Satyam Officials Sold Most Stock in India Before Fall

Satyam Computer Services Ltd. executives reaped $1.8 million from share sales in the six months before a botched takeover and fraud inquiry at India’s fourth- largest software exporter triggered a record fall in its stock.

Nine officials led by Chief Financial Officer V. Srinivas sold a combined 267,358 shares since July 14, according to filings by the company to the Bombay Stock Exchange. That’s more stock than the combined insider sales at 30 companies on India’s benchmark index.

Chairman Ramalinga Raju said on Jan. 7 that he’d fabricated $1 billion of cash and assets, sparking an 83 percent plunge in Satyam’s stock that wiped out $2.2 billion of investor wealth. The insider sales coincided with a record slump in Indian equities as the global credit crunch forced Satyam’s clients including Citigroup Inc. to cut spending on computer services.

“The impunity with which promoters sold shares is really shocking,” said R.K. Gupta, who manages the equivalent of about $100 million of stocks at Taurus Mutual Fund in New Delhi. “It also raises questions about how effective our regulatory system is that it could not detect the wrongdoing from the share sales.” Taurus Starshare fund held 56,223 shares of Satyam at the end of December.

Srinivas was arrested on Jan. 11, a day after chairman Raju was taken into custody and the government sacked the Hyderabad- based company’s board. Five other executives who sold shares were named in the Jan. 7 letter by chairman Raju as being “unaware” of the alleged fraud. S. Bharat Kumar, Srinivas’s lawyer, said he couldn’t contact his client as he is in judicial custody.