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‘FDs unreal and fictitious’

HYDERABAD: The former Chief Financial Officer (CFO) of Satyam Computers, Srinivas Vadlamani, who is third accused in the case of defrauding the company, said in his confessional statement to the police that the fixed deposits as well as cash reserves shown by the management in the balance sheet were “fictitious and unreal.”

Mr. Vadlamani, who was interrogated by the Crime Investigation Department of the Andhra Pradesh Police after his surrender on Sunday, said the management used to hand over the balance sheet a week before the scheduled meetings of the Board of Directors and he used to discuss the accounts with the statutory auditor just two days before it. He suspected “something wrong” in the company’s accounts because of the delay in payments (to the clients).

“Mr. Ramalinga Raju [former Chairman] never told me that the deposits and reserves are fictitious. I am not aware of what he has confessed,” he said.

The former CFO claimed that he sought the management’s permission to draw money in the fixed deposits to avoid delay in payments to customers, but he was instructed to manage with “the operational cash.” This situation continuously occurred over five to six years, but the auditors never pointed out any deficiencies, he said, blaming the audit section and management for the fictitious fixed deposits.

“I do not do auditing at the micro-level. There are 800 people working under me, of whom 10 report to me directly. G. Ramakrishna (vice- president, Accounts), undertakes part of auditing and he works under me with a 20-member team. After the audit is finalised, the reports come to me. I sign them and forward them to the Board,” he said.

In his confessional statement on Saturday, Mr. Ramalinga Raju is understood to have admitted that he and his brother, B. Rama Raju, who was Managing Director and CEO, “took the decisions.” The company showed higher revenues for seven years and this was done to show a higher price to “prevent possible hostile takeovers.” He said the CFO was instructed to do “as per the directions and manage the company” based on the cash flows. He claimed that the balance sheets were manipulated to show that “we acquired new business” and unavailable amounts were shown as available cash to attract more business.

Mr. Ramalinga Raju, Mr. Rama Raju and Mr. Vadlamani will remain in jail at least till January 16 as a court postponed disposal of their bail application till then.

The court could not consider their application following a flash strike by lawyers in the Nampally courts complex, protesting against “ill-treatment” of one of them by the local police inspector. The judge also posted to January 16 hearing of the petitions of the police, seeking custody of the brothers and Mr. Vadlamani, and the SEBI that sought permission to record Mr. Ramalinga Raju’s statement in the jail.

The ex-Satyam chief has put together a team of 25 lawyers, to fight his case.

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