Tuesday, February 3, 2009

SEBI allowed to interrogate Satyam’s Raju By Supreme Court

India News : The Supreme Court on Tuesday allowed market regulator SEBI to begin interrogation of Satyam Computers founder Ramalinga Raju and his brother Rama Raju in connection with the over Rs 7,000 crore accounting fraud in the IT company.

The Securities and Exchange Board of India’s (SEBI) investigating officer was granted permission to commence the questioning from tomorrow.

SEBI had yesterday filed a plea through Solicitor General GE Vahanvati and counsel Pratap Venugopal to the bench headed by Chief Justice KG Balakrishnan to interrogate the Raju brothers.

With Raju continuing to elude SEBI even after spending weeks behind bars, the market regulator had moved the SC after the Andhra Pradesh High Court last week deferred to February 9, hearing on its request to quiz the tainted ex-chairman and his brother Rama Raju.

SEBI had moved the High Court challenging a lower court order, which denied it permission to interrogate the Raju brothers, who were arrested by the state police on January 9 — the day a SEBI probe team had summoned them to appear before it in Hyderabad.

In its request to SC, SEBI had said that it was constrained to approach the apex court for urgent relief related to the most serious financial scam that had large-scale national and international ramifications.

The Raju brothers, along with Satyam’s former CFO Vadlamani Srinivas, are now in judicial custody.

A probe team from SEBI had landed in Hyderabad on January 8, a day after Ramalinga Raju disclosed the massive accounting fraud in the IT company.

According to the market regulator, the High Court should have seen that the Raju brothers cannot use judicial custody as a shield to avoid probe by expert agencies.

SEBI further said that just as police apply for custody, any other agency can also apply for access or custody and the same can be granted and the refusal to permit SEBI even to record the statements of the accused while in the custody was “arbitrary, unreasonable and perverse”.

According to SEBI, merely because investigations by different agencies like CID, Enforcement Directorate, Serious Frauds Investigation Office, Registrar of Companies etc may overlap, it cannot be said that they cannot investigate simultaneously pursuant to the power conferred on them under their respective statutes.

Stating that the scam in the NYSE-listed Satyam Computers was the worst in the country’s history, the advocates said that the company’s market capitalisation has fallen from Rs 15,000 crores to Rs 2,000 crores.

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