Name: Mayank Raj

Roll No.: 2021PGLAW14

Subject: Penal Laws and Theorization of Deviant Behaviour

1. Why Satyam Computer CEO (Ramalinga Raju) Got Convicted? What was the
Offence?
Answer: Timeline of Events of the Scam
a) June 24, 1987: Satyam Computers was launched in Hyderabad.
b) 1991: Debuts in Bombay Stock Exchange with an IPO oversubscribed 17 times.
c) 2001: Gets listed on NYSE: Revenue crosses $1 billion.
d) 2008: Revenue crosses $2 billion.
e) December 16, 2008: Satyam Computers had announced the acquisition of a 100
percent share in Maytas Properties and Maytas Infra, two firms owned by Chairman
Ramalinga Raju’s sons. The proposed $1.6 billion purchase was called off seven
hours later owing to investor opposition to the buyout. However, Satyam’s stock
dropped 55% in trade on the New York Stock Exchange.
f) December 23, 2008: Satyam had been barred from conducting business with
the World Bank’s direct contracts for an eight-year term, one of the harshest penalties
imposed by a customer against an Indian outsourcing company. Satyam was found
ineligible for contracts, according to the bank, since it provided illegal incentives to
bank employees and failed to maintain documentation to justify costs charged to its
subcontractors.
g) December 25, 2008: Satyam had demanded an apology and a complete explanation
from the World Bank for the assertions, which the outsourcer claims have harmed
investor trust. Satyam did not challenge why the business was prohibited from
contracts, nor did it seek for the prohibition to be lifted. Instead, it objected to the
assertions made by bank personnel. It also ignores the accusations that the World
Bank said rendered Satyam unsuitable for future contracts.
h) December 26, 2008: Following the World Bank’s scathing pronouncements,
Mangalam Srinivasan, an independent director of Satyam, resigned.
i) December 28, 2008: Three additional directors had resigned. Satyam had moved its
board meeting from December 29 to January 10, when it was likely to announce a

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 management restructuring. The action was intended to give the company more time to
consider options other than a prospective share purchase. Satyam had also hired
Merrill Lynch to evaluate strategic options for increasing shareholder value.
j) January 2, 2009: The promoters’ stake decreased from 8.64 percent to 5.13 percent
when institutions that had pledged the shares ditched them.
k) January 6, 2009: Promoters’ stake fell to 3.6%.
l) January 7, 2009: Ramalinga Raju resigned after confessing to inflating the
company’s financial statistics. He claimed that the company’s cash and bank accounts
on the balance sheet were overstated and fudged to the tune of INR 50,400 million.
Other Indian outsourcers were scrambling to prove their worth to clients and
investors. The National Association of Software and Service Companies, an industry
association in India, had jumped to defend the Indian IT sector as a whole.
m) January 8, 2009: Satyam was attempting to reassure customers and investors that it
could keep the firm viable following the admission by its former CEO of India’s
largest-ever financial fraud. However, law firms Izard Nobel and Vianale & Vianale
filed class-action lawsuits on behalf of US shareholders, marking the first legal action
against Satyam management following the scam.
n) January 11, 2009: The Indian government intervened in the Satyam outsourcing
issue, appointing three persons to a newly formed Board of Directors in an attempt to
save the company. Deepak S Parekh, Executive Chairman of Housing Development
Finance Corporation (HDFC), C. Achuthan, Director of the National Stock Exchange
and previous member of the Securities and Exchange Board of India, and Kiran
Karnik, former President of NASSCOM, formed the new board.
o) January 12, 2009: Satyam’s new Board of Directors conducted a news conference,
revealing that the business was searching for methods to obtain capital and stay afloat
throughout the crisis. One way to earn funds might be to ask many of its Triple A-
rated consumers to pay for services in advance.
Offence of Ramalinga Raju
1. Mr. Raju had alleged that he overvalued Satyam’s assets by $1.47 billion on the
balance sheet. The corporation claimed to hold about $1.04 billion in bank loans and
cash, but none of it existed. Satyam’s obligations were similarly understated on its
balance sheet.

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 2. Over the course of several years, Satyam inflated income virtually every quarter in
order to match analyst expectations. To further the deception, Mr. Raju faked many
bank statements.
3. Mr. Raju fabricated bank accounts in order to inflate the balance sheet with fictitious
funds. By claiming interest revenue from the fictitious bank accounts, he inflated his
income statement.
4. Mr. Raju further said that during the last three years (2006-2008), he created 6,000
false pay accounts and took the money when the corporation deposited it. To
exaggerate revenue, the company’s worldwide head of internal audit established fake
customer identities and made fraudulent invoices in their names.
5. In addition, the company’s worldwide head of internal audit faked board decisions
and received financing unlawfully. It had also appeared that the funds obtained in
the United States through American Depository Receipts (‘ADRs’) never made it to
the company’s balance sheets.
6. Mr. Raju initially claimed that he did not divert any funds to his personal accounts
and that the company was not as profitable as it had claimed. However, during
subsequent interrogations, Mr. Raju revealed that he had diverted a large sum of
money to other companies that he owned and that he had been doing so since 2004.
7. Mr. Raju first claimed that he was the sole perpetrator of the scam. However, Indian
authorities have also prosecuted Mr. Raju’s brother, the company’s CFO, the
company’s worldwide head of internal audit, and one of the company’s managing
directors, as previously mentioned.

2. What were the charges against Chitra Ramakrishnan?

Answer: Chitra Ramkrishna, once known as the most powerful woman in India's securities
market, has hit the headlines again. However, this time, the former Managing Director and
Chief Executive Officer of the National Stock Exchange (NSE), is in the news for serious
allegations against her. In its order recently, the Securities and Exchange Board of India
(SEBI) said she was influenced by an unknown "yogi" in the appointment of Anand
Subramanian as NSE's group operating officer and advisor to the managing director.
In the 190-page order, SEBI added she leaked key business secrets pertaining to day-to-day
operations. SEBI got the whiff of the irregularities while it was investigating NSE's co-

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locating controversy in which it was alleged that certain brokers had received preferential
treatment and some officials of the NSE were hand in glove with them.
While investigating, SEBI found out several e-mails were exchanged between the then NSE
chief Chitra Ramakrishna and an unknown person.
In January 2015, a whistle blower wrote to SEBI alleging a few brokers were able to log into
the NSE systems with better hardware specifications while engaged in algorithmic trading,
which allowed them unfair access and advantages.
It alleged that market manipulation has been taking place for several years at the NSE co-
location centre. It also said NSE had allowed non-empanelled Internet Service Provider (ISP)
to lay fiber cables on its premises for few stock brokers. Just a year later of these revelations,
Ramakrishna resigned as the chief of NSE. In 2019, SEBI came down heavily on NSE for
alleged lapses in high-frequency trading offered through its co-location facility, directed the
exchange to disgorge Rs 624.89 crore, and barred it from accessing the market for funds for
six months. SEBI found that NSE and its board were aware of such irregularities and
misconduct by Ramkrishna but did not record the matter in the minutes of the meeting and
submitted the report on the irregularities to SEBI only after repeated reminders.
SEBI had said NSE was aware that Ramakrishna had shared confidential information with an
outsider and yet it tried to cover up the matter. In 2018, SEBI had repeatedly sought
clarification from the NSE. The NSE submitted its detailed response along with a report of
the forensic investigation conducted by Ernst & Young (E&Y) in which it was concluded that
the said unknown person was Subramanian.
The regulator said despite being aware of the irregularities on the appointment of
Subramanian, Ravi Narain, the former vice-chairman of the exchange, and the NSE had not
recorded the matter in the minutes of the board meeting in the name of confidentiality and
sensitive information. In 2017, two of the 14 NSE's officials who received a show cause
notice from SEBI for their alleged involvement in providing unfair access to some brokers
had refuted the charges. The irregularities in the colocation facility happened between 2010
and 2015. Ravi Narain was the MD and CEO until March 2013. Ramakrishna succeeded
Narain as MD and CEO and was in office until December 2016 before being forced out.
In their replies to SEBI's show-cause notices, both of them have said that they were not
familiar with the technology and that they had gone ahead with the advice of the functional
heads. They also said that they were not involved in the day-to-day operations of the
colocation facility.