ED freezes Rs.822 crore-worth fixed deposits of Satyam Computers

The Enforcement Directorate Thursday attached Rs.822 crore worth of fixed deposits of Satyam Computer Services Limited, now Mahindra Satyam, under the Prevention of Money Laundering Act.

The ED issued provisional orders freezing the fixed deposits of SSCL with Andhra Bank, Bank of Baroda, IDBI and ING Vysya in connection with a money laundering case against SSCL founder B. Ramalinga Raju and others.

The fixed deposits have been attached as they constitute proceeds of crime derived out of scheduled offences under the PMLA committed by Ramalinga Raju and others, said the ED order.

The central agency would now approach the adjudicating authority under the PMLA in New Delhi for confirming the attachment.

Mahindra Satyam refused to comment on the development. The IT services firm, however, is likely to challenge the attachment order.

The Hyderabad zonal unit of ED had initiated the process for attaching the properties after the Central Bureau of Investigation (CBI) filed a chargesheet against Ramalinga Raju and others in 2009.

The CBI had arrested then SCSL chairman Raju and others after he confessed to one of corporate India's biggest frauds. He was accused facing charges of fudging company accounts and showing inflated profits.

The surfacing of the scam and consequent collapse of the company left shareholders in the lurch. Tech Mahindra later took over the SCSL and renamed it as Mahindra Satyam.

The ED said Raju and his family members "wrongfully" offloaded inflated shares of SCSL by way of sale or pledging of shares.

Their shares were transferred to SRSR Holdings Limited, in which Raju's family members were directors. SRSR Holdings pledged the inflated shared with NBFCs and obtained loans of Rs.2171.45 crore.

These loans were transferred among 327 front companies floated by Raju, his family members and associated and the same were used to buy properties in Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu.

The ED has already attached 356 such properties valued at Rs.250 crore.

"Trail of loans derived from front companies revealed that Rs.822 crores out of Rs.2,171.45 crore found their way to Ms SCSL and were used for day-to-day expenses like payment of salaries among others."

"Since this amount subsists with Ms SCSL and constitutes a part of the loans that were derived or obtained by pledge of inflated shares of Ms SCSL, which is Rs.2,171.45 crore, they fall within the mischief of proceeds of crime under the PMLA and are liable for attachment," the ED order added.