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India’s fraud-busting Enforcement Directorate has confirmed its view that a deal between India’s Space Research Organisation (ISRO) and its commercial subsidiary Antrix, may not have complied with India’s tough foreign investment rules. Antrix is an anglicised version of Antariksha, which means ‘space’.
In essence the long-running case revolves around a deal between Antrix and Devas Multimedia over transponder leases on two ISRO satellites between 2006-2010. The capacity was to be used for connectivity and back-haul of cellular telephony.
Described locally as the “S-Band scam”, in January 2005 Antrix signed an agreement with Devas to lease 10 transponders of S-band capacity on two satellites (GSAT-6 and 6A) for $300 million, and claimed to be well below market rates, for a period of 12-years. ISRO then committed to building and launching the two satellites at a cost of $110 million. Devas sold a 17 per cent stake in itself to Deutsche Telekom (DT) for $75 million.
The deal was terminated in 2011, and the then head of ISRO banned for life from holding any post in India’s pace departments. Other individuals were accused of various infractions.
Devas and DT sued for $2 billion and $1 billion respectively, and were initially awarded $672 million by an arbitration tribunal, and against Antrix.
The Indian government, via its Department of Revenue and Central Bureau of Investigation, registered a case against some of the key individuals and businesses involved in March 2015.
That case has now come to a head and the Enforcement Directorate is claiming that certain payments made to Devas breached India’s Foreign Exchange Management Act (FEMA) and is alleging “wrongful gain” in a formal Violation Notice. An order issued by the agency’s Special Director in Chennai found Devas Multimedia Private Limited, Antrix and others “contravening” the FEMA provisions on at least three counts, after completing the over-three-year investigation into the deal. The agency had registered a FEMA case in 2012 and is also probing the deal under anti-money laundering laws.