Etisalat slams Indian joint venture partner
Joint venture partner Majestic accuses Etisalat of failing to comply with partnership obligations
Etisalat's joint venture partner in India, Majestic Infracon Private Ltd, has started unspecified legal proceedings against the UAE telco.
Majestic, which owns some 45.73% of the Indian joint venture, Etisalat DB, has bought proceedings against Etisalat as well as various group companies and individual directors, before the Company Law Board in India, Etisalat confirmed in a statement.
While Etisalat did not specify what the proceedings were, Indian TV station CNBC TV18 said that Majestic had accused Etisalat of failing to comply with its joint venture obligations and "operational mismanagement".
Etisalat was quick to rebuff the allegations, which it described as "wholly baseless."
Etisalat pointed out that Majestic is controlled by Shahid Balwa and Vinod Goenka, who have both been implicated in India's 2G spectrum scandal.
"The management of Etisalat DB has been made dramatically more difficult by Mr Balwa and Mr Goenka being in prison and by the approach taken by them to its business, not least in relation to the 2G license allegations when the company's defense appears to have been conducted to benefit their personal position," Etisalat said.
"This is a cynical tactical move by parties charged with major corruption offences to shift attention away from their own situation and to disrupt the proper running of Etisalat DB to the detriment of its shareholders and customers."
Balwa was the managing director of Etisalat DB until his recent resignation and Majestic has a larger shareholding in the joint venture than Etisalat.
Etisalat said that it is "investigating closely" how Balwa persuaded it to invest in Swan Telecom, which was later renamed Etisalat DB, as well as Balwa's stewardship of the company and its assets.
The development is the latest headache for Etisalat in India. Last week it emerged that Etisalat DB had been handed a $1.58 billion fine (70 billion rupees) from India's Enforcement Directorate, for alleged violations related to India's 2G auction. Etisalat said that the fine has not yet been enforced and that it has one month to contest it and avoid paying it.