September 9, 2021 11:44:32 pm
Based on a plea by the directorate of enforcement (ED), of the ministry of finance, for legal assistance in obtaining information and documents regarding Singapore and Mauritius based investors in the space start-up Devas Multimedia Pvt Ltd – which is under probe for alleged money laundering – a special court has ordered issuance of letters of request for information to authorities in Singapore and Mauritius.
The court ordered the issuance of the letters of request to Singapore and Mauritius after the ED alleged that foreign investments to the tune of Rs 579 crore that came to Devas Multimedia, in the aftermath of a 2005 satellite deal with the Indian Space Research Organization’s commercial arm Antrix Corporation, was obtained from dubious sources in the US.
The ED has alleged that the dubious funds were routed via Singapore and Mauritius to India and later routed back to the US.
“Issue Letters of Request to the competent authorities at Singapore and Mauritius requesting them to take such steps as are necessary for obtaining the certified copies of the documents from the banks authority, registration authority and tax authority wherever required and also freeze those properties so that the same cannot be transferred, disposed off, alienated or parted with…,” a special court for ED cases said on Thursday.
Among the information sought by the ED is the date of incorporation and registration number of Deutsche Telekom Asia Pte in Singapore and the source of the over Rs 479 crore of funds brought in as investments into Devas Multimedia Pvt. Ltd by the Singapore firm.
The ED has also sought information on linkages between Deutsche Telekom Asia Pte. Ltd., Columbia Capital LLC and Telecom Ventures LLC – both located in Virginia in the US – who “paid a similarly unjustified premium for shares in Devas Multimedia Pvt. Ltd., Bangalore”. Details of all information provided by the firms for opening bank accounts in Singapore has also been sought by the ED.
The ED filed a charge sheet in 2018 under the Prevention of Money Laundering Act, 2002 against the US based CEO of Devas Multimedia Ramachandran Viswanathan, a director of the firm M G Chandrashekar, Devas CTOs Desaraju Venugopal, Nataraj Dakshinamurthy, a finance director Ranganathan Mohan, three Devas subsidiaries in Bengaluru and the US, and K R Sridharamurthy the former executive director of ISRO’s commercial arm Antrix Corporation.
In its chargesheet the ED has alleged that Devas Multimedia transferred 85 per cent of Rs 579 crore of foreign funding it received through a 2005 deal with ISRO to the US under various claims.
Out of the Rs 579 crore FDI received by Devas Multimedia in India via the Mauritius route – from investors like Columbia Capital and Deutsche Telekom – an amount of Rs. 76.19 crore was transferred to a US subsidiary called Devas Multimedia America Inc as investment while an amount of Rs 180.77 crore was transferred to the subsidiary under the pretext of providing business support services and a further Rs. 230.11 crore was spent as legal fee with a a major portion being transferred to the US, the ED has alleged.
In February 2017 the ED had provisionally attached Rs 79.76 crore belonging to Devas Multimedia Ltd which was in the form of upfront capacity reservation fees paid by Devas to ISRO to reserve two communication satellites for its use and mutual fund deposits and bank deposits.
“The main purpose of entering the agreement with ISRO/ACL was to raise foreign investments on the strength of the agreement with ISRO and thereafter siphon off the investment raised, out of India in the guise of investment in subsidiary company, business support services and legal fee,” the ED said in a statement while attaching the assets of Devas Multimedia in 2017.
The ED investigations of money laundering against Devas Multimedia is a fall out of a failed 2005 deal between Devas Multimedia and an ISRO commercial arm for launch of two communication satellites. Under the 2005 deal ISRO was contracted to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia.
The start up company was to provide video-audio services to mobile platforms in India using the space band or S-band spectrum transponders on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO.
The Devas Multimedia-Antrix Corporation (ISRO) agreement was annulled by the Manmohan Singh led UPA government in February 2011 following allegations of the contract being a ‘sweetheart deal’- in the backdrop of the 2G scam in the telecom sector. The UPA annulled the deal citing demand for the S-band spectrum by the defence sector. After the NDA government came to power in 2014 the CBI and ED were asked to investigate the 2005 deal.
After the cancellation of the 2005 deal in 2011 foreign investors in Devas Multimedia – the German telecom major Deutsche Telekom, the three Mauritius based foreign investors and Devas Multimedia approached various international tribunals seeking damages for the failed deal.
While Deutsche Telekom was awarded a compensation of $ 101 million plus interest by the Permanent Court of Arbitration in Geneva on May 27, 2020, the Mauritius investors were awarded a $ 111 million compensation (plus interest) by the United Nations Commission on International Trade Law tribunal on October 13, 2020 and Devas Multimedia was awarded a compensation of $ 1.3 billion by an International Chamber of Commerce tribunal on September 14, 2015.
The $ 1.3 billion compensation award to Devas Multimedia was confirmed by the US federal court for the western district of Washington on October 27, 2020. Antrix Corporation has gone in appeal to a US court against this order and the Supreme Court of India has asked for the ICC tribunal award to be kept in abeyance through a November 4, 2020 order.
The Mauritius investors in Devas have also approached a Southern District of New York court with a plea to declare Air India an alter ego of India and to allow attachment of Air India properties in order to enforce payment of compensation awarded by the UN trade law tribunal.
The National Company Law Tribunal in India ordered the liquidation of Devas Multimedia on May 25 following a plea by Antrix Corporation. Investors in Devas and the NCLT order for winding up Devas Multimedia was upheld by the NCL Appellate Tribunal on Thursday.
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