Satyam founder Ramalinga Raju sentenced to 7 years

Ramalinga Raju, former chairman of Satyam Computer, has been jailed for seven years by a court investigating a more than $1bn accounting scandal at the Indian software group.

In 2009, Raju admitted to inflating revenues at Satyam, revealing the biggest accounting fraud in Indian history and prompting soul-searching among other business leaders over lax corporate governance.

On Thursday, a special court in Hyderabad, the southern IT hub where Satyam had been based, sentenced Raju and 10 others to prison on charges ranging from forgery to manipulating accounts. Raju was also fined Rs50m ($804,000).

The sentence, one of the toughest imposed on an Indian business figure, will come as a relief to anti-corruption activists who were dismayed when Raju was handed a six-month prison term by a separate court last December.

Satyam's near-collapse, which had been compared with the fate of Enron, the US energy group, led to numerous investigations by different regulatory bodies, some of which have yet to conclude.

But analysts said the court in Hyderabad had examined the most serious charges - those most awaited by foreign investors who claimed to have been defrauded.

"This is the big one, no doubt about it," said TT Ram Mohan, a professor in financial services at the Indian Institute of Management Ahmedabad.

"It is still rare in India for big-time politicians and businessmen to end up in jail. On the face of it is seems to be a reasonable judgment by Indian standards . . . The penalty is quite severe," he added.

Also sentenced were B Rama Raju, the former chairman's brother, who once held the position of managing director, along with other executives at what was one of India's largest outsourcing businesses by revenue at the time the scandal broke. 

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"It is with deep regret . . . that I would like to bring the following facts to your notice," his letter began, going on to describe attempts to hide the company's position as being "like riding a tiger, not knowing when to get off without being eaten".

What remained of Satyam was bought by India's Mahindra conglomerate in 2012, but the ramifications continued to be felt via demands for stringent changes to corporate oversight rules.

Analysts said the ensuing regulatory tightening had been patchy and was unlikely to prevent a similar case of deliberate fraud by senior management.

Mr Ram Mohan said: "In some areas things have been tightened up but it is not clear that in corporate India there has been a significant overhaul in governance after this case.

"But it is hard to draw lessons about governance if someone just decides to cook the books, which is what happened with Enron as well. All you can do is hand out reasonable punishments to have deterrence, as they have done here."

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