Trial starts, judgment day nears for Ramalinga Raju
Ramalinga Raju was hailed as one of India's most successful businessmen until he resigned from Satyam in January 2009, admitting in a dramatic resignation letter to massive systemic fraud.india Updated: Nov 02, 2010 15:40 IST
Ramalinga Raju was hailed as one of India's most successful businessmen until he resigned from Satyam in January 2009, admitting in a dramatic resignation letter to massive systemic fraud.
"It was like riding a tiger, not knowing how to get off without being eaten," he wrote, describing how the widening gap between false and actual profits at outsourcing giant Satyam reached "unmanageable proportions".
Raju, who founded the company in 1987, admitted to a "tremendous burden that I am carrying on my conscience" as he detailed missing cash and accounting scams that inflated Satyam's balance sheet by more than one billion dollars.
"I am now prepared to subject myself to the laws of the land," Raju said in the letter, which sent Satyam's shares plunging by more than 90%.
Twenty months on, he appeared in court on Tuesday facing years behind bars if found guilty on charges of fraud when his trial concludes probably sometime next year.
Raju, who was educated in India and at the University of Ohio, was one of the stars of India's software boom which has played a key part in the nation's modernisation and increasingly international outlook over the last 15 years.
Now 56, he was born in a family of farmers in the state of Andhra Pradesh and started business in textile and real estate before spotting the potential in outsourcing.
In a pitch that went down in company lore, Raju went after his first big business contract with US tractor maker John Deere by making an eye-catching offer -- if you are not happy with our work, don't pay us.
The approach worked and with his brother, B. Rama Raju, he built Satyam -- which means "truth" in Sanskrit -- into a major global company with a payroll of 53,000 people and clients such as Nestle and General Electric.
The sector boomed as international firms looked to cheap, technologically-savvy and English-speaking Indian staff to take on office support and software roles.
Raju became an unofficial ambassador for Hyderabad which was nicknamed "Cyberabad" as new technology companies, such as Microsoft, moved to the city.
But as time went on, Satyam felt pressure from rival outsourcers and started cutting prices to win clients.
Critics also said Raju didn't delegate responsibility and that control was all vested at the top.
Arrested soon after he stepped down, Raju suffered a heart attack and also was diagnosed with hepatitis. He was granted bail in August on health grounds but a court revoked the order last month.
Since his arrest, he has spent most of his time in hospital in Hyderabad.
He has backed away from the confessions made in his resignation letter, but police maintain it was a "voluntary disclosure of fraud".