rediff.com: Xerox to notify govt about 'improper payments'

US-based Xerox Corporation on Wednesday said it was notifying the Indian government about the 'improper payments' of $700,000 made to officials by its Indian subsidiary Xerox ModiCorp for pushing sales even as government remained silent over the new bribing scandal.

"The company is in the process of notifying the Indian government," said Paul Arrowsmith, Asia spokesperson of Xerox, which admitted to bribes by the Indian subsidiary through its annual report submitted to the Securities Exchange Commission.

Once notified, the Indian government could launch a full-scale investigation into the scandal.

However, the Department of Company Affairs' Secretary V K Dhall refused to comment or entertain any queries on the issue.

DCA sources, meanwhile, said the file on Xerox ModiCorp's questionable activities to promote business had not reached the department and till such time an official reaction was unlikely.

Officials of Xerox ModiCorp, where the US company
acquired majority stake three years ago, declined to comment on the issue, while its original promoter B K Modi - who now has minority holding - could not be contacted as he was out of the country.

Arrowsmith said from London: "The company has filed a report with the US market regulator last week. The report mentions that the company's subsidiary had made improper payments to the tune of $700,000 to push its sales to government customers in India."

Xerox operates in India through Xerox ModiCorp and has a substantial share in the document management business in the country. The joint venture, in which the US giant holds 68 per cent stake, was set up in September 1983 and it was selling various products including copiers, printers, scanners, fax machines and other office equipment.

Xerox's stock and bond prices also took a beating which was triggered by the nervous selling by the investors.

According to sources, earlier this year the SEC had notified a number of former executives of Xerox and international consultants KPMG that it was considering filing civil charges against them in connection with the accounting abuses.

Xerox, which has been shedding assets to pay down debt as part of a recovery plan, last month renegotiated its crucial bank credit lines and agreed to pay substantially higher interest rates.

According to sources, the shares of Xerox ModiCorp have been delisted from the Indian bourses.

As per the equity pattern of Xerox ModiCorp, Modi Corporation and its associates hold around 28 per cent stake and the remaining 4 per cent has been held by the public.



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