New Delhi: In a fresh twist to the Xerox bribery scandal, accounting firm PriceWaterhouseCoopers (PWC) says Xerox ModiCorp Ltd (XML) made sizeable payments to fictitious companies in cash as well as through bank drafts of which a percentage was deducted and the rest paid back to the company.

PWC, which conducted a detailed investigation into the Indian arm's functioning after the US parent was alerted about the possibility of XML's books of accounts not being in order, has submitted its report to the Department of Company Affairs.

As per this report, fictitious companies, which may not have existed at all, were paid certain charges "apparently styled as commissions, discounts and handling charges" in cash and in bank drafts, sources said.

"Five per cent of each such payment was deducted by these fictitious companies and the balance returned to Xerox ModiCorp," they said adding, this 5 per cent deduction in each such transaction has not been accounted for in XML's books of accounts.

When contacted, Xerox Corporation's spokesperson in London Paul Arrowsmith said, "I have yet to study the report and cannot make any comments."

Also, ModiCorp Chief B K Modi declined to comment on the XML bribery issue.

Sources said as much as Rs 3.6 crore may have been paid as bribes by XML at a time when the B K Modi group held majority stake in the copier company.

Meanwhile, the Income Tax department claims to have recovered nearly Rs 1.10 crore in unaccounted cash during the raids on XML earlier this week besides unaccounted investment in shares and fixed deposits worth nearly Rs 1 crore.

Besides these recoveries, the department found tax evasion of the order of Rs 25 crore to Rs 5 crore for each year, by the copier company.

In a report submitted to the Securities and Exchange Commission (SEC) of the US, Xerox Corporation had admitted earlier this month that its Indian subsidiary, Xerox Modicorp, made "improper payments" to secure government contracts.

DCA has, meanwhile, given a notice to XML to submit its accounts by July 23 accusing the company of not cooperating in the ongoing investigation.

The government had ordered a probe on July 3 into accounts after the parent company admitted Xerox Modicorp had made improper payment of 7,00,000 dollars to government officials in 2000 to promote business.

Sources said scope of DCA probe was for a period of five years, including three years preceding 2000, the year for which bribes were acknowledged by Xerox in its annual report submitted to Securities and Exchange Commission.

Xerox had said that it came to know about the improper payments only after acquisition of majority stake in the Xerox ModiCorp in 1999 from the B K Modi Group, which has been maintaining a total silence on the issue.

PTI