day interrogation. As per the court order, Sunil Kumar would apprise the jail superintendent in advance of the names of his subordinates and colleagues who would be accompanying him to interrogate the two.

They will also decide the timing and other details. It was not clear if the questioning will be done in presence of any jail official.

The Supreme Court had on Tuesday allowed SEBI to interrogate the Raju brothers in jail on Feb 4-6.

SEBI officials will question Rajus on suspected insider trading, diversion of Satyam funds to other companies promoted by their family members and other aspects of the case.

This is the first time since Rajus' arrest on January 9 that SEBI has got access to them. The market watchdog on January 9 had served summons on the Raju brothers to appear before SEBI team, which had reached Hyderabad January 8, a day after Ramalinga Raju publicly confessed to the accounting fraud in Satyam, India's fourth largest IT services firm.

Their lawyer S Bharat Kumar had informed SEBI that they would appear on January 10. However, few hours later they surrendered before Crime Investigation Department (CID) of Andhra Pradesh police.

This gave rise to the suspicion that the two brothers were evading a SEBI interrogation. SEBI then approached a magisterial court to seek permission to record their statements but the magistrate dismissed the petition on January 23.

SEBI challenged the order in the Andhra Pradesh High Court last week. Appearing for SEBI, Solicitor General of India Goolam E Vahanvati had prayed for an ex-parte interim order to question the accused but the high court had refused to pass such an order without hearing Rajus. The high court had issued notices of admission to the Rajus and posted the matter for hearing on Feb 9.

Frustrated over the delay in accessing the accused, SEBI approached the Supreme Court, which gave its nod for the questioning.