CITIBANK CLUELESS ON SATYAM ADS FUNDS

Citibank India has expressed its inability to trace the $84.5 million reportedly siphoned off by Satyam promoters from the ADS proceeds.

According to the probe report of the Serious Fraud Investigation Office (SFIO), the money was last spotted in Citibank Bahrain, from where it went into unknown accounts.

The SFIO has found that Rs 397 crore ($84.5 million) of the $162 million raised by Satyam Computer Services through American depository shares (ADS) in 2001 never reached India. It has forwarded the details of its investigation to the enforcement directorate, which probes violations under the Foreign Exchange Management Act, for further action.

The SFIO report says that ADS funds, which were mentioned in the bank books of Satyam, could not be fully traced after they were transferred from Citibank New York.

The SFIO took up the matter with Citibank India but 'they are still showing their inability to provide this information on the plea that all such transfers are routed through Citibank's system account No 10996665 Citibank na, Bahrain.'

In reply to SFIO queries, Satyam said $152.69 million was raised through the ADS issue and $50.25 million brought into India on June 12, 2001. 'The company was not able to provide details of the balance amount,' the SFIO said.

Analysing the issue, the SFIO says that 16.67 million ADS, equivalent to 33.35 million shares, were issued at a price of $9.71 each. The $161.91 million raised (more than what Satyam said) was reflected in Citibank New York account No 36781814 in two blocks ' on May 18 and May 24, 2001.

The bank books of Satyam showed most of the amount was transferred to India, through several banks. But when the SFIO asked the banks in India ' Bank of Baroda, BNP Paribas, HSBC and HDFC ' to verify the transfers to Satyam's accounts, the details showed that an amount of $84.5 million had not been credited. Instead, as the SFIO found, these were routed to unknown accounts by Citibank Bahrain.

When asked about the ADS transactions, Satyam founder Ramalinga Raju told SFIO investigators that he did not have 'definite recollection as this event happened almost eight years ago.' CFO Vadlamani Srinivas said the exact details could be obtained from the records. To the extent he remembered, 'the issue proceeds were utilised to meet capital expenditure and working capital needs.'

The SFIO has also written to the enforcement directorate for further investigation on investments made by some Mauritius-based firms in Maytas Properties and Maytas Infra ' the companies floated by the sons of Ramalinga Raju, Rama Raju Jr and Teja Raju. The report says that SRS Orion I Investments, (SRS 1, SRS 2 and SRS 3) registered in Mauritius invested Rs 520 crore in Maytas Properties. Also, Mauritius-based companies had bought 38 percent equity shares in Maytas Infra. The money invested, the report says, may have been routed from the accounts of Satyam.

 

Source: The Financial Chronicle