Ghotala.in

3rd Satyam exec detained after fraud scandal

NEW DELHI – Indian police arrested the chief financial officer of embattled outsourcing giant Satyam Computer Services Ltd. on Saturday, the third executive to be charged in a massive fraud scandal that threatens to roil India’s flourishing tech industry.

The arrest of Vadlamani Srinivas came as authorities tried to contain the $1 billion fraud scandal by dissolving the company’s board, including the interim head, and announcing plans to name 10 new replacements.

The scandal broke Wednesday when Satyam’s founder and former chairman, B. Ramalinga Raju, confessed to filling the company’s balance sheets with “fictitious” assets and “nonexistent” cash in an extraordinary letter to the company’s board.

The company — which is now fighting for its life — could no longer conceal the $1 billion hole after a deal intended to save the struggling company was abandoned, Raju said in the letter.

He resigned from Satyam — Sanskrit for “truth” — that day, along with his brother, former managing director B. Rama Raju. The siblings have been arrested and were charged Saturday with criminal conspiracy, forgery, criminal breach of trust and falsifying documents, said senior police official V.S.K. Kumudi. They face up to life in prison, he said.

Srinivas, the third-ranking executive at Satyam, was arrested and charged with the same offenses Saturday night, Kumudi said.