HYDERABAD (AFP) - An Indian court on Thursday convicted the former chief of outsourcing giant Satyam and his aides over a US$2.25 billion (S$ 3.05 billion) accounting fraud in a scandal dubbed "India's Enron", the prosecutor said.
Byrraju Ramalinga Raju, his brother and eight others were found guilty of manipulating Satyam's books during the IT boom in India in 2009 in a case that shook the industry.
"All the accused have been convicted of almost all charges", prosecutor K. Surender told reporters outside the court in Hyderabad.
Raju faces a life sentence after being charged with criminal conspiracy and breaching public trust in a scam that prosecutors said caused 140 billion rupees (S$3.05 billion) in losses to investors.
The Satyam scandal erupted in 2009 after Raju admitted to overstating profits for years and inflating the company's balance sheet.
Raju, who was educated in India and the United States, was one of the stars of India's software boom - a key driver of the country's economic growth over the previous decade.
In a confessional letter to shareholders in 2009, Raju said: "The concern was that poor performance would result in a takeover." "It was like riding a tiger, not knowing how to get off without being eaten."
The confession sent shockwaves through the industry, which had put Raju’s success down to dedication and hard work in Hyderabad, an IT hub that acts as the Indian headquarters of Google and Microsoft.
“Raju was like the messiah of IT for Andhra Pradesh back then,” said KV Kurumanath, an editor at the Hindu BusinessLine newspaper. “He was looked upon as a god, and a big achiever,” said Mr Kurumanath, who has been closely following the case.
Raju has been out on bail since November 2011 after spending nearly three years behind bars during the trial. His brother, Satyam’s former managing director B Rama Raju, was also convicted, along with other employees and two former PricewaterhouseCoopers workers.
A senior investigator hailed the verdict and hoped the sentencing of the 10 later Thursday or Friday would act as “a big deterrent” to other corporations against misusing shareholders’ money.
“India very rarely prosecutes corporate fraud. And this is the biggest corporate fraud case in South Asian history. So for us, getting a conviction is a big victory,” he told AFP on condition of anonymity.
Raju’s lawyers have told the court that he was not responsible for the losses and that documents filed during the trial were fabricated.
India’s equity market regulator last year slapped multi-million dollar fines on Raju for manipulating the firm’s shares during the scandal.
But the case raised concerns about why regulators, who were only prompted to act after Raju confessed, failed to spot the scam earlier, along with corporate governance issues and accounting standards.
“The biggest thing this reveals is the failure of India’s regulatory system,” said S. Nagesh Kumar, a news analyst and former editor based in Hyderabad. US energy giant Enron collapsed in 2001 in the wake of massive false accounting revelations.