In the third incident of this kind, i-Flex Europe CEO Senthilkumar is arrested in London.
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Update:
31 March 2003, Bangalore
This story first appeared in Dataquest Vol XXI, No 6, p 102.
In what was the most bizarre third act, i-Flex Solutions’ European subsidiary CEO, V Senthilkumar, was arrested in London on the request of Dutch authorities on March 27, 2003.
Another 14 i-Flex employees were asked to leave the Netherlands.
This comes close on the heels of Polaris CEO Arun Jain’s detention in Indonesia in December and, more recently, the harassment of software professionals by the Malaysian government.
Speaking to Dataquest the day after the arrest, i-Flex senior manager Corporate Communications, Peter Yorke, said the company had not yet received official word on the incident. “What is enraging,” says Yorke, “is that we have receive no official communication from them. We are told that this is a visa issue. But all our visas are valid. Moreover, if this was a visa issue, we should at least have received some notification, some warning beforehand.”
Yorke was only incidentally in London on his way back from the US when he heard of the incident. According to him, the i-Flex office in the Netherlands and three customer sites where i-Flex employees were working were raided simultaneously. Employees were asked to leave within 14 days, though some chose to leave immediately.
A couple of employees were there with their families.
The company’s local Dutch employees were also interrogated, though at the time of going to press, it was still not clear why.
The Netherlands has two kinds of visas —a normal visa that allows business visits, but under which no person can work locally, and work visas required for working at customer sites.
Interestingly, Dutch authorities also put India on a select list of countries whose nationals need an airport transit visa to transit through the airport.
Last month Indian software professionals were seriously harassed by the Malaysian government when about 270 people — almost all Indians, barring a handful of Pakistanis — were herded out of their apartment block in a dawn raid. Though they were eventually released, it is hard to say why these incidents are happening across varying geographies in the first place.
Yorke says during his recent visit to New York, he did get the feeling that Indian software companies and their employees seemed to be coming under increased scrutiny because of growing sensitivity on outsourcing and job loss issues in local countries. At the time of going to press however, that was more of a conjecture than confirmed fact.
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i-Flex CEO Arrest Update
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 May 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.
22 Apr 2003, Bangalore
This story first appeared in dqindia.com.
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 (not 14 as previously reported) 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. For now, they have chosen 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.
A Problem of Law?
Indian software employees on a business visa are not allowed to work at a customer center in the Netherlands. That requires a work permit.
The i-Flex employees in question were there on a business visa.
So, the legal question here is: 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 according to Ghaisas, not just a branch office, and lists a number of things the company has already done to make sure it was getting the legalities right.
It consulted its own and local Dutch lawyers before entering the geography.
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). No one expressed any reservations then.
In January this year when Senthil Kumar went to take over as Netherlands CEO, the company did a due diligence exercise. Took a legal opinion again from a Dutch lawyer who told them a work permit was not required for software product implementation.
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 a Problem of Perception?
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 on a regular scrutiny."
Another theory–in March, the company’s core banking product, Flexcube, was ranked the world’s number one universal banking solution by IBS (International Banking Systems). IBS is the touchstone ranking of all international banking product sales. So the theory is, this was a competitor. Either way, it is unlikely that either theory will ever be proved.
The government and trade bodies might choose 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, calls it, "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."
Next - Enter the MEA
The fate of Senthil Kumar will depend on how the British authorities view the company's 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 barrier 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."
In this case, the challenge now is to deliver on that. 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.
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