In a shocking revelation, a draft audit report finds that Bangladesh’s second largest mobile operator Robi Axiata Limited has evaded Tk 1,490 crore in taxes and other payables over a period of 18 years, an unprecedented malpractice that has raised eyebrows among industry insiders. Sources privy to the audit documents said Robi, a joint venture between Axiata Group Berhad of Malaysia, Bharti Airtel Limited of India and NTT DoCoMo Inc of Japan, resorted to the malpractice while using spectrum, deliberately lowered its number of subscribers hiding the real figures in documents and even manufactured balance sheet to avoid government taxes.
“One even cannot believe what Robi did over the last 18 years. We found irregularities in every step. The company also hid information relating to tower use to the government, which is absolutely a crime,” said a member of the audit committee.
The draft audit report has recently been submitted to the BTRC (Bangladesh Telecommunication Regulatory Commission), the regulator that had commissioned the audit.
When contacted, BTRC Chairman Dr Shahjahan Mahmood told The Independent, “Yes, we’ve got the draft audit report that clearly identifies tax evasions of big amount.”
However, Mahmood did not divulge the amount of tax evaded, saying, “Before finalisation of the report I cannot disclose the figure.”
“But I can tell you that upon receipt of the draft audit report we’ve already sent it to Robi Axiata to explain the irregularities. The operator has sought some time to reply,” Mahmood added.
Chairman of the audit committee Brigadier General Md Mustafa Kamal, who is also Director General of E&O (Engineering and Operations) Division of BTRC, refused to make any comment on the issue, saying, “As we are yet to finalise the report, we can’t disclose anything at this stage.”
Robi, which was fined Tk 145 crore for dodging revenues by transferring phone calls abroad using illegal VoIP (Voice over Internet Protocol) in November 2007, declined to respond to the queries by The Independent.
The company commenced its operations as Telekom Malaysia International (Bangladesh) with the brand name ‘Aktel’ in 1997, one year after it took the licence. In 2010 the company was rebranded to ‘Robi’ and the company changed its name to Robi Axiata Limited.
The BTRC on March 15, 2016 signed an agreement with audit firm Masih Muhith Haque & Co to examine Robi's books. Masih Muhith Haque later collaborated with foreign partner PKF Sridhar & Santhanam LLP to do the job.
The firm audited the business activities of Robi from 1996 to 2014, just before the operator merged with the Indian operator AirTel.
As per the draft audit investigations, Robi, where Axiata
holds 68.7 per cent controlling stake, Bharti holds 25 per cent stake while the remaining 6.3 per cent is held by NTT DOCOMO of Japan, used more spectrum than approved in 1800MHz band, depriving the government of Tk 350 crore.
From 1998 to 2005, Robi, which was then AKTEL, had shown some 800,000-900,000 less subscribers than the original number only to evade Tk 200 crore in taxes, said the draft audit.
According to the draft, the NBR fixed Tk 1,100 tax for selling a handset in 2004 and 2005. Robi, then AKTEL, just hid all the information on sold handsets to avoid taxes. “The government was supposed to receive a huge amount of money relating to handset selling tax from Robi,” a source with the government said.
Masih Muhith Haque & Co was supposed to submit it report within 180 days after signing the deal with the BTRC. But the firm had to face hassles to complete the job. BTRC paid a fee of Tk 7.82 crore for the audit.
Robi was the third largest operator in the country but after the merger with Airtel it became the second largest operator with 41.38 million subscribers out of total 143.11 million in the country. Grameenphone tops the list with 64.95 million subscribers.
Apart from the tax evasion figure of Tk 1,490 crore, the NBR (National Board of Revenue) on November 05, 2017 demanded Tk 925 crore from Robi Axiata in unpaid value-added tax after discrepancy was found between its own records and the mobile operator’s database.
The Large Taxpayers Unit of the NBR analysed data stored in Robi’s computers and its submitted returns from January 2013 to December 2016 and found that the operator did not pay Tk 553.61 crore in VAT and Tk 158.20 crore in VAT-at-source.
Robi did not even pay VAT on merger fee and spectrum charge and made unlawful rebate claims, all of which amount to Tk 213.19 crore, according to the NBR.
Three years ago, BTRC decided to audit accounts of all mobile phone operators at a cost of Tk 40.88 crore to check whether the mobile operators are complying with the licence conditions, paying the correct taxes and fees, and sharing revenues with the regulator and other agencies.
Earlier in October last year, the BTRC signed a deal with Toha Khan Zaman & Co to run an audit into Grameenphone, the largest mobile operator in Bangladesh.
The BTRC has already floated tender for Banglalink’s audit and it will receive offers on January 29. In 2011, BTRC started auditing the top two telecom operators— Grameenphone and Banglalink.
Ahmed Zaker & Co, which was assigned to audit Banglalink accounts, could not complete the task, citing inability.
However, Fazal & Co completed the audit of Grameenphone in 2011. Following the audit, the telecom regulator had sent a letter to Grameenphone, demanding Tk 3,034 crore on October 3, 2011. The operator, however, raised questions over the audit firm’s qualification for the task. The matter was taken to court and the Supreme Court on December 9, 2013 had declared the appointments of firms by BTRC to open the audits into the mobile phone operators illegal as it violated Public Procurement Rules 2008.
“We’ve followed the court order and instructed local firms to have joint ventures with foreign companies,” said a high official of BTRC. “We are doing our job professionally so that no question can be raised,” he added.
Failing to get the response of Robi regarding the draft audit report on tax evasion over phone, The Independent sent an e-mail to the mobile operator’s spokesperson Ekram Kabir, but he did not make any reply till filing of this report.
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