rediff.com: Govt orders probe into Xerox case; CBI swings into action

The Xerox-ModiCorp scam snowballed on Wednesday with the government ordering a probe into its accounts following admission of improper payments of $700,000 to government officials in the year 2000 to promote business even as the Central Bureau of Investigation swung into action to gather intelligence about the beneficiaries of bribery.

Within a day of US-based Xerox Corporation's admission of 'improper payments' by its Indian subsidiary coming to light, Department of Company Affairs secretary V K Dhall said: "We have ordered inspection of accounts to ascertain the facts as reported by the company itself."

In view of the mention of bribes to government officials, CBI sources said that once a definite information was gathered, suo moto action could be taken against the beneficiaries under Prevention of Corruption Act.

Dhall's statement came after Xerox Corporation said it was notifying the Indian government about the 'improper payments' made to officials by its Indian subsidiary Xerox ModiCorp for pushing sales.

The DCA probe into Xerox-ModiCorp, where the American giant has 68 per cent equity, under section 209 A of the Companies Act would be completed expeditiously, Dhall said.

Meanwhile, Xerox spokesperson Paul Arrowsmith said that his company was not planning to buy out its local partner, from whom the US giant had acquired majority stake three years ago, to prevent such unethical practices, according to news agency Dow Jones.

Dhall said the Indian unit of Xerox Corporation, ModiCorp would be given a fair chance to make their case and depending upon the outcome, action under other sections of the Companies Act could be thought of.

The bribery scandal also attracted political attention with the BJP demanding an investigation terming the payments made to government officials as 'serious violation of law.'

"If what has been stated by the Xerox company is true, it is a serious violation of Indian laws - anti-graft and company - and requires an investigation," party spokesman Arun Jaitley said in New Delhi.

The company was in the process of notifying the Indian government and has also written to US justice department, Arrowsmith said adding" "We are waiting for their response."

The shares of the Indian unit were delisted from the bourses after the company undertook business restructuring in 1999 when the Xerox Corporation acquired majority stake of 68 per cent in the joint venture.

In the joint venture, B K Modi and associates have 28 per cent stake, while 4 per cent is held by the public.

Xerox India officials said though some shares were still with the public as they did not respond to the buy back offer in 1999, the current development would not have any impact as the shares were not traded on stock exchanges for long.



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