A Modi spokesman said E&Y’s appointment was approved during meetings of the XMC board. He said the meeting included 6 out of XMC’s 7 board members and the decision was carried by a majority. The board has 2 nominees from the Modi side, chief financial officer S Venkatraman and senior vice-chairman OP Dani.
The meeting started on Tuesday. Another round had to be held on Wednesday.
Spicecorp holds an 18.19 per cent “effective” stake in XMC. Another 7 percent is held by other associate companies of the BK Modi group. Xerox nominees on the XMC board include Jule Elimole, Pierre Nothard (managing director), Mukund S Abhayankar and T Gordon Nicol. Modi sources claimed E&Y initiative was approved by three nominees of Xerox.
It may be noted that E&Y are also the auditors for Spicecorp, a BK Modi concern. Xerox has already mandated the Indian arm of PwC (FE of July 23) for inspecting XMC’s records for the past six years. This is in addition to the inspection by PwC (London) ordered by parent Xerox for its global operations. In a press release here, Spicecorp said it is concerned about the allegations being made against its nominees on the XMC board.
According to a PTI report, the Modis today “virtually held US partner Xerox Corp responsible in the bribery scam in joint venture XMC.”
“The recent disclosures by Xerox to the SEC, US and the subsequent submission of the relevant sections to the Indian government is something that Xerox has done pertaining to its day to day operations in India,” PTI quoted Spicecorp chairman Veena Modi.
Xerox made a voluntary disclosure earlier this month that its Indian subsidiary XMC made “improper” payments of $700,000 to Indian government officials in the year 2000 to promote business, following which the department of company affairs ordered a probe. “After coming to know the findings of PwC report, Spicecorp is keen to find out who is involved in these payments, as alleged,” the statement said.