Had investors not lost so much money, the onward march of DSQ Software would have been amusing. With at least three regulators/ investigative agencies chasing its managing director Dinesh Dalmia and a couple of arrest warrants issued against him, the man does exactly what he pleases.
He has managed to sell the most lucrative parts of his business and its software contracts to the Ramesh Vangal-Satyen Patel combine of non-residents. He is now busy converting the residual company into a call centre, with differently skilled employees.
The Enforcement Directorate has put out a light blue alert against Dalmia, which means that he can be detained whenever he is spotted. Yet, DSQ employees say that he is freely moving around in Chennai but only the enforcement officials cannot seem to locate him.
Angry employees who have been fed on a series of false assurances say that several hundred employees have been asked to go on no-pay leave for two months. They believe that around 450 employees would be sacked. Those who have resigned are yet to receive a final settlement of their dues.
The astonishing part is that the entire mutual fund industry (including DSP Merrill Lynch’s mutual fund) holds large chunks of DSQ Software stock in their portfolios.
Yet, not a single fund has asked questions or thought fit to fulfil their fiduciary function of protecting their unit holders’ money.
There are new developments in DSQ Software’s ongoing dispute with the San Jose-based Fortuna Technologies, which it was to acquire in 2000. Fortuna sources say (Cheques & Balances, June 9, 2002) that in the first hearing last week the American Arbitration Association has said that all four counts under which Fortuna had moved against DSQ Software are open to arbitration.
It may be recalled that Fortuna had accused DSQ of making false promises, concealment, wilful and negligent misrepresentation, defamation and slander. It had claimed several million dollars from DSQ under various heads.
It is further learnt that Dalmia has withdrawn the counter claim that he had filed before the Northern California District Court claiming that Fortuna was only entitled to a break-up fee of $ 350,000.
Oh, the media!
The newspaper report that consulting major McKinsey & Co had recommended a merger of the loss-making IFCI with the Industrial Development Bank of India (IDBI) had provoked an edit by one paper and a column by this writer against such a move.
McKinsey has reacted to the criticism saying that its report does not recommend that IFCI be taken over by IDBI. In fact, sources close to the deal say that the story was the brainchild of an IFCI executive who palmed off the idea to a journalist as having emanated from McKinsey.
Does that make the media culpable for commenting on it? Judge for yourself. IDBI, which holds a 30 per cent stake in IFCI, seemed to validate the original report by dashing off a press release rejecting the idea of a merger with IFCI. Wouldn’t one expect that a financial institution, which is 30 per cent owner of IFCI, would have confirmed its veracity before issuing an official press release?
If nobody bothered to check with McKinsey, it is because the consulting company has usually made it a point to avoid the media.
There is another side to the travel advisories issued by the USA, Japan and most of Europe. Last week, an MNC executive was complaining bitterly about the expatriates in his organisation getting a fully paid, government-ordered vacation. Wonderfully for them, the vacation coincided with the beginning of the vacation season in these countries and the World Cup soccer.
Our MNC friend says that Japanese executives working in India were worked up that the big soccer event made it difficult to get tickets to Tokyo. Their complaints paid off when their government sending a special flight to take them away.
In fact, the only group that was furious at the ill-timed travel advisories were people in the financial markets who saw their net asset values drowning under the hysteria and rhetoric.
Maybe the exaggerated response of foreign governments was after all based on the opportunism of their citizens working in India or the desire to impose backdoor economic sanctions, rather than a real assessment of ground realities.
After all, their actions also hurt their own investments in the Indian stock market. -- Sucheta Dalal