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.
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.
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.
Though there's little evidence that the fraud leaked over to Indian banks or hurt Satyam's customers, shareholders have watched the value of their investment all but disappear. And one Indian job website reported receiving 15,000 resumes from Satyam workers this week.
"Raju has cheated me and millions of shareholders," said Rajesh Shrivastava, 43, a businessman who owns 5,000 shares. "I still fail to believe that I have almost lost everything. The god of IT has failed me."
Those who have spent time with Raju describe him as a modest, thoughtful, seemingly honest man.
"All of us who know him are quite shocked," said Kiran Mazumdar Shaw, managing director of Bangalore-based Biocon, a biotech company. "I always thought I was such a good judge of character. Obviously I'm not."
In retrospect, Raju's story is rich with such ironies.
"Satyam" means "truth" in Sanskrit. And Raju's shelves groaned under the weight of honorary doctorate degrees and good-governance and creative entrepreneur awards.
But not everyone was impressed with the chief executive who loved science fiction, spicy Andhra Pradesh food and hiring people who could speak his native Telugu language.
"If you walk around Dalal Street, our equivalent of Wall Street, there's surprise but not shock," said Ramesh Damani, a member of the Bombay Stock Exchange.
"There was always a sense there was creative bookkeeping, although not necessarily fraud."
Traders speak of a smell test that left Satyam trading at lower price-to-earnings multiples, a measure of earnings potential, than other Indian IT giants in its class such as Infosys Technologies Ltd. The company seemed willing to give away far too much to reach a deal with brand-name global companies, said a lawyer involved in several deals with Raju.
"Other firms had a clear bottom line," he said. "Satyam was willing to do deals at all costs."
But Raju, who got a business degree at Ohio University and was one of the first to see the business potential in the Y2K scare, still has some supporters.
Residents of the village of Bhimavaram, where he grew up and created jobs, have rallied behind him. And some have applauded the way he left the stage. "To me Raju was a hero, and will always be a hero," said Sharad Kumar, 38, a businessman. "You tell me: How many people dare to come out in open and confess to such a thing? . . . What Satyam did was basically to make middle-class Indians dare to dream."
Analysts said the rising tide of hot money going into emerging markets in recent years and India's tech boom made it possible to keep the scam going for years.
"It was the best game in town," said Raamdeo Agrawal, managing director of Mumbai-based Motilal Oswal Securities. "The whole world loves you and you get hooked on it."
But in recent months, as the global economy soured and credit dried up, the walls started to close in. In desperation, Raju tried to engineer a "purchase" of two family firms last month, a deal that allegedly would have allowed him to post money transfers that didn't take place.But shareholders grew suspicious given the $1.6-billion price tag and Satyam's sudden desire to move into the completely unrelated infrastructure businesses.
A further blow came when the World Bank dropped its business with Satyam, citing "improper benefits" given to bank officials. And in what may have been the last straw, DSP Merrill Lynch was called in to broker a sale, only to resign as the company's advisor Tuesday. Raju released his letter the following morning.
"That may've been the trigger," said Manoj Vohra, director of India research with the Economist Intelligence Unit.
Analysts said that in the short term, this bombshell could dent the reputation of "India Inc." But barring another scandal, it would probably be recognized for what it is -- a case of irregularities by one company.
"I hope this is a wake-up call for everyone the world over," said Shaw, the biotech executive. "We've seen an economy of greed, fueled by scams and loose regulations leading to this recession. Good governance has never been held at a [proper] premium."