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Richa Mishra

New Delhi , June 15

THE Delhi-based chartered accountants, Surendar K. Jain & Co, appointed to investigate whether the management of Xerox Modicorp Ltd is guilty of fraud, is said to have submitted its report to the Ministry of Company Affairs (MCA). It took the independent investigators close to two years to complete its investigations.

This was one of those rare cases where the Department of Company Affairs (DCA) had mandated an outside professional to probe a case falling under its purview. The independent investigators were appointed in August 2002. This move followed Xerox Corporation's revelations to the Securities and Exchange Commission (SEC) in the US that the Indian subsidiary had made `improper payments' to the Indian Government officials for securing high-value orders.

While refraining from commenting on the findings, sources said, "The Ministry will first examine the report and then decide on the next course of action."

The investigators had also looked into the role of foreign representatives on the board of the company. The DCA had given its nod to the investigators after factoring in a lot of issues, prime among them being that it should not affect the flow of foreign investment into the country.

The investigators were asked to commission the enquiry through a separate body, which would route the queries through the consulates of the countries, which the representatives of the board belonged to.

It may be recalled that the DCA had selected the Delhi-based auditing firm from the panel of names received from the Comptroller and Auditor General (CAG). It had set up a group to shortlist and appoint an investigating officer for the purpose.

After obtaining the Company Law Board (CLB) order to initiate investigations into Xerox Modicorp to assess whether the company's management was guilty of fraud, the DCA had decided to appoint an independent investigating officer. It had moved an application seeking permission for initiating investigation under Section 237 B (ii) of the Companies Act, 1956 against the company. The CLB order authorised DCA to summon Xerox Modicorp functionaries in the course of the inspection as well as widen the scope of investigations.

Before this, the DCA's investigations into the alleged "improper payments" to the Government officials to acquire supply contracts were limited to the inspection of the books of account of the company under Section 209(A) of the Companies Act.

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