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ISRO hit by money laundering scandal

August 28, 2018

India’s Space Research Organisation (ISRO), and its commercial arm Antrix, are now the subject of allegations of money laundering.

The case is based on ISRO’s Antrix and Devas Multimedia, an independent company which held certain capacity rights on ISRO satellites. The deal saw ISRO/Antrix allocate 70 MHz of S-band capacity to Devas on its GSAT-6 and GSAT-7 satellites. The scandal first came to light in 2011 when allegations were made of favouritism, non-compliance, financial mismanagement and conflicts of interest.

The case is a huge embarrassment for India and its space operations. Some three years ago an international arbitration court at The Hague awarded about $672 million to Devas as compensation and damages in its claim against ISRO/Antrix. The conditions of the Arbitration saw a further penalty of 18 per cent annual interest accruing on the award.

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.

India’s Central Bureau of Investigations (CBI) has brought charges against key officials at India’s Space Research Organisation (ISRO) over the alleged fraud and loss of millions. An earlier decision by India’s fraud-busting Enforcement Directorate (ED) confirmed its view that a deal between ISRO and its commercial subsidiary Antrix, were illegal. Antrix is an anglicised version of Antariksha, which means ‘space’.

India’s Central Bureau of Investigation, which had already named certain key officials alleged to be involved, has been given permission to prosecute other individuals. They include Veena Rao, an employee of India’s Dept. of Space and G Madhavan Nair, the former ISRO chairman.

It has now emerged that a formal chargesheet for money laundering was filed earlier this month by the Enforcement Directorate against six individuals including former Antrix MD K R Sridhara Murthi, two US-based directors of Devas Multimedia and four subsidiaries of Devas Multimedia located in Bengaluru and the US.

Devas officials named by the ED as accused are Ramachandran Viswanathan (CEO), M G Chandrashekar (former ISRO employee and director), Desaraju Venugopal (a CTO), Nataraj Dakshinamurthy (CTO), Ranganathan Mohan (a finance director).

The ED has accused Devas Multimedia, its subsidiaries and its senior officials, and Sridhara Murthi, the former MD of Antrix, of facilitating the siphoning of a part of Rs 579 crore (about $83 million) foreign investment that was received by Devas Multimedia on the basis of its 2005 agreement with ISRO for building and launching two satellites to provide video services on mobile handsets in India.

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