Reliance Infocomm Executive's E-mails Under Lens !

[Arun 795]

TIMES NEWS NETWORK - THURSDAY, MAY 19, 2005 10:05:31 AM

NEW DELHI:

Days before the launch of Reliance Infocomm’s overseas service in the US, a top-level Infocomm executive had warned the management that the idea of disguising overseas calls coming into India as local ones, to avoid paying charges to state-owned BSNL and MTNL, would run afoul of regulators.

The documents—e-mails written to Mukesh Ambani by Akhil Gupta, then CEO Corporate Development, Reliance Infocomm—suggest that the company chose to push the limits of the law. The government has got hold of these documents and investigating agencies are now ascertaining whether this translates into criminal intent. If so, proceedings against the company could go beyond the monetary penalty imposed on it, said highly placed sources.

There are two key e-mails. The first mail from Gupta, one of Mukesh’s close aides, dates back to late March last year. He virtually acted as a whistle-blower when he said in the mail, “I have reservations regarding the 12 cents per minute to all phones and not just (Reliance phones). Here is the way I see the scenario unfolding.’’

He went on to list what could happen in case Infocomm went ahead with its project.

“Within seven to ten days of our commercial launch, BSNL will know. It will clearly be established that we are violating in spirit if not the law and avoiding paying ADC (access deficit charge) to BSNL or government. I will be surprised if Trai (country’s telecom regulator)\other government agencies do not move to reverse this. If we have to reverse, how do we go back to consumers? We need to create a softer image of Rel Info in NRIs’ minds.’’

The communication proved to be prescient. In October 2004, the communications ministry began investigating Infocomm’s activities, and by November BSNL and MTNL slapped penalties, asking it to pay past dues and penalties, together worth about Rs 500 crore. Early this year, Infocomm paid up.

Within seven to 10 days of our commercial launch, BSNL will know It will clearly be established that we are violating in spirit if not the law. I will be surprised if Trai/ other govt agencies don’t move to reverse this As you can see from my previous e-mail, I had opposed it and put my warning in writing...It’s very painful to see us spoiling our name

Gupta clashed with Mukesh aide on re-routing calls

Akhil Gupta, declined to comment when contacted by TOI. When Infocomm officials were reached for their comments, they said the matter was sub-judice and involved the legal interpretation of certain services that were offered by the company but that had since been withdrawn.

Coming back to Gupta’s story, his views on re-routing calls clashed with those of another trusted Mukesh Ambani aide, Manoj Modi. Ultimately, Modi’s opinion to go ahead with rerouting appears to have prevailed.

Gupta seemed to have sensed that he was in a minority. Therefore, his e-mail warning Mukesh to stay clear of these practices ended with a resignation offer, “I suggest that we hand over the sponsorship (or management) of the NRI scheme to MM\BDK (Manoj Modi\B D Khurana).’’ It adds, “I have three to four

weeks before we go on vacation. I would assist the new sponsors during this time.’’

However, he was persuaded to stay on. The management of the Infocomm project was divided with Modi handling regulatory and legal issues in India and Gupta handling marketing in the US. But after the call rerouting scheme came under investigation, rumours started circulating that Gupta was, in fact, the mastermind behind the scheme to disguise foreign calls.

This prompted a second email from Gupta in early December, again to Mukesh, laying the entire blame for the whole botched operation on Modi. “I have heard from several sources now that MM’s office is spreading rumours that (I) was responsible for deciding to modify the caller line identification and not pay ADC. As you can see from my previous e-mail, I had opposed it and put my warning in writing,’’ he said.

“I do not know what the motivations might be in the current environment,’’ wrote Gupta. He asked for Mukesh’s intervention in the bitter war of recrimination. “Would you please help in stopping this unethical nonsense from spreading and set the record straight.’’ The mail concluded, “It is very painful to see us paying huge penalties, spoiling our name and the person responsible gets to blame someone else. What a shame.’’

Following differences with the Infocomm management, Gupta recently resigned from the company.

[Arun 795]

Reliance terms reports on Infocomm call re-reouting 'miseleading'

New Delhi, May 19, 2005 - Press Trust of India

Reliance today cried foul over reports on Akhil Gupta, a close associate of Group Chairman Mukesh Ambani, blowing the whistle on rerouting of international calls as local ones by the group's telecom entity Infocomm saying it was an attempt to mislead.

"The report contains misleading facts and information. The matter is subjudice and the company does not wish to make any comment," a Reliance spokesperson said in a statement.

On the other hand, Gupta, whose objection to the controversial rerouting by Reliance Infocomm went unheeded before his silent exit from the group, remained non-committal.

"The matter is sub-judice.... I have no comments to offer," Gupta told PTI on phone from Mumbai in an apparent reference to the matter pending before the Delhi High Court.

Asked if he had sent an e-mail warning group Chairman Mukesh Ambani way back in March last year that rerouting would tantamount to violation of spirit, if not law, Gupta refused to comment on the issue.

Gupta, perceived to be a close associate of Mukesh, had quit Reliance last month after working on various projects, including Refinery, oil and gas business, and was CEO, Corporate Development of Infocomm when he put in his papers. Gupta has now joined as Senior Managing Director of Blackstone, a US-based private equity fund and advisory firm.