India’s central bank began checking the exposure of the country’s financial sector to Satyam, the outsourcing giant at the centre of India’s largest corporate fraud, yesterday as the authorities widened their investigation into the scandal.

B. Ramalinga Raju, the chairman and founder of Satyam, has admitted orchestrating a £1 billion fraud over the course of several years. His confession last week that about $1 billion (£687 million) of the cash he had reported as being on Satyam’s books was utterly “fictitious” sent the company’s shares into freefall in Mumbai and New York and raised questions about standards of regulation in India.

Amid fears that the true scale of Mr Raju’s deception is not yet known, the Reserve Bank of India is demanding details of banks’ exposures to Satyam and other companies run by the disgraced IT tycoon’s family in an investigation that is thought to be focused on property-related loans. Mr Raju is thought to have suffered massive losses when real estate valuations plummeted last year.

The Indian Government has also formally ordered an investigation by the country’s Serious Fraud Investigation Office (SFIO). Satyam is already under the scrutiny of India’s markets watchdog and the police.

Prem Chand Gupta, the Corporate Affairs Minister, said that the SFIO would submit a report in three months. Asked whether the Government would consider bailing out Satyam, which may not be able to pay its 53,000 employees this month, he said: “Give the board some time. At present it’s a hypothetical question.”

The Government has dissolved the company’s board and appointed three new directors. PricewaterhouseCoopers, Satyam’s auditor, denied media reports that its offices had been raided.

Countdown

- 1987 Satyam founded by B. Ramalinga Raju

- 53,000 Employees at Satyam are unsure if they will be paid next month

- 1991 Satyam made its debut on the Indian markets

Source: Times Online

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts