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Tuesday, April 14, 2009

LIC lost Rs.950 crore in Satyam scam

Cash balance in banks inflated from Rs. 139 crore to Rs. 5,160 crore

Company sales were also inflated from Rs. 23,434 crore to Rs. 27,691 crore

NBFCs lent Rs. 1,744 crore following mortgage of shares by Raju borthers

HYDERABAD: The Life Insurance Corporation (LIC) is the single largest institutional investor to lose heavily in the Satyam Computers fraud, having coughed up Rs. 950 crore.

On the contrary, Allahabad Bank, Union Bank of India, Punjab National bank, Oriental Bank of Commerce and the Corporation Bank together lost Rs. 10 crore, the Central Bureau of Investigation (CBI) stated in its charge sheet filed in the court on Tuesday.

The 80-page document highlighted that ex-Satyam chairman B. Ramalinga Raju and other accused generated 7,561 fake invoices against software services that were not rendered and showed a turnover of Rs. 5,117 crore. The sales of the company were also inflated from Rs. 23,434 crore to Rs. 27,691 crore.

The accused inflated the cash balance available in banks as well from Rs. 139 crore to Rs. 5,160 crore and claimed to have earned an interest of Rs. 375 crore which was non-existing. The Income-Tax paid on revenue from interest was shown at Rs. 30 crore while the actual tax deducted at source was only Rs. 1.5 lakh. However, the actual interest that accrued to company was only Rs. 7 lakh.

The charge sheet maintained that Ramalinga Raju and his brothers Rama Raju and Suryanarayana Raju first offloaded their shares in Satyam for Rs. 75 crore and gifted the proceeds to their wives and family members. They sold the share holding of their family members in the company to earn Rs. 707 crore in 2002. The funds were used for purchase of several properties. As a result of these transactions, the stake of the family in Satyam fell from 18 per cent in 1992 to 1.27 per cent by 2008 end.

Many non-banking financial companies (NBFCs) lent Rs. 1,744 crore following mortgage of shares by Raju brothers who had equity participation in 327 front companies of Satyam group. In this background, a significant feature of the charge sheet was the claim of Ramalinga Raju that 37 front companies had pumped in Rs. 1,430 crore into Satyam which CBI and the Government appointed board of the company denied.

The CBI stated that it found no entries in support of the claim in Satyam’s books of accounts.

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