Arvind Rao, managing director and chief executive of telecom VAS provider OnMobile Global Ltd, has resigned from his position after a special review of corporate governance procedures by the company's legal advisor Amarchand Mangaldas, Suresh & Shroff Co and supported by the audit firm KPMG identified weaknesses in some processes.
These developments come amid alleged financial misappropriation charges against its promoter and CEO Arvind Rao.
Last evening, OnMobile said in a statement that another co-founder and executive director, Mouli Raman, would take charge as interim MD. The company has appointed an external agency to look for a new CEO, an OnMobile spokesperson told VCCircle.
"While the review has identified some weaknesses, strong alternate controls have ensured that the company did not suffer any loss. Recognising that these weaknesses took place during his tenure, Mr Arvind Rao has submitted his resignation from the position as managing director and CEO with immediate effect and the board has accepted the same," said a company statement, issued after a board meeting late on Monday evening.
Earlier, the company had denied the alleged fraud and speculation that its board had ordered a probe against Rao for fund misappropriation and diversion to another organisation promoted by him. The firm had stated earlier this month: Arvind Rao is not being investigated by the board for any misappropriation of funds. Arvind, while continuing as managing director, spearheads the international business. To ensure that the rest of the business gets adequate focus, the day-to-day operations of the company are being overseen by a sub-committee of the board.
H H Haight, chairman of the board, said, "I respect Arvind's decision. Arvind has contributed greatly to OnMobile's growth. As a company, we are committed to upholding the highest corporate governance standards and we seek the continued support of all the stake holders to help OnMobile realise its true potential."
Haight represents Argo Global Capital, the single largest investor in OnMobile Systems Inc, a US-based holding company of OnMobile. OnMobile Systems owns 35 per cent in OnMobile, which also counts Infosys Technologies as one of its promoters, as per OnMobile's documents filed in February 2008, during its IPO even as Infosys held a small stake. Argo Global is a venture capital firm focused on the Internet and wireless communications businesses.
Rao, who has seen some of his pledged shares of OnMobile Global being invoked in the past few days, is also a small shareholder in OnMobile Systems Inc. On the invocation of the shares pledged by Rao, the company spokesperson said, "Invocation of pledges is a personal decision. Arvind Rao's stake is about 5.9 per cent as on last Friday, based on the input from our share registry agents." However, Rao would remain a shareholder in OnMobile Systems, according to the company.
(Edited by Sanghamitra Mandal)