SC allows Sebi to interrogate Rajus

NEW DELHI: Market regulator Sebi will lay its hands on the big fish in the Rs 7,000 crore Satyam fraud as the Supreme Court on Tuesday permitted it to grill Ramalinga Raju and brother Rama Raju for three consecutive days starting from Wednesday.
Sensing urgency in solicitor general G E Vahanvati's apprehension that vital evidence relating to the biggest financial fraud in India's corporate history could be lost because of the market regulator not being allowed to question the key accused, the SC directed the superintendent of Chanchalguda jail, where the two brothers are lodged, to permit the Sebi investigator to question them.
In addition, a Bench comprising Chief Justice K G Balakrishnan and Justices P Sathasivam and J M Panchal agreed to permit Sebi investigator Sunil Kumar to take assistance of experts in interrogating the Rajus to crack the scam.
Acting swiftly, Kumar started from Chennai to be in Hyderabad in time to undertake questioning of the Raju brothers on Wednesday. In addition, Sebi, within hours of the apex court order, informed the jail superintendent that Kumar and three experts would interrogate the duo from February 4 to 6.
Vahanvati, appearing for Sebi, said the trial court and the Andhra Pradesh High Court's order announcing that SEBI did not have investigating powers had made a laughing stock of the judiciary as it was contrary to the statutory provisions conferring powers on the market regulator to inquire into such corporate frauds and even question the accused.
What probably tilted scales for an express order from the Bench after a brief hearing was Vahanvati's stunning statement, "Documents are going out. We want to seize them. If the accused are permitted to carry on with their alleged activities in covering up their trail despite being lodged in prison, then what investigation could be carried out by the market regulator?"
For a change, the Y S R Reddy government, which is perceived in many quarters to be lenient with a self-confessed scamster, stood solidly behind SEBI in its demand for intense questioning of the duo. Its counsel Bharathi Reddy, while accepting notice on SEBI's petition, told the SC that the market regulator should be permitted to question the accused.
Though Sebi was happy with the SC order allowing its investigator to have the accused interrogated for three consecutive days, it was unsure whether three days would be enough to unravel a fraud of this magnitude. Most likely, they would come back to SC seeking more time after they complete the initial interrogation.
Sebi said it had promptly appointed an investigator and had issued summons to Raju to appear in Hyderabad on January 9, barely two days after his confession. "Instead of appearing before the investigator, his lawyers took adjournment till January 10 and curiously surrendered before police on January 9 evening, from which date the accused have not been available for inquiry by SEBI," it said.
After the trial court refused to relent, the market regulator moved the HC, which on January 30 issued notice on its petition but refused to grant its investigator access to Raju and his brother.
"In less than one month, the market capitalisation fell from Rs 15,000 crore to Rs 2,000 crore. Domestic investors in this company have been completely devastated. Foreign investors' confidence has been shaken," SEBI said, adding that as Satyam shares were listed on American stock exchange, the fraud had serious implications for the country's image abroad.