Of a deserted office and a man who is giving Samsung sleepless nights

JCE Consultancy filed a case against Samsung Electronics and its chairman Lee kum-hee that he had failed to make a payment of $1.4 million

Shaikh Allauddin Pakir Maiddin is giving sleepless nights to the top brass of South Korean consumer electronics maker Samsung and its chairman, Lee Kun-hee, the richest man in that country. But, unlike the Samsung headquarters that dominates Seoul’s skyline, Maiddin’s registered office lies in a nondescript four-storied building in the bylanes of Delhi’s Shakarpur.

That’s the official address mentioned in court papers and shares the 200-square-foot space with fruit juice shops, travel agencies, lawyers, job consultants and electronic equipment sellers in the building. The Koreans might not have known Maiddin at all — his neighbours in the building, too, have never seen him — if he was not the sole proprietor of JCE Consultancy, the company whose legal battle with Samsung has put chairman Lee in the dock and put the Indian government in a situation where it must intervene to ensure the country’s relations with South Korea, and investments from that country, do not get hampered.

SOME FACTS ABOUT JCE

• Nobody has opened the doors of JCE Consultancy’s registered office for the past few years
• The neighbours at the registered office have never seen its owner, Shaikh Allauddin Pakir Maiddin
• Lawyers are secretive about Maiddin, cite security concerns
• No records are found about JCE Consultancy on the website of the corporate affairs ministry

Maiddin’s neighbours say his office has remained shut for most of the past few years. “We have always seen the room locked,” says a businessman with office on the same floor. The association of traders in the building says he is not a member.

JCE Consultancy had filed the case against Samsung and its 72-year-old chairman for allegedly failing to make a payment of $1.4 million (about Rs 8.4 crore). According to its petition, Samsung’s Dubai subsidiary had in 2001 signed an agreement with Sky Impex Ltd (a trading company registered in the British Virgin Islands) to buy Coke Calcination packages. JCE Consultancy sold these packages, while Sky Impex acted as the intermediary.

It was a case of financial fraud, according to people in the know, and JCE claimed it did not get payments to the tune of $1.4 million for the packages it supplied. After Samsung discovered the fraud, which included some of its own officials, it filed a case against S C Baek, its former finance controller in Dubai, and proprietors of Sky Impex. Later, representatives of Sky Impex were convicted and Baek was sentenced to two years of imprisonment. However, the payments due to the India supplier, JCE claims, were not made.

In India, the initial petition filed against Samsung Dubai and the company’s management was quashed following a petition filed by Samsung in the Allahabad High Court. But, JCE Consultancy later moved a Ghaziabad court by filing a criminal case. This case led to arrest warrants being issued against Lee. Since then, Samsung has been fighting the case in different courts.

Advocate Mandeep Singh Vinaik, who is part of a team representing Maiddin, defends keeping his client’s whereabouts a secret. “There are security concerns. We can’t give much detail about him, as the case has been on for long.” He refuses to say whether Maiddin is in India or in Dubai but points out that JCE Consultancy, a proprietorship company, does not require having an office and a company might even change its address. “Every court, during the past few years, has ruled in our favour. We will get him (the Samsung chairman) arrested here. We’ll not let him stay in peace,” he says. On the government’s response that it will do everything to assist the company, Vinaik argues: “This is in the jurisdiction of the court. Neither the government nor a minister has any business to interfere.”

THE CASE

A sequence of events as claimed by JCE Consultancy and Samsung

• Samsung Dubai plans to buy Coke Calcination packages, signs up Sky Impex
• Sky Impex acts as intermediary, while JCE Consultancy supplies the packages to Samsung Dubai
• Samsung discovers financial fraud at Samsung Dubai, involving some of the Dubai unit’s employees; files a case against S C Baek, finance controller at the Dubai subsidiary
• JCE Consultancy claims it hasn’t received payments to the tune of $1.4 million for goods supplied; files petition in the Allahabad High Court
• Baek and proprietors of Sky Impex are convicted in Dubai; Baek gets 2 years in jail
• Allahabad HC quashes petition; JCE Consultancy files a criminal case in a Ghaziabad Court, claiming it has yet to receive payments
• Ghaziabad court rules in JCE’s favour, issues summons to Samsung chairman Lee Kun-hee; later issues a non-bailable warrant in view on Lee’s no-show
• The Supreme Court orders Lee to appear in the Ghaziabad court

The Supreme Court had on April 2 ordered that Lee Kun-hee to appear within six weeks before a Ghaziabad trial court in the $1.4-million payment case. The Court had also said Lee might seek bail or exemption from appearance “in accordance with law”.

Following the Supreme Court order, South Korea was reported to be considering invoking provisions under the Bilateral Investment Promotion and Protection Agreement against India for the hit on Samsung Electronics’ investments. Meanwhile, Commerce & Industry Minister Anand Sharma has expressed apprehension the apex court’s decision might adversely affect investment climate in India.

So secretive are details of JCE that Samsung has had to seek the Indian government’s help. The government, meanwhile, is verifying the credentials of JCE Consultancy and looking into the records with the Department of Corporate Affairs, which keeps a tab on all companies registered in India.

However, details of the company are not there on the ministry of corporate affairs website, either. One of JCE’s lawyers says proprietorship companies do not need to file details with the ministry.

JCE Consultancy had actually filed a case against Samsung Electronics and its 72-year old chairman had failed to make a payment of $1.4 million (about Rs 8.4 crore).

According to the petition filed by JCE Consultancy, Samsung's Dubai subsidiary had signed an agreement with Sky Impex Limited (a trading company registered in British Virgin Islands) to buy Coke Calcination packages, in 2001. JCE Consultancy was the seller, and Samsung Dubai was the buyer, while Sky Impex was the intermediary.

People in the know have said that the case was a financial fraud where bills of exchange were issued against false purchase orders. After Samsung discovered the financial fraud, which included some of its own officials it filed a case against SC Baek, its former finance controller in Dubai, and proprietors of Sky Impex. Later, representatives of Sky Impex were convicted and Samsung's former financial controller in Dubai SC Baek got imprisonment for two years.

In India, the initial petition filed against Samsung Dubai and the company's management was quashed by a petition filed by Samsung at Allahabad High Court. But, JCE Consultancy later filed a criminal case in Ghaziabad which led to the arrest warrants being issued. Since then, Samsung has been fighting the case in different courts.