Reliance probed for alleged misreporting of revenue

The books of Reliance Communications, the Indian mobile phone group, have come under scrutiny amid claims that the group misreported annual revenues by as much as 23 billion rupees (£315 million) last year, possibly to avoid paying licence fees to the Government.

Reliance, which is controlled by the billionaire Anil AmbaniAnil Ambani and is India’s second-largest mobile phone operator by subscriber numbers, has denied any wrongdoing, suggesting that the allegations have been engineered by business rivals.

The allegations stem from leaked details from a report prepared by Parakh and Co, the auditor, for the Indian Government. The auditor was ordered by New Delhi to examine apparent discrepancies between the revenue reports Reliance made to the Government and to its shareholders.

Parakh and Co said in the leaked document: "Our report reveals that there has been under-reporting of revenue for the purpose of payment of revenue share, and underpayment of licence fee and spectrum fees."

The claims threaten to stoke concerns over corporate governance in India.

In January, the corporate world was left reeling when B.Ramalinga Raju, the founder and chairman of Satyam, one of the largest Indian outsourcers, admitted orchestrating a £1 billion fraud over the course of several years.

The confession by the disgraced IT mogul that much of the cash he had reported being on Satyam's books was utterly "fictitious" sent the company's shares into freefall in Mumbai and New York and raised serious questions over standards of business regulation in India.

Reliance Communications has denied any "irregularity or discrepancy" in its accounts. It described the auditor's comments as biased and "instigated by corporate rivals".

Parakh and Co’s audit claims that the company reported wireless revenue to the stock market of 152 billion rupees for the year ended March 2008 but reported gross wireless revenue of 129 billion rupees to the Government.

The auditor said that one-off transactions partly explained the difference between the figures. Sources close to Reliance said that the auditors had not discovered anything that the company had not already made public and that it had reported revenues correctly.

Source:http://business.timesonline.co.uk