Around a month ago Dinesh Dalmia, the chairman of the DSQ group, rang up to request me to stop writing nasty articles about him. He was extremely polite, insisting that he was now focussed on his business and dead serious about reviving his company. His wife had called a little before Dalmia did and they both made the same claim: that they were starting out on a clean slate and were focussed on business. But one had heard that line from Dalmia before. In fact, he made similar claims a little before we discovered his fake transactions in DSQ Software and DSQ Biotech through three Overseas Corporate Bodies (OCBs). Interestingly, while the Mumbai and Kolkata police find Dalmia elusive, he was in Mumbai last month lobbying various politicians. Was Dalmia trying to suppress investigations against him?
Some stunning revelations by the New York Post about his recent business deals in the US indicate that he certainly had reasons to staunch bad publicity in India. Last week, Christopher Byron of the New York Post, a well-known columnist and author of several books discovered Dalmia's shenanigans in the US. In his column of September 8, titled Phone-Bank Sellout, Byron says, Strange business deals pop up everyday in this country (the US). But one of the strangest by far involves a Texas-based telemarketing company called Aegis Communications Inc, which is being acquired by an offshore company called AllServe Systems Plc. The takeover was to be finalised last week.
According to Byron, Aegis Communications has access to "the most personal financial details of millions of American citizens" and is owned by a group that includes former American Defence Secretary William Cohen. In fact, Aegis is the sixth-largest US telemarketing company, with 4,500 employees manning banks of phones and computer screens at 11 different facilities across the country. Byron also says that Aegis poorly paid staff is notorious for leaking sensitive information in their possession for a price.
In trying to trace the antecedents of AllServe, which was to acquire Aegis Communications for $22.75 million, he drew a strange blank. Although a press release described AllServe as a UK company with a global presence,Byron found, after much investigation that it has an Indian connection. But nobody, not even the chief information officer of Aegis, knew who really owned the company. So Byron began to backtrack through name change and corporate address filings in the US and Europe and searched the Net extensively to come up with earlier avatars of AllServe.
Surprise! Their earlier names were Total Systems and DSQ Europe. He then got someone from the Scandent Group (which had most recently dealt with Dinesh Dalmia), to actually confirm that Dalmia owned AllServe. Byron's investigations led him to Dalmia's many companies and also this newspaper's reportage on DSQ Software. Chris Byron told me, that he became suspicious when the AllServe website provided no details on shareholders and their background. He is continuing to investigate AllServe and has already located several separate companies in the US, which all had the name DSQ and changed it to Total Systems or Total Infosystems, before being renamed as AllServe. He has most recently tracked Dalmia's operations down to the British Virgin Islands, where a Post Box 146, at Wickham's Cay1, Road Town, Tortola controls much of his global activities and is represented by his long time associate A.K. Sen. This PO box number is also the address of Globetech Worldwide Ltd, the company through which Dalmia signed the deal with Scandent Network to sell DSQ's overseas contracts. The acquisition of Aegis in the USA is probably Dalmia's boldest move yet.
His colourful past includes reckless speculation and ramping of DSQ software and DSQ Biotech shares during the dotcom boom. This is being investigated by the Kolkata police. Then there was his unexplained preferential allotment to three Mauritius based OCBs, which he falsely claimed had represented a merger with Fortuna Technologies of San Jose, USA until this writer exposed the hoax. The Securities and Exchange Board of India (Sebi) merely cancelled the additional equity allotted to the Mauritius OCBs owned by him. The Enforcement Directorate has since served Dalmia a show-cause notice for violation of foreign exchange laws in DSQ software as well as DSQ Biotech, which was renamed Origin Agrostar Ltd in October 2001. The Directorate found that Dalmia has created several illegal OCBs in DSQ Biotech which were allotted a large chunks of shares on a preferential basis, which were then used to ramp up the stock.
Undeterred by the investigations, Dalmia coolly demerged the US and European subsidiaries of DSQ Software, renamed them as Total Infosystems and began a process of selling off their main business contracts to the Scandent Network Pvt Ltd, which has operations in India and abroad. The deal with Scandent, which took place in April 2002 and was a complicated arrangement involving the setting up of several 'mirror' companies. Dalmia is understood to have collected over Rs 145 crore through the sale. None of this money came to DSQ Software. Neither Sebi nor the Department of Companies seems to be bothered. On April 1, 2002, I wrote in the Financial Express that the main sale deal is being signed by DSQ and Dalmia with Ramesh Vangal (former chief of Pepsi in India) and Satyen Patel and a company incorporated in the British Virgin Islands called Globetech Worldwide Ltd (PO Box 146), Wickham's Cay.
Another agreement was signed with the Indian outfit of Scandent. The contracts transferred by DSQ Software, DSQ Europe and Total Infosystems included those with Peregrine Systems Inc, the California-based Liberty Mutual Group, Exel Logistics (formerly known as MSAS Global Logistics limited). The deal has never been reported to DSQ Software's Indian shareholders. And very little of it was ever investigated by Indian regulatory agencies. The Department of Company Affairs (DCA) allowed him to compound several offences, refused to investigate the quality of his audited accounts and has made no attempt to remove him from management despite having the powers to do so. Naturally, DSQ Software, which touched an extraordinary Rs 2,820 in the BSE at the height of the bull run of 2000 is now down to just Rs 9.90. But its shareholders, including institutional investors remain curiously unquestioning. In the meanwhile, people who Dalmia owes money to, continue to file cases in the hope that he will be brought to book someday. His money is elsewhere, though.