Telcos hit with form fraud cases

Telcos hit with form fraud cases

New Delhi: The spectrum scam isn’t the only controversy haunting telcos. Last month, the department of telecommunications (DoT) filed a complaint with the Delhi police accusing Reliance Communications Ltd (R-Com), Tata Teleservices Ltd (TTSL) and Idea Cellular Ltd of forging customer authentication forms (CAFs).

The so-called first information report (FIR) was filed by Akmal Hussain, assistant director general of DoT’s telecom enforcement, resource and monitoring (TERM) cells on 10 February.

The complaint—Mint has reviewed those against TTSL and R-Com—says that TERM obtained a random sample of customer verification forms (or CAFs) submitted to telcos in May 2009 and while studying this, found “certain blatant facts leading to the commission of offence of forgery and wilful cheating" by the companies. “It has been observed that the companies involved had forged and fabricated the original sets of CAFs submitted by customers to create a new set of documents with malafide intentions," the complaint adds.

TTSL said in a response to queries that “it is an industry practice to outsource the task of storage of CAF forms to professional external agencies. When the authorities brought certain instances of irregularities on this front to our notice, TTSL immediately terminated the services of the said agency, and also lodged a formal police complaint against this agency". The agency named in the FIR is iSmart Globals Processes Pvt. Ltd.

R-Com said it follows procedure to ensure that the CAF and related documents are in full compliance with guidelines.

“If any aberration is brought to our notice by the department, action, including filing police complaint against the erring distributor/dealer is taken immediately," the company said in an email response. “We are in the process of getting the details of this matter from the department."

Idea declined to comment.

Indian laws require telcos to verify the identity and addresses of customers before issuing them mobile phone connections; this was put in place given India’s increased vulnerability to terror attacks and the resulting security safeguards. Although the law has been in place for a number of years, the seriousness with which telcos approached this is reflected in the last-minute scramble to present documents and prevent disconnection after the government set a deadline of October 2010 for telcos to verify customer identities and addresses. This has been extended to March.

The DoT complaint doesn’t refer to customers without documents, but those who had purportedly submitted documents.

Some of the CAFs were fake, having proof of identity or proof of address documents of persons with similar names already being served by the telco.

After TERM discovered the forgeries and the fraud, it met with the telcos, which then produced CAFs with accurate information for the same customers. TERM wrote to the telcos in September 2009 asking why a complaint shouldn’t be lodged with the police for forgery and fraud. The telcos blamed their dealers. TERM refuses to buy that argument as seen from its complaint: “This grave act of forgery cannot be done without the connivance of the employees and functional directors of the operators."

A DoT official, who did not want to be identified, said that TERM typically picks a sample of 5,000 from each operator and that, in this particular case, it found 406 discrepancies with Idea’s forms, 114 with R-Com’s and 90 with TTSL’s.

According to the licence agreement between telcos and the government, DoT can impose a penalty of up to 50 crore for violations in the licence agreement and an additional 1,000 per faulty CAF.