The Hindu : Govt. orders probe into Xerox scam

Online edition of India's National Newspaper
Thursday, Jul 04, 2002

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Govt. orders probe into Xerox scam

By Our Special Correspondent

NEW DELHI JULY 3. In the wake of the global giant, Xerox Corporation, disclosing a scam in its Indian subsidiary, the Government has ordered a probe into the joint venture with Modicorp while the Central Bureau of Investigation (CBI) may investigate the role of officials involved in the bribery scandal.

The scandal involving "improper payments'' linked to sales of Xerox equipment to Government agencies has come out in the open with the U.S.-based company announcing that it will be notifying India as well as the U.S. Justice Department about the payments estimated to range between $6,00,000 and $7,00,000 during the year 2000.

The Department of Company Affairs has immediately ordered a probe into Xerox India's account to find out the facts as reported by the parent company itself. The DCA Secretary, Vinod Dhall, said the department had ordered inspections of the company's books of accounts under section 229 A of the Companies Act for alleged violation of the provisions — 62, 68 and 628 — all relating to financial mismanagement of a company. Further action would be based on the outcome of the investigation, he said.

The bribery revelations for the Indian joint venture come on the heels of a spate of global financial accounting scandals involving corporate icons such as Arthur Andersen, preceded by the Enron collapse and followed by that of the communications giant, World Com. The disclosure about the bribery of government officials resorted to by Xerox India has not come as a big surprise in this country as it is common knowledge that corporates indulge in "improper payments'' in a routine fashion. But for the first time such payments have been formally acknowledged as auditors dug up this information about the Indian operations of Xerox Corporation whose name is a virtual synonym for the term photocopy. The Bharatiya Janata Party spokesperson, Arun Jaitley, was among the first to react and described the payments made to Government officials as a ''serious violation of law''. He demanded a thorough investigation into the affair as it was a serious violation of Indian laws — both anti-graft and company.

The CBI, on its part, indicated that suo motu action could be taken against the beneficiaries of pay-offs under the Prevention of Corruption Act. But it did not categorically say that any steps are being taken immediately as there was no definite information available.

The DCA Secretary said the enquiry into Modi Xerox where the parent company had a 68 per cent equity stake would be completed expeditiously, with the Indian shareholders being given ample opportunity to present their side of the case.

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