 "Bengaluru court for police probe on complaint against LG")
A Bengaluru court has directed the city police to probe allegations that the household and health care unit of LG Group, the Korean conglomerate, arbitrarily terminated a contract with an Indian distributor and cheated it of Rs 100 crore a decade before.
The order, on November 18, was on the termination of contract of India Household and Healthcare (IHHL) by LG Household and Healthcare in January 2005. LG Household is a unit of LG, which makes household goods, cosmetics and beverages.
LG cancelled the contract with the Bengaluru-based distributor a week after it extending its contract to sell soaps and detergents in India. The termination came a few days after the removal of Press Note 18 by the central government, ensuring foreign firms setting up joint ventures in India need no longer get clearance from their local partner to set up new companies.
"There is no protection for an Indian entrepreneur if there is a criminal breach of trust by a multinational," said Vijay R Singh, co-founder of IHHL. The firm claimed to have lost over Rs 100 crore due to the termination. IHHL said in 2005 the company had sought arbitration but this was rejected by LG. An LG spokesperson could not comment on the development.
IHHL was the sole distributor for LG Household and Healthcare, said Singh. He said they'd filed a police complaint in February 2014 against 35 officers of LG, including group chairman B M Koo.
LG had taken an advance of over Rs 100 crore for goods supplied and had ordered destruction of the products following the termination. IHHL had taken loans from State Trading Corporation and Union Bank of India for the goods, now expired, but stored in warehouses in Chennai.
In 2012, LG had expressed the intention of setting up its own operations to tap India's growing consumer market, which has increased spending on fast moving consumer goods such as soaps and shampoos. "This shows they want to come on their own. Why didn't they sit across the table and talk to us about their intentions?" asked Singh.
-----