The Mahindra group and the various enforcement agencies appear to have different viewpoints on the treatment of the Rs 1,230-crore, which Mr Ramalinga Raju had personally invested in the erstwhile Satyam Computer Services between 2007 and 2009.

And, this is one of the reasons why the Hyderabad-based company has sought a three-month extension for restating its accounts, a senior Government official said. Sources said the bone of contention is whether the amount should be classified as a liability and taken on the company’s books.

“…In the last two years, a net amount of Rs 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances…” Mr Raju had said in his resignation letter dated January 7, 2009.

‘circular payments’

The Mahindra camp feels these funds should not be taken on the books of the rechristened Mahindra Satyam since they have been incurred on account of ‘circular payments’ or fictitious transactions made by Mr Raju and his other benami companies.

Circular payments are transactions that originate from one company or person and go through an entire circle of individuals/ companies before coming back to the originator. It creates artificiality of payment without actual outgo from the originator.

However, a senior Enforcement Directorate official examining the issue, told , “They (Mahindra Satyam) will have to take care of this amount (Rs 1,230 crore) in the restated accounts. This has to be certainly shown in the accounts as it was invested by (Mr) Raju in the company.”

Another Government official pointed out that the restated accounts of Mahindra Satyam may not present a complete picture if these funds (Rs 1,230 crore) are not treated as a liability.

Lack of access

If the company agrees to do so, it will bring down its networth and overall valuations, he said.

A spokesperson for Mahindra Satyam said the sole reason for the delay (in restatement of accounts) was lack of access to the company’s financial documents.

Another Mahindra official said the investigating agencies had permitted the auditors to evaluate critical documents only between ‘9 am and 5 pm’ in the day, which slowed down the process. He, however, played down the company’s differences with the enforcement agencies over the treatment of these liabilities which ‘have been taken care of’.

He even said the enforcement agencies have permitted Mahindra Satyam to refrain from showing the Rs 1,230 crore as a liability in the company’s accounts, a point countered by the enforcement officials mentioned earlier.

The Satyam fiasco is being jointly probed by the Central Bureau of Investigation, the Enforcement Directorate and the Serious Fraud Investigation Office.

Satyam’s founder and ex-chairman, Mr Raju, had confessed to deliberately falsifying company accounts for several years building up to India’s largest-ever corporate fraud of over Rs 7,000 crore.

In order to give more credence to the cooked up numbers, he had to hire more employees, pay dividends and make acquisitions, thereby, entailing additional expenditure. This expenditure was met through borrowings from various shell companies, experts said.

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