New Delhi: US-based Xerox Corporation on July 3 said it was notifying the Indian government about the "improper payments" of $ 7,00,000 made to officials by its Indian subsidiary Xerox Modicorp for pushing sales even as government remained silent over the new bribing scandal.

"The company was in the process of notifying Indian government and US Justice Department," said Paul Arrowsmith, spokesperson of the US giant which admitted to bribes by the Indian subsidiary through its annual report submitted to the securities exchange commission.

Once notified, the Indian government could launch a full-scale investigation into the scandal, although Department of Company Affairs' (DCA) secretary V K Dhall refused to comment or entertain any queries on the issue.

DCA sources, however, said the file on Xerox Modicorp's questionable activities to promote business had not reached the department and till such time an official reaction was unlikely.

Officials of Xerox Modicorp, where the US company acquired majority stake 3 years back, declined to comment on the issue while its original promoter B K Modi, who now has minority holding, could not be contacted as he was out of the country.

Xerox's Asia spokesperson Arrowsmith said in London that, "the company had filed a report incorporating improper payment made to US market regulator last week. Its Indian subsidiary had made improper payments to the tune of $ 7,00,000 to push its sales to government customers in India."

Xerox operates in India through Xerox Modicorp and has a substantial share in the document management business in the country. The joint venture, in which the US giant holds 68 per cent stake, was set up in September 1983 and it was selling various products including copiers, printers, scanners, fax machines and other office equipment.

Xerox's stock and bond prices also took a beating, which was triggered by the nervous selling by the investors.

According to sources, earlier this year the secretary had notified a number of former executives of Xerox and international consultants KPMG that it was considering filing civil charges against them in connection with the accounting abuses.

Xerox, which has been shedding assets to pay down debt as part of a recovery plan, in June renegotiated its crucial bank credit lines and agreed to pay substantially higher interest rates.

According to sources, the shares of Xerox Modicorp have been de-listed from the Indian Bourses.

As per the equity pattern of Xerox Modicorp, Modi Corporation and its associates hold around 28 per cent stake and the public has held the remaining four per cent.

PTI