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Satyam Probe Scrutinizes CFO, Audit Committee, Indian regulators and police are trying to unravel

Indian regulators and police are trying to unravel how the chairman of Satyam Computer Services Ltd., who has admitted to falsifying corporate figures, may have managed for years to fool his top financial officer and the company’s audit committee.

Investigators from the Securities and Exchange Board of India, the Reserve Bank of India and Central Board of Investigation are looking into the fraud, said an official with the Andhra Pradesh state police in Hyderabad who is also involved in the probe.

Image: Satyam CFO Vadlamani Srinivas (R) being brought to the Chanchalguda prison after his arrest in Hyderabad.

The police also have called in cyberforensic experts, who can retrieve erased data from computers, he said. “It will take some time because these cases are not common,” said the investigator.

Former Satyam Chairman B. Ramalinga Raju admitted last week that he had illegally boosted Satyam’s earnings numbers and created a fictitious cash balance of more than $1 billion. He was arrested Friday.

Satyam’s chief financial officer, Srinivas Vadlamani, was arrested over the weekend on suspicions that he was involved with fraud, forgery and other charges.

In a written statement, presented in the local courts Sunday, Mr. Vadlamani said that while he wasn’t directly involved in fudging the company’s accounts, he knew that there was something suspicious for more than five years. The statement didn’t say why he didn’t report the suspicions. He said he wasn’t in charge of keeping track of the company’s deposits. “I was specifically asked not to look into that area of operations,” Mr. Vadlamani said in the statement.

Bank deposits were instead handled by the chairman, Mr. Raju, and his brother, the former managing director of Satyam, B. Rama Raju, who is also in police custody, according to the statement.

Sourcse / courtesy : WallStreet

Image credit: Reuters