Founder of Satyam outsourcing, Ramalinga Raju
LAWYERS were set to call their first witnesses today in the trial of the disgraced founder of Indian outsourcing giant Satyam, in a billion-dollar corporate fraud case dubbed “India’s Enron”.
The trial comes nearly two years after founder and former chairman B Ramalinga Raju shook the Indian corporate world by admitting that he had falsified Satyam’s profits and assets for years.
Prosecution lawyers said they would produce two witnesses today - both government officials involved in the police seizure of accounting documents.
Raju’s counsel Bharat Kumar said the questioning and cross-examination of each witness was expected “to take a long time”. As many as 300 people are expected to give evidence in total.
Raju, who was educated in India and the US at the University of Ohio, was one of the stars of the software boom that has been a key driver of India’s economic growth over the past 15 years.
Raju, 56, faces charges including conspiracy, cheating and forgery, having admitted in a statement in January, 2009, that he had overstated profits for years and inflated the company’s balance sheet by more than a billion dollars.
He was jailed awaiting trial for 19 months before being granted bail in August of this year, and has been undergoing treatment for hepatitis at a hospital in Hyderabad.
Raju stands charged with nine other senior Satyam executives, including his brother B Rama Raju.
The scandal at the Hyderabad-based firm is known as “India’s Enron” after the US energy giant that collapsed in 2001 in the wake of massive false-accounting revelations.
Satyam was ranked as India’s fourth-largest outsourcer by revenue before the scandal.
Raju was born in a family of farmers in the southern state of Andhra Pradesh and started business in textile and real estate before spotting the potential in outsourcing.
Satyam and the rest of the sector boomed as international firms looked to cheap, technologically-savvy and English-speaking Indian staff to take on office support and software roles.
The group was taken over in April 2009 by mid-sized software outsourcer Tech Mahindra, a unit of the tractors-to-holidays conglomerate Mahindra and Mahindra, which paid nearly $600m (£371.94) for a majority share.
Rebranded as Mahindra Satyam, it announced a loss two months ago of $27.6m (£17.10m) for the fiscal year to March as it reported its first results since the scandal.
Analysts have been divided about Satyam’s future, with some saying the worst is over while others argue it could take a few quarters or even years of uphill struggle to fully emerge from the scandal.
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