PRAGOTI

"As the Satyam fraud unravels, the state Congress' role is increasingly under a dark cloud". Outlook's correspondents SUGATA SRINIVASARAJU, VENUGOPAL PILLAI dig into the Satyam-Maytas scam/affair(s) and ask several questions worth pondering and further digging into...

There Are Issues Here...

Is political patronage still working to Ramalinga Raju's advantage; are central probe agencies being stalled?

How long will a complete forensic examination of Satyam's accounts take, weeks or months? There are 7 different agencies on the case now-who will eventually get the relevant documents?

Did Raju siphon off money to make real estate investments in group companies? How will investigators prove this? Can the Maytas group be delinked from Satyam's fate?

Was there insider trading? What is the role of investment banks and trustees of pledged shares in selling Satyam shares just before Raju's confession?

How implicated are Satyam's bankers-in giving unsecured loans and cooking the books?

PwC's statement says its audit isn't to be relied upon, but there's no clarity on their role. What'll happen to PwC?

Why have the US regulators and exchanges not got into action in this case?

Does Satyam indeed have the money to keep operations going? Why did the government suddenly become cautious about a bailout/credit assistance plan for Satyam?

Is there any truth to reports of foreign exchange violations, even money laundering, by Ramalinga Raju?

Will the Satyam fraud now put other companies under the probe scanner-or will it be business as usual?

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There appears to be little doubt in Hyderabad about who B. Ramalinga Raju and Satyam's current political bosses are: Andhra Pradesh chief minister Y.S. Rajasekhara Reddy and the coterie of advisors that surround him, prominent among them being K.V.P. Ramachandra Rao, an RS MP and advisor to the CM, and his son Jaganmohan. A senior Congress leader drew on the pugmarks analogy to explain: "You see the pugmarks, you know the tiger is somewhere around. But it'll take a while before the tiger is visible." He also alleged that the confession letter of Ramalinga Raju was itself a "controlled explosion", with people in the CM's coterie constantly assessing the damage.

Smelling a comeback opportunity, former CM Chandrababu Naidu finally went on the offensive, "There is an unholy nexus and it has to be probed," he told Outlook. But when asked if Ramalinga was not a product of his time in the chair, he went on the defensive, "I promoted genuine entrepreneurship." Naidu says Maytas companies or its consortia were the biggest beneficiaries under the Congress regime, having been awarded irrigation and other infrastructure contracts worth nearly Rs 38,000 crore.

The TDP boss says he "never encouraged Maytas. I was always firm on procurement procedures. During YSR's time, nine class one contractors—including Maytas—were identified and all high-value works given to them. Again, these contractors are expected to award sub-contracts to the Congress or the CM's cronies. The modus operandi of this administration has been to either have silent partnerships in the projects, get shares or collect money. Look at the growth rate of some companies after this government came to power in 2004. It is understandable to have 20-30 per cent growth, but some companies here have grown by even 1000 per cent." When asked if Ramalinga Raju was in touch with him after his 2004 debacle, he stopped short of saying the man had deserted him: "He never came to me after that. I remember meeting him only once on a social occasion."

A source who knows Raju's family well confirms the smooth transition from Naidu to YSR. "If tomorrow Chiranjeevi comes to power, he (Raju) would have adjusted himself.Ramalinga is a shrewd businessman and if something has gone wrong he will not go down alone." The source also lets it out that Ramalinga was particularly close to someone who has a large influence on 'postings' in the YSR administration. "This man became very busy after the Satyam scam broke. The man has an office in Dubai where Maytas too has investments," our source adds. A senior city analyst says he "wouldn't be surprised if they even used the H1B visa route to send the children of politicians and bureaucrats abroad. I have heard such whispers."

So, it's in this sort of atmosphere, with suspicions and allegations of a nexus going around, that Ramalinga shot off the confession letter. Which only led to several more questions being asked:

* Like what was the Satyam chairman up to for nearly two days after his fraud came to light? Had he been given time to clean up the money trail?
* Why did he surrender before a DGP and not at a police station?
* Why was the CM insisting that Ramalinga had been arrested, while it was a surrender? Was he produced late before the magistrate to avoid the 5 pm cut-off time to enter a prison?
* Was there an effort by the state to deny sebi access to Ramalinga?
* Was evidence tampered with when the state police raided the offices and residence of Ramalinga?
* Was there police complicity, as is alleged, in the sudden vanishing of interim CEO Ram Mynampati?

Amidst the rising tide of questions, TDP Rajya Sabha leader M.V. Mysoora Reddy told Outlook that his party feared the state treasury may have been kept open on a Saturday and Sunday (January 10-11), much after the Satyam scam broke, to provide mobilisation advances for Maytas in the Pranahita Chevella irrigation project. "I plan to speak to the finance secretary on this. There is a certain brazenness with which this government functions," he says.

The BJP's Bandaru Dattatreya has also demanded a thorough probe into the "fake companies" in the various Maytas consortia. There is little clarity on whether the government will take over the two Maytas companies, as it is commonly believed that Satyam's money has been diverted here to buy land. The Maytas question is also important because the Maytas Infra-led consortia handled nearly 25 major government projects, all of them now in different stages of implementation. In many projects, the state has already released huge mobilisation advances and also sanctioned land. A senior bureaucrat in the irrigation department told Outlook they had begun assessing the risks involved and a report would be sent to the chief secretary soon. "The Maytas issue is being dealt with exclusively at the level of the chief secretary and CM," he says.

Land has been one of the central issues in the entire Satyam controversy, and already an arbitrary figure of nearly 6,000 acres has been granted to the Maytas companies. But in reality there is little clarity on the complex maze of Maytas' land holdings. Only one thing is clear, the major acquisitions never happened in Satyam's name.

Outlook contacted ex-MP and Congress spokesperson Tulsi Reddy and he had this to say by way of response: "The CM has already said he is ready for a CBI probe. Our party is prepared for such an investigation." Most Congressmen are very cautious about coming on record on the Satyam issue.

In fact, as the Satyam story develops, there is palpable nervousness in the Congress party with both the assembly and parliamentary elections due in a few months time. "The Congress high command is excessively dependent on YSR for both funds and seats to try and come back to the Centre.He is playing this to his advantage." In the south, the Congress prospects in AP seem much brighter than in Karnataka and Tamil Nadu. Kerala, anyway, is a small state. As a senior Congress leader admits, "With Satyam blowing up, there is a certain desperation to save the situation, at least till the elections get over."