Tarrant County businessmen are embroiled in an international dispute over a Pakistani call center.
Tom Slone was an accomplished executive with The Associates. Then he met a silver-tongued Pakistani-American businessman and started a company with operations overseas. A few years later, it all went horribly wrong.
By Barry Shlachter
February 10, 2008
Zipping himself into a sleeping bag on the floor of a Pakistani call center shortly after Christmas, Tom Slone was feeling the depth of the crisis ravaging his Colleyville-based Touchstone Communications.
It wasn’t Pakistan’s complicated, and often corrupt, local business environment that put Slone in his predicament, or the political unrest triggered by the assassination of opposition leader Benazir Bhutto the day before. Nor was it the collapse of the U.S. subprime-mortgage industry, which had supplied most of his call center’s work.
The future of Touchstone Communications was instead threatened by something much more common: a partnership dispute between Slone and Westlake entrepreneur Farukh Aslam, 42, a member of the company’s board of directors and the man who initially persuaded Slone to launch the call-center business in Pakistan.
By planting himself in the call center, the 65-year-old North Texan was trying to use his body to physically maintain possession of his $2 million venture. He says Aslam unilaterally sold off assets, drained a bank account, fired local managers and overran the call center with what Slone described as 20 "stinky goat herders." Before it was over, he would ask Pakistan’s president, Pervez Musharraf, to intervene.
"Farukh has set out to destroy the company," Slone asserted.
"Tom," countered Aslam, "has run the company like it’s his own personal ‘Wonderland.’ "
Charges and countercharges
The nastiness indicates how far their once-close relationship has deteriorated. The clash has spilled into the courts, prompting legal action in Fort Worth and Islamabad, Pakistan’s capital. In district-court filings in Tarrant County, Slone is claiming fraudulent sale of property by Aslam, who in turn accuses Slone of misusing company funds and defaming him.
It wasn’t always like this.
Aslam had been so convincing about the profits that could be made in Pakistan that an initially reluctant Slone traveled to the country despite post-Sept. 11 security concerns heightened by the kidnapping and slaying of Wall Street Journal reporter Daniel Pearl.
The idea was to take advantage of Pakistan’s low wages and abundance of young, educated workers, who had been overlooked during the scramble to open call centers in neighboring India.
Opened in 2003, Touchstone’s Pakistani subsidiary built itself up to 600 employees, many of whom were cold-calling U.S. homeowners to coax them into refinancing with subprime mortgages.
The operation rode the subprime boom, then cratered simultaneously with the industry’s fall, laying off half its Pakistani employees last summer.
The two players at the center of the fracas both tell remarkable life stories.
Slone came from a broken home and was raised by grandparents. The first time he remembers seeing his mother was during a visit to a Louisville, Ky., jail where she was serving time for scamming military pay allotments. Decades later, he was managing $30 billion in assets as president of consumer-finance operations for Las Colinas-based Associates First Capital.
At age 42, the firm allowed him to complete his education by commuting to the University of Pittsburgh every Friday. Slone graduated with a 3.86 GPA and a degree in psychology at 44. He was an on-loan executive with the Big Brothers/Big Sisters charity when Associates was acquired by Citigroup in 2000; he retired afterward.
A mutual friend introduced him to Aslam, who had come to Texas from his native Pakistan alone at 17 to study electrical engineering at the University of Houston. But Aslam caught the real estate bug and dropped out his senior year after buying rental houses. With backing from his family, who operated a cotton gin in Pakistan’s Punjab province, he snapped up property when values plummeted during the 1980s savings-and-loan crisis. He diversified into strip centers and moved to Fort Worth in 1991.
Today Aslam, a naturalized U.S. citizen, estimates his personal wealth at "several million" dollars.
"I must say I’ve lived the American dream," he said.
A company run by Aslam and his younger brother Mobeen, known as "Binny," acquired the former Color Tile Building at 515 Houston St. in downtown Fort Worth in 1998. Known today as the STS Tower, it’s home to a long-distance wholesaler operated by Aslam that he says sells $30 million worth of call minutes to Pakistan annually. The brothers are building a Hampton Inn motel in Georgetown and another in Fort Worth’s Fossil Creek.
Until recently, Farukh Aslam shared an eighth-floor office suite in the STS Tower with his brother- in-law, Shezad Malik, a British- born cardiologist turned attorney. Malik and the Aslam brothers made early investments in Touchstone totaling $1.5 million. Today they are aligned against Slone and his supporters, who control a majority of the shares.
Slone says the trouble began last year when a California investor, also of Pakistani origin, offered to buy a 20 percent share of Touchstone for $960,000. He had one condition — that Aslam have no role in the company, according to the lawsuit.
"He had his own personal reasons for keeping Aslam out; he didn’t say more," Slonesaid.
Earlier, Aslam had indicated a willingness to sell his share of the company for $500,000, Slone said.
"Up until then, there were only philosophical differences," Slone said. "What made him mad now was that the prospective buyer put in the requirement that Farukh not be involved, saying there would be ‘No purchase at any price while Farukh was a shareholder.’"
Aslam says he just wants his half-million dollars back, and offered Slone a chance to repay him over an extended period with a personal note. "Make me whole," Aslam recalled saying.
Slone, who said he has put $700,000 into the company, said the personal IOU was a deal-breaker because he didn’t know what would happen in Pakistan because of the political turmoil. And in that climate, "I wasn’t going to guarantee him $500,000 personally when no one was guaranteeing me or any other investor their money."
Aslam disputes that, saying the deal broke down over Slone’s insistence that money Touchstone owed his family’s computer company in Pakistan be included in the $500,000.
"That never came up," Slone said Jan. 31. "I never heard that before today."
Meanwhile, the subprime-mortgage industry was collapsing.
In January 2007, a subprime lender — NovaStar Financial of Kansas City, Mo. — backed out of an agreement to pay $1.5 million for a 30 percent stake in Touchstone while giving it more call-center work. In anticipation of the deal, Touchstone had purchased $165,000 worth of computer equipment from Aslam’s family business.
"It was our first sign of problems in the real estate sector," Slone said. The situation became increasingly grim, with clients scaling back work. In August, Touchstone carried out its extensive layoffs.
Then civil unrest broke out in Pakistan after Musharraf sacked the chief justice for the second time and declared a state of emergency. Musharraf, who was then also the army chief of staff, had spoken with Slone on several occasions. The meetings were well publicized by the military-led government as an example of interest from Western investors.
Operating at odds
Touchstone’s own crisis escalated around Thanksgiving.
Aslam traveled to Islamabad, relieved the subsidiary’s chief financial officer of the company checkbook and his laptop, and barred the man from the building, according to the lawsuit and to Slone. Aslam also sold the lease on one of Touchstone’s three remaining call-center rooms for about $163,686, then wrote checks payable to his family’s computer company for $338,830, the suit says.
"Farukh cleaned out the company bank account except for $5,000 he didn’t know we had," Slone said. "He had the authority to write checks, [but] he didn’t have the right to hand over money to his own company."
Aslam maintains that he used the money to pay a portion of bills long owed his family’s computer business, totaling $500,000. Slone says the debt to the company had been reduced to $50,000.
"I was forced to act unilaterally," Aslam told the Star-Telegram, adding that he had "acted in the best interests of Touchstone."
The lease that Aslam sold was for a call-center room to have been used for business expected from Telenor Pakistan, a local cellphone subsidiary of Norway’s Telenor ASA.
But the agreement died when the space disappeared, Slone says. "We needed to diversify, and we had been negotiating with Telenor for almost 60 days, had already begun hiring people, and we were ready to sign a contract," he said.
A deal gone awry
Aslam admits sabotaging the deal, which he claims was an elaborate sham perpetrated by an ex-employee who was later sued by the company.
Telenor’s negotiator, Aslam said, was "spinning" Slone for three months.
"This was a very slick kid with a grudge," he said. "You sue him in court, and you want to do a deal with him? ... If Touchstone couldn’t make money [selling its services per worker] at $9 and $10 an hour for U.S. companies, how could we make any at $3.10 an hour from a Pakistani company?"
Slone maintains that the deal could have been profitable. The deal would have employed 200 workers using a call center dormant during daylight hours. (U.S. clients require overnight shifts because of the time difference.) Telenor would have provided free communications, and Urdu-only speakers are far cheaper than bilingual employees, Slone said.
He said the lawsuit was filed against the former employee because he tried to poach workers after he left.
"The suit was mostly symbolic to discourage the practice and was dropped shortly after it was begun," he said. "The relationship with [the former employee] today is good and, ironically, [he] brought the $1 million Telenor revenue opportunity to us."
The seven-day, post-Christmas standoff between Slone and the "goatherders" who lounged in nearby call-center cubicles ended after Slone wrote a letter to Musharraf, pleading for him to intervene and warning that Pakistan’s reputation for protecting foreign investment could be damaged if he didn’t.
Although the government was busy quelling riots sparked by Bhutto’s killing, it sent police to clear out the call center.
Slone’s letter, which alleged that Aslam had committed "illegal acts," prompted the dissident director to lodge a defamation suit in Pakistan to defend his reputation.
"I do business in Pakistan; I have family in Pakistan," Aslam said.
Back in Texas, the warring sides are inflicting six-hour depositions on each other. Both sides acknowledge that they have started mediation talks on Aslam’s defamation action.
Weathering the storm
Touchstone’s call centers continue to function, although at least one top Pakistani manager e-mailed his resignation from Pakistan, saying he could no longer deal with the tumult.
The company was lucky that the standoff occurred between Christmas and New Year’s Day, when most of its clients typically scale back marketing calls. In the crisis after Bhutto’s assassination, other clients agreed to wait out the disruptions, which kept many employees from reaching work.
Although it’s operating in the red and its future is far from certain, Touchstone says business actually picked up in January.
The Federal Reserve interest-rate cuts helped jump-start interest in mortgage refinancing, which has led to heightened demand for call-center work, Slone says.
Aslam predicts that Touchstone will not survive because of heavy debt, but his adversary remains bullish.
"We’re fighting to keep it alive," Slone said. "We’ve reduced expenses. Our goal is to weather the storm and get everybody’s money back."
(c) copyright Star-Telegram
Slone In Islamabad. Aslam in Fort Worth.