The chairperson of India’s Satyam Computer Services will appear in court on Saturday, a police official said, a day after he was arrested on charges relating to India’s biggest corporate scandal.
Ramalinga Raju and his brother B Rama Raju, co-founder and managing director, were arrested late on Friday on charges of criminal breach of trust, criminal conspiracy, cheating, falsification of records and forgery.
At Saturday’s hearing authorities will seek permission to hold Raju and his brother in custody for further interrogation, said VSK Kaumudi, inspector general of police in the crime investigation department in the southern city of Hyderabad.
Satyam, which specialises in business software and back-office services for clients including General Electric and Nestlé, is based Hyderabad.
Chairperson and founder Raju resigned on Wednesday after revealing years of accounting fraud, including an admission that about $1-billion, or 94% of the cash and bank balances on Satyam’s books at end-September, did not exist.
The board of Satyam, which was scheduled to meet on Saturday, has been dissolved by the government and a minister has said a new board would be constituted with 10 members, which would meet within seven days.
There was no move at this time, however, to take over Satyam’s management, said Corporate Affairs Minister Prem Chand Gupta on Friday.
Analysts said Satyam’s very existence was threatened by the scandal, which stand-in chief executive Ram Mynampati said has pushed the company into a crisis of unimaginable proportions.
The company’s market value has shriveled to $330-million, from more than $7-billion six months ago.
Satyam’s interim CEO said on Thursday the chief financial officer had also offered to resign after Raju’s admissions.
Several securities fraud class action lawsuits have been filed in the United States on behalf of investors who bought Satyam American Depository Receipts (ADRs) in the last five years. – Reuters