India Tax Officials Raid Xerox Unit18 Jul, 2002
India Tax Officials Raid Xerox Unit
Tax officials searched the offices of Xerox Corp.'s Indian subsidiary, Xerox Modicorp. Ltd., following the global copier maker's disclosure that it had made "improper payments" to get orders from the Indian government, news media reported Wednesday. The searches were carried out at 20 locations in the Indian capital, two places in northern Uttar Pradesh state and one office in eastern Calcutta city, the Press Trust of India news agency said, quoting unidentified income tax department officials. Television reports said tax officials began the searches after Xerox's Indian unit failed to respond to queries from the Department of Company Affairs, which has ordered an inspection of the company's accounts.
The department issued its orders last week after a review of the company's accounts by PricewaterhouseCoopers alleged that certain payments — which were entered as commission or handling charges — had been paid to certain individuals or companies.
Randal Quarles, U.S. assistant Treasury secretary for international affairs, told reporters Wednesday that the United States would assist Indian authorities in the investigations into illegal payments.
Quarles, who attended a two-day meeting of the Group of 20 deputies in New Delhi, however, ruled out any joint investigation by Indian and U.S. authorities into the affair.
In an annual report filed with the U.S. Securities and Exchange Commission in late June, Xerox Corp. said: "We estimate the amount of such payments in 2000, the year the activity was stopped, to be approximately $600,000 to $700,000."
Xerox Corp. did not have the payment figures for the earlier years, but told the SEC that the practice took place "over a period of years." The company said it discovered the practice in 2000.
The SEC said in April that accounting improprieties increased the Stamford, Connecticut-based company's pretax profits by dlrs 1.5 billion from 1997 through 2000.