Is Vodafone India passing on calls data to UK intelligence?

In what could be fresh trouble for India’s number-two telecom firm, it has emerged the home ministry has raised concerns about the company passing on communication details from its Indian customers to an intelligence agency in the UK.

Reports in several newspapers Monday said the finance ministry, in a letter dated February 20, has asked the Department of Telecom to look into concerns raised by a December note written by the Ministry of Home Affairs that said that "leading telecom firms, including Vodafone, are learnt to be secretly collaborating with UK's intelligence and security agency GCHQ and passing on details of their customers phone calls and other communication."

Three newspapers said they had accessed the memo.

The matter assumes significance in light of a proposal by Vodafone India’s British parent to buy out the remaining minority stake in the Indian subsidiary it doesn’t already own at a cost of about Rs 10,000 crore.

The proposal, the first after the government allowed 100 percent foreign direct investment in the telecom sector, has already been cleared by both the Foreign Investment Promotion Board (FIPB) and the Cabinet Committee of Economic Affairs (CCEA).

Also read: FIPB clears Vodafone proposal

The home ministry note also referred to the tax case it is fighting with the government in which authorities have said it owes around Rs 11,000 crore after buying stake in the Indian arm from a foreign company. The note also said the Vodafone Group was a tax evader in the UK.

"Realignment of Vodafone India, without settling pending tax issues which may have ramification on similar deals with other entities, is not advisable from economic angle. The Department of Economic Affairs may consider those facts while processing FIPB proposal," the MHA note reportedly said.

Typically, both agencies look closely into security concerns before approving any major investment proposal, a fact mentioned by Vodafone in its rejoinder to the reports.

"No such concern has been raised with us by the Indian Government. The Government of India’s approval of our FDI application states that it was cleared by the FIPB and CCEA after all necessary due diligence," the group said in its reply. "Vodafone complies with the law in all of our countries of operation, including -- in the case of our European businesses -- the EU Privacy Directive and EU Data Retention Directive."

Vodafone does not disclose any customer data in any jurisdiction unless it is legally required to do so and has never been accused of tax evasion, the firm added.