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Govt may investigate WorldCom-VSNL deal

Thomas K Thomas

The ministry of communications may inquire into the deal between VSNL and WorldCom to ascertain whether the top management of Videsh Sanchar Nigam Ltd was aware of any financial irregularities in WorldCom before signing the deal with the US telecom major to carry international traffic.

Ministry officials told Business Standard, "We may conduct an investigation into the deal between VSNL and WorldCom to examine whether the agreement between the two sides conformed to international practices. After all, VSNL was under government control when the deal was signed and therefore it would be our responsibility to ensure that there were no irregularities."

The official was reacting to reports of VSNL facing a revenue hit of over Rs 4.26 billion as a result of an accounting scandal at WorldCom.

VSNL had signed an MoU with MCI WorldCom in April 2001 confirming its intention to continue the relationship in providing mutual support in data and voice services in the US and the Indian markets. The MoU gave preferred carrier status to each other.

A spokesperson of WorldCom Asia-Pacific told Business Standard from Hong Kong, "It is business as usual for us in India and we will continue to honour all our commitments, including the payment of dues to VSNL."

Meanwhile, VSNL in its response to queries from the Bombay Stock Exchange and the National Stock Exchange, has said the company is in touch with WorldCom as well as its US lawyers.

"We are studying the situation and looking at how much outstanding is to be settled between the two sides. We are collating information on how much traffic WorldCom carries from VSNL. We do not deny the possibility of WorldCom owing money to VSNL. A clear picture will emerge in a few days," VSNL said in its note to the stock exchanges.

According to VSNL, it also received a written communication from WorldCom on Thursday assuring it of a cordial relationship. "WorldCom believes it will come out of its current crisis," the note said.

Bharti to demand safeguards

Bharti Telesonic will demand additional safeguards from WordCom in case it signs an agreement with the company. Says N Arjun CEO of Bharti Telesonic: "We will now ask for safeguards to ensure that our payment will come on time."

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