New allegations in the Satyam scandal could have major Foreign Corrupt Practices Act implications. A story in The New York Times by Heather Timmons on Sunday said Satyam Computer Services’ founder and former chief, B. Ramalinga Raju, may have “skimmed huge amounts of cash from the company, rather than padding its books as he has claimed, a person involved in the investigation of the company said on Saturday.”
Raju said in a confession to the company’s board two weeks ago that to inflate the balance sheet he forged bank records to show about $1 billion in fake deposits. But the person involved with the investigation in India, who hasn’t been identified, says that Raju instead used 300 family-controlled companies to siphon as much as $1 billion in cash from Satyam.
If that’s true, it’s more likely money from the company went to officials in India and perhaps other countries. Satyam has government-linked customers for its outsourcing services around the globe. Payments to government officials or employees at government-linked enterprises could violate the FCPA’s antibribery provisions.
Meanwhile, AFP reports that the Indian government has ordered a fraud investigation into Raju’s “family-promoted Maytas Properties and Maytas Infrastructure, saying it suspected a link between these two companies and the scandal at Satyam.” There have been other reports that Raju’s family-owned companies might have received special preferences from authorities for infrastructure projects in India.
Raju is in an Indian jail pending a bail hearing on Thursday. He has said he didn’t take any money from Satyam and never profited personally from his fraud.
U.S. authorities haven’t commented yet on the case or any planned investigation.