New Delhi - Ramalinga Raju, founder and chairman of Indian information technology firm Satyam Computer, was scheduled to appear in court Saturday, a day after his arrest for a 1.4-billion-dollar accounting fraud.

The police Criminal Investigation Department in the southern city of Hyderabad arrested Raju and his brother, Satyam managing director B Rama Raju, late on Friday.

Ramalinga Raju resigned on Wednesday after revealing in a letter to Satyam's board that he had falsified company balance sheets with fictitious assets and nonexistent cash to the tune of 78 billion rupees (1.43 billion dollars).

India's federal Ministry of Corporate Affairs dismissed the Satyam board on Friday and was in the process of naming 10 new directors.

An official of Satyam, India's fourth largest IT services firm, said company business was normal although uncertainty reigned after the suspension of the board, PTI news agency reported.

"We are asked by the Company Law Board not to implement the decisions of the (Satyam) board. But we are allowed to continue our activity," Satyam Computer's head of global marketing and communications Hari Thalapalli was quoted as saying.

Raju and his brother were interrogated by police into the early hours of Saturday, IANS news agency quoted police sources saying.

The siblings were charged with cheating and forgery. Legal experts said they were unlikely to get bail for at least a fortnight and could face up to 10 years in jail if found guilty.

The Satyam fraud is India's biggest corporate scandal and has raised questions regarding corporate ethics in Indian companies and the role of auditing companies. Satyam's books were audited by Pricewaterhouse Coopers.

In the statement announcing the disbanding of Satyam's board, federal Minister for Corporate Affairs Prem Chand Gupta said: "The greed and misdeeds of a few persons who were at the helm of affairs of the company could have caused the present unfortunate situation. We are determined to reach the truth but are equally concerned with the fate of employees and other stakeholders."

Gupta said documents had been seized from various Satyam offices and the ministry was inspecting eight firms in the corporate group. Gupta said action had been initiated against the company's auditors.

"The Satyam case is an aberration. The credibility of the Indian corporate sector in general, and IT sector in particular, should not be allowed to suffer because of this," Gupta said.

The Securities and Exchange Board, India's market regulator, sent a team of officials to Hyderabad to question Raju.

Satyam's shares lost about 78 per cent since Raju disclosed the accounting fraud on Wednesday.

Satyam, which means truth in Sanskrit, was established by Raju in 1987 and had logged revenues of 84.7 billion rupees in the financial year 2007-2008.

The company, which is also listed on the New York Stock Exchange, has 53,000 employees and counts 185 Fortune 500 companies as its customers. It operates in 66 countries. (dpa)