Would They Treat an American CEO This Way?

They put him in jail. After a week they took his passport and let him out on
a bail bond of £20,000. On April 11 they will decide if he is to be extradited
to Netherlands in custody, or will be allowed to go there on his own as a free
person.

i-Flex Solutions and its Netherlands CEO V Senthil Kumar had never imagined
they will one day be talking to criminal lawyers on issues like forgery and
extradition and bail. But they are.

Kumar was arrested in London on 26th March on the behest of the Netherlands
government, which wants him extradited for investigation into charges of visa
irregularities. Another 12 of the company’s Indian employees in Netherlands
were given a week to leave the country.

"If this was an American CEO, would they have behaved like this?"
fumes Deepak Ghaisas, i-Flex solutions CFO and CEO of India operations.
"Would he have made to go through the same humiliation? We don’t arrest
Dutch CEOs on conceived or perceived violations!"

Ghaisas has a point. While visa irregularities in Netherlands is a criminal
offence, it is unusual– if not bizarre–to arrest a CEO without so much as a
notification. As a matter of fact, nine days after the arrest, neither the
company nor Kumar himself have received any official notification from the Dutch
authorities on why the extradition request was made.

All they have is communication from the British authorities.

This puts i-Flex in a tough situation. Without any official communication,
they cannot as a company approach the Dutch. They have chosen, therefore, to let
the ministry of external affairs speak to them. The company has also appointed a
law firm in London and Netherlands to deal with this case.

Question is, what is the case?

Misunderstanding?

The basic question of law at the moment is this–i-Flex employees were
there on a business visa that allows short-term visits, but does not allow
software professionals to do development work there. That requires a work
permit. So question–were i-Flex employees there under a wrong visa?

The company believes not. Says Ghaisas–"We are a software product
company. Which means that we don’t do development. There may be incidental
work with respect to implementing the product, but there is no
development."

Besides, the company says they’ve had offices in the country since May 2000
and this issue has never come up. The company has a proper subsidiary there says
Ghaisas, not just a branch office and lists the things the company did to make
sure it was getting the legalities right

n It consulted
its own and local Dutch lawyers before entering the geography.

n It has been in
constant touch with the Dutch consul general who visited i-Flex offices in
Bombay in March 2001 and 2002. The company took pains to explain its business
model to them (product implementation v/s development). Neither expressed any
reservations then.

n In January this
year when Senthil Kumar went to take over as Netherlands CEO, the company did a
due diligence exercise. Took legal opinion again from a Dutch lawyer who told
them a work permit was not required for software product implementation kind of
work.

Bottomline, says Ghaisas, "I don’t know what we could have done
differently. People keep asking me what our learning has been from this
experience but what can I say? We did everything there was to do."

Or not?

Theories always abound of course. But the company sees other possibilities
why this happened and why at this time. One possibility, says Ghaisas, "is
a complaint lodged by some disgruntled element–a Dutch employee who was sacked
recently.

This is clearly not based no a regular scrutiny." Another–in March,
the company’s core banking product Flexcube was ranked the world’s number
one Universal Banking solution by IBS (International Banking Systems) that is
the touchstone ranking of all international banking product sales. So one theory
is, this was a competitor. Either way, it is unlikely that either theory will
ever be proved.

The government and trade bodies might chose to look at all three incidents of
the recent past–harassment of software professionals in Malaysia, arrest of
Polaris CEO Arun Jain in Indonesia and Kumar’s arrest in London–as separate
and isolated incidents. What is certain however is that it is now, as Ghaisas,
called "a different ball game." Every time Indian IT professionals
travel abroad now, he says, "this will play on their mind. Suddenly it
feels like free movement is under question. That the free treatment of IT people
is under doubt."

What next?

As for the fate of Kumar himself–first it will depend on how the British
authorities view the company plea against extradition.

The fact that he got bail is a good sign. But not the end of the story. After
that, much will depend on how effectively the Indian ministry of external
affairs puts its case to the Dutch government.

The first reaction from the MEA has been both prompt and strong. It is
speaking to the Dutch authorities and an MEA spokesman recently said, "We
feel that such action, although it is painted as visa fraud, actually smacks of
economic protectionism. It’s a sort of neo- non-tariff barriers and will
certainly come in the way of free-flow of services and professionals,
particularly given the fact that these are highly qualified, highly reputed
professionals."

The challenge now is to deliver on that promise in this case. And perhaps to
look beyond the particulars of each incident to see if there is a trend building
up here that the government needs to sit up and take notice of.

Sarita Rani