The Serious Fraud Investigation Office has submitted its final report on the Satyam case last week, and it tallies with my belief that Ramalinga Raju was broadly telling the truth in his confessional statement. He created fictitious sources of funds, plumped the company's balance sheet in order to keep the stock price high, and made hundreds of crores by selling shares at prices he knew were far in excess of what the company deserved.
I wrote three months ago that we are conditioned to believe fraud must involve skimming and siphoning. Throughout the Satyam investigation, enforcement officials as well as the media have been convinced that large scale embezzlement is at the root of the scandal. Since no evidence of embezzlement has been found by the SFIO, journalists are counting that as a setback to the investigative process. Hindustan Times carried a funny article on the issue two weeks ago, in which 'flummoxed' CBI officials complained about the Raju brothers' failure to co-operate on the issue of siphoning. The presumption on part of the writer as well as the investigating agency was that embezzlement had to have taken place, the only question was how. Moneycontrol put out a report last Friday headlined, 'SFIO fails to figure out siphoning of Satyam funds by Rajus', and Mint carried a similar piece, both with the same underlying assumptions regarding the nature of the Satyam fraud.
Early on in the crisis, there were allegations that the Rajus had created fictitious employees, and diverted the salaries of these non-existent individuals to their personal account. That would have been one way of taking money directly from the company, but would have worked at cross purposes with the strategy of inflating profits. I wasn't surprised when this allegation was disproved.
Ramalinga Raju provided us with a convincing motive for his actions, as well as an indication of how he went about defrauding shareholders. The SFIO has uncovered perfectly good evidence of bank deposits which did not exist, evidence that backs up Raju's original story. The Maytas episode also fits perfectly into this picture. Why, then, are the police and media trying to jam the pieces of evidence into a completely different jigsaw puzzle?