How Raju, his associates generated false invoices

Here is an extract from today's business line  

How Raju, his associates generated false invoices

K.V. Kurmanath

Hyderabad, April 15 Mr B. Ramalinga Raju, the former Chairman of Satyam Computer Services and A1 in the Rs 7,136-crore fraud, had allegedly generated 7,561 false invoices to show a non-existent business of Rs 5,117 crore in the books.

The elaborate, clandestine method used by him and some of his associates was explained in the calendar case 187/2009, the number alloted to the case that shook the corporate world.

The CBI alleged that Raju’s associates created 7,561 false invoices in a Super User Role category. The finance in-charges, business unit heads and associates who were to work on the fictitious projects would not have access to this category.

After doing this, some of the partners-in-crime carefully inducted 6,603 invoices reflecting sales to the tune of Rs 4,746 crore into the Oracle Financials system of the company. To address the numbering problem, they would make their subordinates clandestinely omit certain number in the series, while generating regular invoices (to pave way for the false invoices).

They also reflected receipts (against some of these invoices) to the tune of Rs 3,983 crore in the accounting system. To support these receipts, they falsified bank statements. “Payments were shown to have been received at Satyam’s account in the New York branch of Bank of Baroda. The bank has confirmed that no such payments were received,” it said.

The CBI said it had made elaborate cross-checking with finance in-charges, business unit heads, associates and banks and ascertained that most of the receipts were fake. It submitted a list of fake invoices generated quarter by quarter.

Besides generating false invoices, the accused were also inflating sales every quarter. The average inflated percentage of sales is around 18 per cent. As against the actual sales of Rs 23,434 crore from Q1 of 2004-05 to Q2 of 2008-09, Satyam published the sales figures at Rs 27,691 crore in the same period, showing an inflated sale figure of Rs 4,256 crore (almost all of it in the last 18 quarters).

Of the 327 companies incorporated by the Rajus, 83 belonged to Mr Ramalinga Raju and his wife and sons. Mr Rama Raju, the former Managing Director and A2 (accused 2) in the case, and his family owned 86 companies and Mr Suryananarayana Raju, another brother, and his family owned another 78 firms.