Lawyer Will Seek Bail for Jailed Satyam Officials
The New York Times
Published: Jan 13, 2009
HYDERABAD, India — The co-founders of the Indian software company Satyam Computer Services, who are at the heart of a corporate fraud scandal that has sent shock waves through Indian business circles, were expected to seek bail on Monday, even as Satyam's newly appointed board meets to discuss the company's future.
S. Bharat Kumar, the lawyer who is representing the former Satyam chief executive, B. Ramalinga Raju; his brother Rama Raju, a co-founder of the company and former director; and Satyam's chief financial officer, Srinivas Vadlamani, said he would ask a magistrate's court in Hyderabad on Monday afternoon to grant his clients bail.
The three men, who have been arrested on suspicion of cheating, forgery, criminal breach of trust and falsifying documents, were arrested over the weekend after Ramalinga Raju admitted to faking about $1 billion in cash on Satyam's books and tendered his resignation.
The revelations have shaken the company and its 50,000 employees, led to a collapse in Satyam's share price and raised worries that similar problems might lie buried at companies elsewhere in the country's information technology sector.
The government over the weekend stepped in to appoint a three-member board in a bid to restore confidence in the outsourcing firm, prompting its shares to rebound more than 61 percent Monday morning. The board is meeting in Hyderabad to lay out a road map for clients and staff in the wake of the scandal, which has been compared to the Enron fraud in the United States.
Satyam specializes in business software and offers back-office outsourcing services to dozens of leading international companies. The fraud has cast a cloud over foreign investment in India and over its important outsourcing sector.
On Monday, the World Bank revealed that it had, in 2007 and 2008, barred not only Satyam, but also two other leading Indian software companies, Wipro and Megasoft Consultants, from working for it. The World Bank said that Wipro had provided improper benefits to the bank's staff, and that Megasoft participated in a joint venture with World Bank employees while conducting business with the institution.
Wipro fell about 12 percent as a result on the Mumbai stock exchange, and Megasoft slumped 15 percent.
Meanwhile, it remains unclear what that the chances are of the Raju brothers and Satyam's finance officer getting bail. Mr. Kumar, their lawyer, reiterated Monday that he believed the Raju brothers and Mr. Vadlamani had a "good case" for being released on bail. Police officials, however, said they would push to keep the three men locked up while they await trial.
Mr. Kumar declined to reveal what argument he will make before the magistrate, saying that it would unethical for a lawyer to disclose arguments to the press before making it in court.
But he indicated that, at least for Ramalinga Raju, declining health may play a role in his bail petition.
"He is suffering from various ailments, including unstable blood pressure," he said. "We believe and hope prison authorities will take the appropriate medical care in the facility, otherwise it amounts to a human rights violation."
If bail is not granted, the three Satyam executives will remain in prison until Jan. 23, when they are scheduled to appear in court for a preliminary evidentiary hearing.
© The New York Times. All rights reserved. This article originally appeared in The New York Times.
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