Authored by Hammurabi & Solomon Partners
No Supreme Court Judgment or High Taxes in India – the €1.9 Billion Losses may have actually been caused due to years of diversion of Rs. 200 Billion short paid to Government & kept hidden from shareholders!!..
Following a hard position I had taken on #Vodafone’s brouhaha, sans emotional atyachar, purely basis law of the land here (Why Does Nick Read Find The Situation In India “Critical” ? €1.9 Billion Losses – Blame On India, After Suppression Of Liabilities From Shareholders, Short Payments Of License Fees & Diversion Of Funds !!), Vodafone CEO Nick Reads’s apology, within hours, to Prime Minister Modi, Telecom Minister Ravi Shankar Prasad and DoT officials did not appear to be coming from the left field. But of course, the speed of realization was no doubt startling. The facts which speak for themselves in face of the avalanche launched by him against the Supreme Court Judgment against the ‘industry’ and the Indian Government for high taxes give away any sense of basis for the same. The legal proceedings arise out of terms of the revenue sharing arrangement and hence are not something that was created now by either the Indian Government or the Supreme Court. When the Hon. Supreme Court settled the longstanding disputes between DoT and Telecom Service Providers (TSPs) regarding payment of dues to the Government in terms of LF & SUC, it merely paved the way for TSPs to fulfil there payment obligations and for DoT to realise the public money held away and diverted by TSPs to fund dividends, operations and expansions for decades. These liabilities till 2016-17 purportedly come to around INR 35000-40000 crores for Voda Idea with a significant portion of this amount relating to liabilities of erstwhile Vodafone subsidiaries i.e. Vodafone India Limited (VIL) and Vodafone Mobiles Limited (VML), as discussed in the earlier columns following the Supreme Court Judgment. Non-provisioning of LF & SUC dues in books, diversions based on masking disclosures to shareholders and on pretentions that liabilities would never arise could only get this far. Reliance is placed on the past columns and therefore facts are not being repeated for sake of brevity. Vodafone’s statements in the news release of 12th November 2019 were a clear over-reach of law of the land and institutions such as Government of India and the Supreme Court. A swift realisation and thus prompted an immediate apology by Vodafone CEO Nick Read to Prime Minister Modi, Telecom Minister Ravi Shankar Prasad and DoT Officials. Is the apology accepted? Will this wash away what Vodafone has risked for years i.e to being accused of playing fraud upon the investors and shareholders for lack of transparency and for neither paying LF & SUC nor provisioning the actual liabilities in their books of accounts. And of course, judicial over-reach of the Supreme Court, by call the judgment to be against the ‘industry’ as against ‘defaulting TSPs’ need more explanation, lest a tutorial on this may be the next big elephant liability Vodafone has exposed itself to!!
This article was originally published in LegalEra Magazine