It's not a failure, but purposeful cheating. Thereby, it is a criminal breach of trust, which can attract punishment under the Indian Penal Code (IPC).

From the information available in the public domain, it appears that various offences have been committed, including the criminal breach of trust, cheating, forgery, falsifying records, criminal conspiracy and abetment.

Section 405 defines the offences of criminal breach of trust that is punishable under Section 406 IPC, with imprisonment of either description for a term which may extend to three years, or with fine, or with both. Section 420 defines the offence of cheating which is made punishable with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

                                     The Satyam fiasco: Complete Coverage

Section 463 defines the offences of forgery which is made punishable under section 465 IPC, with imprisonment of either description for a term which may extend to two years, or with fine, or with both. Section 120A defines the offences of criminal conspiracy which is made punishable under section 120B IPC.

Separately, under Section 24 of the Sebi Act, they can be imprisoned for up to 10 years and imposed a fine of up to Rs 25 crore (Rs 250 million). If they do not pay the fine, they can be jailed for a further term of anywhere between 4 months and 10 years.

However, just a letter to Sebi is not enough to convict Raju. More corroborative evidence will be necessary after which a prima facie case can be established. Then the Company Law Board (Section 397) and Economic Offences Wing (EOW) are empowered to freeze the assets of the promoters.

Can the company be taken over by the government and placed under an administrator under the current circumstances?

No, since it is not a public sector undertaking or a co-operative society.

Can the government or the regulators sack the new interim management and put in place a new one?

The Securities and Exchange Board of India has the power to do that.

Are the independent directors liable for anything?

Not unless a case of mens rea (Latin for guilty mind) is established against them in the courts.

What does the letter of Raju mean?

The letter of Raju is a written acknowledgement of various irregularities and offences committed by Satyam Computer Services [Get Quote]. The letter is addressed to the board of directors of the company and is also marked to Sebi and the stock exchanges.

What has Sebi done on this letter?

Sebi has constituted an enquiry committee. The enquiry committee is mandated to deal with the following five important issues: