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Reliance Communications asks ministry to reject audit report
January, 21st 2010

Reliance Communications (RCOM), Indias second-largest telecom company by subscribers, has asked the communications ministry to reject the special audit on it by Parakh & Co and alleged that the report was issued for malafide purpose, based on uncorroborated facts and done without any discussions with it (RCOM). The telco has also told the Department of Telecom (DoT) that the entire report was drafted for the purpose on sensationalising irrelevant matters.

In October 2009, Jaipur-based Parakh, the auditor appointed by the telecom ministry to examine the books of RCOM, said in a report that the telco had failed to show revenues of Rs 2,799.19 crore, causing losses of Rs 315 crore to the government in terms of licence and spectrum fees.

Last month, based on the special auditors report, communications minister A Raja had informed Parliament that RCOM had caused losses of around Rs 250 crore to the exchequer by under-reporting revenues.

In a 28-page communication to DoT dated January 13, a copy of which was viewed by ET, the telco had sought that stringent action be taken against the auditors for misconduct in the preparation of the report and their failure to observe their undertaking of confidentiality. The telco has also alleged that the special auditors had leaked the report to the media.

When contacted, the RCOM spokesperson confirmed having written to DoT on the special auditor having made selective leakages of the audit report to the media even before DoT opened the confidential envelope containing the report and said this clearly reflects prejudiced, mischievous, biased and malafide intention and above all acting on behalf of our corporate rivals.

The spokesperson also reiterated RCOMs stance on the auditors along the same lines as reflected in the companys response to DoT. Further, the email reply from the company said there was no irregularity or discrepancy whatsoever in the accounts of the company.

DoT had appointed the special auditor after the Cellular Operators Association of India had alleged under reporting of revenues by RCOM. The audit was later extended to RCOMs rivals, including Bharti Airtel, Vodafone Essar, Idea Cellular and Tata Teleservices. These audits are currently underway.

The Mumbai-headquartered telco, in its reply has also said that it has furnished proof to show that the special audit has erroneous facts, erroneous conclusions on matters of law, one-sided computations and had incorporated irrelevant and unnecessary data resulting in disclosure of unnecessary details that caused damage and harm to RCOM.

RCOM has also given a point-by-point rebuttal to each of the issues raised by Parakh.

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