Is Prithvi Information Solutions (PISL) another Satyam in the making?
PISL, Andhra’s second largest IT firm, allegedly pocketed crores of rupees that belonged to the Japanese trading company Sojitz, says SHANTANU GUHA RAY. In HYDERABAD’S Rs 32,000 crore IT market, they are calling it the second Satyam. The directors (including the independent ones) of Prithvi Information Solutions (PISL) — Andhra Pradesh’s second largest IT firm — have been issued summons by a city criminal court. The Rs 200 crore alleged fraud involves unpaid dues to a leading Japanese corporation.
PISL is headed by VV Rama Rao, a school teacher-turned-businessman with close political ties. His daughter Madhavi Vuppalapati and son Satish Kumar, who hold top positions in the company, are alumni of such prestigious institutes as the Carnegie Mellon University.
The company, listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), has allegedly diverted the amount to itself, violating various agreements that it had concluded with Japanese trading firm Sojitz Corporation in early 2008. The deal involved buying telecom equipment for the State-owned Bharat Sanchar Nigam Limited (BSNL).
Such is the open-ended crisis that in the last one year alone, as many as three auditors — Ernst & Young, PricewaterhouseCoopers India and Grant Thornton — walked out. Worse, Deutsche Bank, one of the world’s top banks, has accused the firm of making serious misrepresentations to avail credit facilities. PISL officials are not talking. “The case is sub judice,” a senior PISL official told TEHELKA. But it is reliably learnt that the Mumbai-based Securities and Exchange Board of India (SEBI), the BSE and NSE have received serious complaints from the company’s vendors. For the record, PISL is considered a preferred vendor by BSNL.
A former managing director of BSNL, Preetpal Singh, was recently appointed an independent director on the PISL board. It already has several industry veterans as independent directors.
So just what went wrong? In 2007 BSNL asked PISL to supply telecommunication equipment. PISL approached Chinese equipment manufacturer Huawei, which approached Sojitz to grant trade finance to PISL. All payments from it were to be credited directly into an escrow account, within the stipulated credit period of 270 days, from the date of equipment delivery. The account was opened with the Punjab National Bank.
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