VSNL clarifies on Reliance Communications announcement w.r.t ICC arbitration award

With reference to the announcement by Reliance Communications Ltd (RCOM) with respect to the ICC Arbitration Award published on August 30, 2006 & September 14, 2006, Videsh Sanchar Nigam Ltd (VSNL) has announced that - since the said announcements contain false and disparaging imputations against VSNL; the company has to bring to the notice of investors as below:

"1. We note that the announcements contain false and disparaging imputations against VSNL, not justified or supported by any facts. Allegations of monopolistic and anti competitive practices by VSNL indicates clear malafide on the part of FLAG Telecom / RCOM under the guise of a corporate announcement to prejudice and harm the reputation of VSNL.

2. Repeated statements by FLAG through its holding company, RCOM that VSNL was acting or engaging in alleged monopolistic and anti competitive practices appear to have been made with sole intent to bring disrepute to VSNL. The allegation that ultimate users of international capacity will be harmed due to exorbitant prices is patently false and only made to create the facade of public concern.

3. Further, the allegation that VSNL was in violation of its commitment is incorrect. VSNL has been fully compliant with its obligation to perform the award. As a matter of New York law, which governs the terms of the Construction & Maintenance Agreement, Dutch law and international arbitration practice there is no restriction on a party's fundamental right to challenge an award when arbitrators (in this case by majority as it is not an unanimous award) have exceeded their mandate. The Netherlands Court has already admitted the Writ filed by VSNL. However, the award until it is set aside, is binding on VSNL and VSNL is fully compliant with its obligations. Indeed, VSNL and FLAG are currently liaising for the upgrade of the Mumbai cable landing station by FLAG.

4. As stated earlier, unwarranted and false statements by FLAG and its surrogate use of the platform of stock exchange through RCOM is clearly with malice and defamatory. We understand that the terms of the Listing Agreement mandate listed companies to furnish certain information to the stock exchange. The unwarranted allegations on VSNL, we believe, glaringly fall out of the mandated information/disclosure requirement stipulated in the Listing Agreement. It is unfortunate and undesirable that one listed company is propagating defamatory material against another listed company in this manner."

Source : Equity Bulls

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