Reliance Communications trashes DoT auditor’s findings

Reliance Communications on Sunday rubbished media reports that it owes the exchequer Rs316 crore in underreported revenues, saying it had conducted a ''preliminary review'' of the Department of Telecommunications' special audit which found it did not have to pay any additional licence or spectrum fee to the government, nor had it inflated its revenues.

The DoT had earlier asked for a special audit of several telecom companies and part of the special audit on Reliance Communication had found its way to the media, which said the company owed the government about Rs316 crore.

''The special auditor's report is incorrect, hopelessly biased, one-sided and prejudiced,'' said the company in a statement. It also said that there was no reference to any item of revenue or differences apart from items reported by the company and included in its quarterly disclosures to the stock exchanges, DoT and the Telecom Regulatory Authority of India.

''The special audit has nowhere recorded a finding that there was any inflation of revenue by RCom, as incorrectly alleged in a section of the media,'' said the statement.

Parakh & Co, the special auditors appointed by DoT, had alleged that RCOM inflated revenues by over Rs 2,900 crore, while at the same time, underreporting revenues to Trai with the intention of evading licensing fee of over Rs 300 crore. But RCom said it had received a copy of the report issued by the special auditors appointed by DoT only on 14 October, after ''persistently'' asking for a copy of the report. The report was submitted to DoT on 7 October.

The company claims that the special auditors have wrongly alleged the existence of an additional liability of Rs70 crore towards licence fees on income such as unrealised foreign exchange gains and interest and dividends earned by the company before it became a 'licensee'. ''This finding is entirely contrary to the direct decision of the TDSAT applicable to the entire telecom industry,'' it said in a statement.

RCOM has accused the auditors of not being professional in their conduct, as they did not discuss their findings and observations with the company at any stage. ''The special auditor has arrived at adverse findings without seeking any response on facts and law from RCOM and it has also finalised the report without any discussions with RCOM's statutory auditors,'' the company said.

Prakash Sharma, spokesperson for Parakh & Co, however refuted the claims, saying that the RCom officials knew the contents of the special audit report before it was submitted to DoT.