NEW DELHI — It's a classic rags to riches to rags story.
The son of farmers leaves his village behind, moves up from textile mills to real estate to IT outsourcing for multinational firms. He emerges as one of India's wealthiest and most famous entrepreneurs -- until he reveals that his empire was floating on an accounting lie and it all comes crashing down.
The U.S. has its Wall Street meltdown and the Bernard Madoff investment scandal. India has Ramalinga Raju, who appears to have perpetrated the nation's largest corporate scandal in recent memory.
What has people really scratching their heads is the way the 54-year-old Raju, co-founder of Satyam Computer Services Ltd., chose to signal the game was up: with what some have dubbed a "come-and-get-me" letter released Wednesday that detailed how he'd perpetrated the fraud.
In his mea culpa, Raju lays out how small amounts of fake profits and cash accounts built up over several years until the gap between real and imaginary assets eventually approached $1 billion.
"It was like riding a tiger, not knowing how to get off without being eaten," he wrote. He added that he alone was responsible, his board was blameless and that even top managers had no idea of the fraud.
Some observers are skeptical. "It's impossible to believe he acted alone," said Surjit Bhalla, managing director of Oxus Fund Management in New Delhi. The government appears to agree.
Late Friday, it stripped Satyam's directors of their power, ordered them replaced by independent board members and arrested Raju and his brother on charges of conspiracy, forgery, fraud and criminal breach of trust, according to local media reports. The arrests ended two days of speculation that he had fled to Texas; Dubai, in the United Arab Emirates; or some other distant hideaway.
Questions have also been raised about how top global accounting firm PriceWaterhouseCooper signed off on Satyam's books for eight years and how regulators in India, Europe and the United States apparently failed to pick up any whiff of problems. The accounting firm has denied any wrongdoing and pledged to cooperate with authorities.
Satyam, based in Hyderabad, provided back-office operations for hundreds of corporations, including billing and system integration and technology support. The company grew from its original 20 employees to 53,000 people in 66 countries. Raju picked up 185 Fortune 500 clients -- General Electric, Nestle and Microsoft among them -- becoming an example of India's high-tech ambitions while drawing the ire of U.S. and European labor groups fearful of job losses.
