A government appointed auditor is understood to have found inflation of revenues by Rs 2,915 crore (Rs 29.15 billion) by Anil Ambani group firm Reliance Communications in 2007-08, besides evasion of Rs 315 crore in licence fee --findings termed as 'biased' by the company.
DoT sources confirmed receipt of the report by auditors Parekh and Co and said that it is yet to examine the findings. DoT would ask for RCom's response later.
"RCom is in full compliance of licence terms and conditions," a company spokesperson said, adding, "auditors' alleged comments are biased and appear instigated by corporate rivals. . . Premature leakage of confidential report to media reflects the Special Auditors' prejudice/bias."
"All revenues for FY'07 and '08 are correctly reported in RCom's audited account. Alleged comments of special auditor do not reflect any under-reporting of revenue... licence fees."
The special audit committee report that has been submitted to the DoT found that for FY'08 actual wireless revenue earned by the company was only Rs 12,298 crore (Rs 122.98 billion) as against Rs 15,213 crore (Rs 152.13 billion) reported to the shareholders, which is an over reporting of Rs 2,915 crore (Rs 29.15 billion).
It also found that RCom evaded licence fee and spectrum fee to the tune of Rs 315 crore (Rs 3.15 billion).
"Some of the revenues accruing to the companies which are liable to be recognized as revenue in accordance with AS-9 has not been recognised so, and in particular, the companies have netted of the discount in the nature of the commission on sale of prepaid cards and accounted only the net realized consideration as revenue which has the adverse impact on the AGR, license fee and spectrum charges," the report said.
The report further added: "The reconciliation of wireless revenue between the revenue reported by the company on a consolidated basis to the stock exchanges and the wireless revenue reported to TRAI reveals that the consolidated wireless revenue earned as accounted in the books by Rcom and its subsidiaries from the provision of wireless servies to wireless subscribers in India under the UAS license is Rs 12298 crore. (Without taking into account the deviation noticed dealt in the report) in 2007-2008 as against the consolidated revenue reported under wireless segment of Rs 15213 crore (Rs 152.13 billion)."
Here's how the report says Rcom committed the alleged fraud:
Rs 617 crore (Rs 6.17 billion) by duplicating revenues in two different accounting years
Explaining this, the report said that Rcom passed off a financial transaction as wireless revenues earned during the period. "The amount would have been already accounted as wireless revenues in the year in which the debtors were created resulting in the same revenues being accounted as wireless revenues twice in two different accounting years."
Rs 379 crore were accounted from expired prepaid cards
"The consolidated wireless revenues reported in the CFS include income booked by RCIL from expired prepaid cards to the tune of Rs 379 crore (Rs 3.79 billion)," the report said.
Rs 300 crore obtained from sharing dealer network which is not per se wireless revenue
"The consolidated wireless revenues reported include booked income by RCIL for sharing dealer network which is not a wireless revenue from its subscribers," the auditors said.
Rs 1352 crore of income from one-time payments
"This ought to have been classified in the 'other' segment rather than the 'wireless' segment," the report said, and finally,
Another duplication of Rs 267 crore
"The sum accounted in RCOM as revenue shared by RCIL from wireless services provided under UAS license of RCOM, the same is included in RCIL revenue as well as RCOM revenue hence adjusted," it said.
In conclusion, the report said that the gap between wireless revenues in the consolidated financial statements of RCom filed with the stock exchange and the revenues reported to TRAI in the year 2006-07 was Rs 197 crore (Rs 1.97 billion).
"The gap which was Rs 197 crore in 2006-07 (1.9 per cent) has increased to Rs 2,563 crore (Rs 25.63 billion) in 2007-08 (25.5 per cent)" the report concluded.
DoT is awaiting the report of four other companies namely Tata Teleservices, Bharti Airtel, Vodafone and Idea from the respective auditors appointed by it, and the government, if warranted, will take necessary action after examining the reports.
The report on RCom would now be examined by a four-member committee of department of telecommunication, headed by member (finance), sources said.
The special audit was initiated to check if revenues by the company were diverted to segments which attracted lower licence fee.
In case of wrongdoings detected during the audit, sources said the operators could be subjected to penalties under the provisions of licences.
Image: Anil Ambani
With additional inputs from PTI
