The Hindu Business Line : SC to hear SEBI plea to quiz Ramalinga Raju today

The Supreme Court will hear on Tuesday a special leave petition filed by the Securities and Exchange Board of India for a direction to interrogate Mr B. Ramalinga Raju and Mr B. Rama Raju, former Chairman and Managing Director, respectively, of Satyam Computers, in connection with the financial scam in the company.

A Bench of Chief Justice K.G. Balakrishnan and Mr Justice P. Sathasivam directed the matter to be put in the ‘mentioning list’ after Solicitor-General G.E. Vahanvati sought early listing of the SLP.

In its SLP, SEBI said it approached the Andhra Pradesh High Court for a direction to permit the market regulator to interrogate the two brothers who are in judicial custody in connection with the scam.

However, the High Court refused permission and posted the matter for further hearing on February 9. In view of the urgency, SEBI was constrained to move the apex court, the SLP said.

‘Worst fraud’

The SLP said the financial fraud in Satyam Computers was the worst in the history of this country. In less than one month, the market capitalisation fell from Rs 15,000 crore to Rs 2,000 crore.

Domestic investors in this company have been completely devastated and foreign investors’ confidence has been shaken.

SEBI said the balance sheet of Satyam as on September 30, 2008 “carries an inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books), an accrued interest of Rs 376 crore (non-existent), an understated liability of Rs 1,230 crore on account of funds arranged by Mr Ramalinga Raju and an overstated debtors position of Rs 490 crore (as against Rs 2, 651 crore reflected in the books).

SEBI said it was a specialised agency which had the competence and expertise to investigate matters pertaining to frauds in relation to transactions in securities.

A case of this magnitude has not arisen in the Indian corporate history before and SEBI is an expert body with the statutory duty to conduct a comprehensive and meaningful investigation.

‘Large-scale ramifications’

It said the scam had large-scale national and international ramifications in relation to a listed company and the two brothers instead of appearing before the SEBI, as was obliged under the law, sought adjournment and, thereafter, they were arrested.

The finding of the trial court that the SEBI was not an investigative agency and that there was no provision in law under which it could interrogate the two respondents was contrary to law.

The High Court ought to have intervened in the trial court’s ruling but it had simply adjourned the hearing to February 9.

The SLP sought quashing of the impugned order and a direction to facilitate the interrogation of the two brothers in custody.

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SEBI’s plea to quiz Rajus posted for Feb 9

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