Even as it pursued the prosecution of start-up firm Devas Multimedia and former ISRO officials over a failed 2005 satellite deal, the Indian government tried to reach a negotiated settlement on the same.
The lead counsel for the foreign investors in Devas Multimedia, Matthew D McGill, told The Indian Express that in February 2020, NSA Ajit Doval and former ISRO chairman A S Kiran Kumar held negotiations with Devas officials in Paris for settling all disputes arising out of India’s cancellation (in 2011) of the 2005 satellite deal between Devas and Antrix Corp (ISRO’s commercial arm).
British daily The Financial Times first wrote about these negotiations on July 13. As per its report, the talks took place even as the CBI and Enforcement Directorate were prosecuting chargesheets filed in 2016 and 2018, respectively, against Devas officials in India and the US, as well as former ISRO officials. In 2021, Antrix Corp sought liquidation of Devas Multimedia in India citing fraud in the deal.
Mcgill says the talks were “a means to settle the entire Devas controversy – which meant settling the claim against Antrix and pending claims against the government of India and a resolution of all of the criminal and ED proceedings initiated by the government of India”. “The fact that the government of India, in February of 2020, was willing to dismiss all of these charges that it had brought over the course of many years against Devas, and its officers, says a lot about the truth behind the charges,” the US-based counsel adds.
Mcgill says that an agreement was reached on the key terms, “reflected in a draft written agreement”. “The parties agreed to the sum of money to be paid to Devas and its shareholders, and that all proceedings initiated in India would be dropped.”
He adds that what was surprising was that the talks took place at the instance of the Indian government, but it later walked away without providing any reasons.
Jay Newman, another senior US advisor to investors in Devas, says: “It is a mystery to us that, after having an agreement, they went back. It was a comprehensive settlement, it was a document that ran into dozens of pages and was very specific, and it only had to be executed, and the government just disappeared.”
The foreign investors in Devas include a consortium from Mauritius, the German telecom major Deutsche Telekom, and Columbia Capital.
According to Mcgill, while Kiran Kumar and Doval represented the government of India in the talks, on the Devas side were Larry Babbio – the chairman of Devas and former vice-chairman of Verizon Communications, one of the largest communications companies in the US – Jim Fleming, the chief of Columbia Capital, and Devas CEO Ram Viswanathan.
While Kiran Kumar received a call but did not respond to queries, either on the phone or to messages, sources close to the government said the settlement attempt was not related to the criminal proceedings by the ED.
Devas Multimedia investors are seeking US $1.3 billion compensation from Antrix — awarded to them in 2015 by an International Chamber of Commerce arbitration tribunal, for the cancellation of the 2005 deal. Devas has lately been attempting to seize Antrix and ISRO assets in different parts of the world and filed arbitrations against the Indian government, to enforce the compensation award.
Armed with a May 2021 NCLT order for liquidating Devas Multimedia (the order was confirmed by the Supreme Court of India in January 2022) the government of India has now challenged the arbitration awards in several international courts.
Last month, the ED moved an application in a special court in Bengaluru seeking to declare the US-based CEO and founder of Devas Multimedia, Ramachandran Viswanathan, a “fugitive economic offender’’.
Among the eight persons charged by the CBI in the Devas-Antrix case are former ISRO chairman G Madhavan Nair and former Antrix executive director K R Sridharamurthi. The CBI has accused the eight of causing a loss of approximately Rs 578 crore to the Indian government in the 2005 deal.
The ED case is against former Antrix managing director K R Sridharamurthi and five Devas officials. It alleges that Devas transferred 85% of the Rs 578 crore foreign funding it received on the back of the 2005 ISRO deal, to the US under various claims. Charges have not been framed in these cases yet.
Mcgill says: “India is abusing its criminal justice system. It has weaponized it to harass and imperil the freedom of an innocent man, an internationally recognized businessman (Viswanathan), just simply to gain some negotiation leverage for the ultimate resolution of this matter. It is appalling behavior.”
Newman slams the government for “the completely fraudulent process of using the Indian legal system in an improper way to avoid what it owes in a commercial dispute”.
The biggest compensation granted to Devas has been a September 2015 ICC tribunal award of over $1.2 billion, which was confirmed by a US federal court in October 2020. Antrix Corporation has filed an appeal against this order.
The deal involved Antrix launching two communication satellites for Devas Multimedia, agreed upon during the UPA government. It was annulled in 2011 following allegations around the contract, in the backdrop of the 2G scam. After the NDA came to power in 2014, it started a CBI and ED investigation into allegations of corruption and money laundering in the deal.