ED slaps L1,217-cr FEMA violation notice on Devas

Agency says Bengaluru firm that inked pact with ISRO arm violated law while receiving FDI

Published: 07th June 2016 04:29 AM  |   Last Updated: 07th June 2016 04:29 AM   |  A+A-

NEW DELHI: The Enforcement Directorate on Monday issued a showcase notice to Bengaluru-based Devas Multimedia Private Limited and others for allegedly violating the Foreign Exchange Management Act (FEMA) to receive funds from abroad after inking an agreement with Antrix Corporation, the commercial arm of ISRO. The ED has established that the total violation under the FEMA by Devas and others is around `1,217 crore.

The ED alleged violation of the provisions of the FEMA in the Foreign Direct Investment (FDI) received by Devas  from various overseas investors, including CC Devas Mauritius Limited, Telecom Devas Mauritius Limited, Deutsche Telkom Asia Private Limited and Devas Employees Mauritius Private Limited.

“Devas received investment of `578.54 crore from May 2006 to June 2010,” said a senior ED officer. The ED officials are of the view that the Foreign Investment Promotion Board (FIPB) granted approval for FDI with the condition that the agreement between the Devas and the foreign investors are subject to Indian laws. But the share subscription agreements entered by Devas contained clauses relating to the settlement of disputes in courts other than those in India. The officials said the FDI received by Devas were contrary to the conditions specified in the approval granted by the FIPB. “The extent of contravention on the said count is `578.54 crore,” an ED official said.

Interestingly, Devas also assured the overseas investors an annual 8 per cent priority dividend — in addition to the other dividends and distributions — on a cumulative basis. “Such assured dividends are not the nature of any equity instrument and contrary to the provisions of FDI regulations under FEMA, 1999,” the ED official said. Further, Devas promised to return higher than the ceiling fixed by the RBI.

Earlier, the CBI had registered cases against executive director of Antrix K R Sridhara Murthi, M G Chandrasekhar and R Vishwanathan of Forge Advisors, Devas Multimedia Private Limited and unnamed officials of Antrix, ISRO, Department of Space and some private individuals. It alleged that the accused had entered into a criminal conspiracy and the government officials abused their position by favouring Devas. 

Antrix-Devas deal 

Antrix signed an MoU in 2003 with US-based Forge Advisors. Forge Advisors later formed Devas Multimedia in 2004. In 2005, Antrix had signed a deal with Devas to provide it with the crucial S-Band wavelength, which is mainly kept for the strategic interests of the country.


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