If B Ramalinga Raju were to Write a True Confessional…

10 01 2009
Imagine the following  as a letter that B.Ramalinga Raju could have written to his wife on 9th June just before his arrest.
 
Dear Nandini,
 
I am writing this mail sitting in this farmhouse, outside of Hyderabad , waiting for my arrest. I know the events over the last one month, have been so overwhelming, that we haven’t been able to have any meaningful conversation at all.
 
Even you must be wondering about the actions taken by me and also the sharp reactions from the media and the world around us. For someone like you, who had got used to basking on the reflected glory from me, it must be a huge shock. Probably, you thought fame was a one-way street. Even I thought so.
 
Let me tell you that though I am not demonstrative about my love to you or to our sons, the family’s interest was always paramount while I took my decisions. I thought how I could protect our family’s interest and minimise the damage as much as I could, given the mess I had got into.
 
In simple terms I want to explain the mess to you. Actually, Satyam was doing quite well. We were making decent profits. We had good clients also. But, it was a little too staid and boring. So, I kept reducing my stake in Satyam progressively from 30 odd percent to 8 percent.
 
You know I am not really a computer guy. I can barely manage to read and write emails. Also, I can open and scroll down powerpoint presentations made by my juniors. I was not really the software pro, I was made out to be.
 
At this point, one man I really hate is Babu (Chandrababu Naidu). He wanted  Hyderabad to compete with Bangalore on IT. So he wanted some homegrown entrepreneur from AP to take on Bangalore . In his mind, Satyam was the competitor to Infosys. Although heart of heart  I knew, I was no match for Narayana Murthy. I enjoyed all the attention and favours I got from Babu. You remember, how happy you were when I made a presentation for 45 minutes in front of Bill Clinton.  
 
Then our boys joined business. I advised them that rather than wasting their time in Satyam , they were much better of getting into more exciting businesses. I thought real estate and infrastructure was where the action was. So I asked them to inject life into Maytas, which was passive for a long time. I can leverage my connections in the political parties and the government to get them good contracts and land deals.
 
Couple of years back, I even began to believe that what I did in 20 years in Satyam , our sons have achieved it in two years in Maytas. So that is where the future of our family lies. The real estate boom in and around Hyderabad gave me hope that we can multiply money much faster in real estate than in software.
 
However, I was identified very strongly with Satyam. I realised that in public mind Satyam was me and I was Satyam, even though my heart lay elsewhere. With a meagre stake of 8 %, I wanted to control Satyam. It gave me access to ready cash whenever I needed it. I had put a team of yes-men (all are from our place) who were running it without much hassles. I had put that clerk, Vadlamani as the CFO,as he was ever ready to do whatever I asked him to. 
 
The plan started to unravel in 2008. I did not realise that the correction in the stockmarkets in January was unlike the previous years. I had in the past pledged Satyam shares and taken loans and invested in land and stockmarkets. Even when the shares used to go down , they used to recover soon. In 2008 it did not. I wanted to do an IPO of Maytas Properties and get some money by fooling the public, but I could not. Simultaneously, the real estate market also collapsed.
 
When the real estate and the stock market collapsed simultaneously, I realized I was in serious trouble. I had pledged a lot of our family holding and also taken a lot of cash out of Satyam to buy a lot of land. On top of that the Satyam results also were poor.
 
In September 2008, if I had reported poor results, the stockprice of Satyam would have gone down, which means I would have margin calls from the debtors for my pledged shares. So I decided to doctor the results big time. Honestly, earlier I had cooked the results once a while, to meet the guidance or to just look that we are nearly as good as Infosys, but nothing like what I did in September 2008.
 
 
The real estate and the stock market refused to look up and the December results were round the corner. So my only hope of retaining control of Satyam and Maytas was to merge them. Whereas, all our Telugu-vadu board members accepted it without any murmurs, I did not realize the investor and media reactions would be so sharp. Actually, I and Satyam were too high profile for pulling of such a thing. Many others manage it beautifully, but they maintain low profile.
 
After that event, the investigations started and I knew that time was running out. I consulted a lot of our Raju community people and even told them that there is a problem. They assured me that they will help me out. They even told me you resign, but do not confess. I thought, quite a bit, should I confess or not. Should I confess about siphoning Satyam money or cooking results ? My lawyer told me that confessing about cooking results would get you a maximum of 10 years in jail. Knowing the judicial system in India and our political connections, I thought I would confess it in India .
 
By taking the entire blame on me and Rama (MD), I wanted to shield you and our sons. I decided to dump that clerk Vadlamani by not even mentioning his name. Anyway, he might have made more money than he had ever dreamt.
 
The real estate market is down now, but it will recover sometime soon. Then it will all be fine. The next half of our life we will have to live fighting cases and in ignominy. It is OK.
 
I took a little too much risk. I counted too much on our political connections and community support. It did not work out. My kshatriya pride also came in my way. Otherwise, I could have clearly focused on money and pulled off this, just like many other Indian businessmen.
 
Please do not get too sentimental about the 50,000 odd Satyam employees. The good ones will find job elsewhere. The majority of the others are half-baked engineers from third-grade colleges. They should be grateful to us for enjoying the high salary and the foreign tours for all these years. If they believe that they are software pros, it is their problem. They cannot speak a few lines of correct English and cannot write proper software code. I will not be surprised if they go back to tobacco cultivation and chilli trading in Guntur and other places where they came from.  
 
I know still there are a lot of unanswered questions. I have sneaked in my Blackberry, I will write to you from wherever they keep me in custody. We are still in our 50s only. Even if they put me in for 10 years, I still look forward to our retired life together in Bhimavaram on the banks of Godavari .
 
Take care.
Disclaimer – This is an imaginary letter and any resemblance to persons living or dead is purely coincidental.
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4 responses

10 01 2009
Harry

Making fun is good,but hurting feelings of other is not excusable.Know about Ramlingaraju first and his growth and his foundations he has established. Infosys can never be a competetior to Satyam. We satyamites are very much happy to work in this company. You ask an Infy guy whether they are happy being in Infosys

13 01 2009
Venkat Subramaniam

From Satyam to Maytas (reversal of the word ‘Satyam’), Ramalinga Raju literally seems to have come full circle. How else can one explain what got revealed over the last few days. This further establishes the saying ‘Truth is stranger than Fiction’.

Ramalinga Raju like Narayana Murthy was an icon of middle class entrepreneurs in India, and when an icon like Raju crashes suddenly in front of world, a lot of hopes aspirations and values also seem to crash all around us, and one can’t help questioning the very basic principles that govern us.

Perhaps, somewhere Raju lost sight of the fact that he had become larger than life, and he failed to realise the mammoth impact that his actions would have on the image of Indian business in general and the IT industry in particular.

Many like me I am sure are still in disbelief, but nevertheless the truth is sinking in now.

13 01 2009
Sweta Sharma

“We are suspicious of those CEOs who regularly claim they do know the future – and we become downright incredulous if they consistently reach their declared targets. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.” – Warren Buffett

19 01 2009
Anirban Banerjee

The one thing that used to strike me as very “odd” was the actual presence of a lot of fools who really could not even speak proper english, let alone do a systems analysis & design, and actually work in onsite projects.
I myself was a Satyamite, way back in 2001-2003 and worked 2 months in Satyam at their Bahadurpally office. I rate myself at about 6-7 out of 10 on my technical area (incidentally Sybase DBA) and I was interviewed by a third rate guy who knew nothing of the basics. I actually told him to go read the manuals first, and correct me if my answers were proven wrong. I told them not to waste my time and if they were serious, call the final client interview – which I cleared – incidentally for Merrill Lynch, US. Once in US, I was astounded by the quality of communications made by their PLs & PMs and wondered why clients such as Merrill did business with these guys. I found out that Merrill had their own political structure and that certain “connections” were maintained. Two years was enough for me and I was sick & tired, by their bereaucracy, lack of comminucation skills of an incompetent middle management, lack of appreciation of talented people, etc, etc, etc…I quit in 2003, had enough, and joined a far better company, not in terms of cooked up “revenues”, but where meritocracy actually counts. I knew nothing about things that would happen in 2009, but Satyam left a sore feeling with me. In 2005 I actually dissuaded some of my friends to join Satyam….today they thank me for “saving” their career…..well! That’s about enough, I think.

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