Devas-Antrix deal: Bengaluru court okays serving fugitive economic offender notice to Devas CEO

A special court in Bengaluru on Saturday ordered the issuance of a notice under the Fugitive Economic Offenders Act-2018 to the US-based CEO of satellite communications firm Devas Multimedia Pvt Ltd, Ramachandran Viswanathan, on the basis of an application filed by the ED to declare him a fugitive economic offender (FEO).

The special court has ordered that a notice regarding the application filed by the ED “under Section 4 r/w Section 10 and 12 of the Fugitive Economic Offenders Act-2018” to be issued “against the accused Ramachandran Viswanathan under Section 10 of the Fugitive Economic Offenders Act-2018”.

As per the process outlined by the ED for issuing notices under the Fugitive Economic Offenders Act-2018, an officer not below the rank of deputy director in the ED can seek direction from a special court to declare an individual an FEO and a notice will be forwarded as per section 10 (4) of the FEO Act-2018 to a central authority notified by the Central government.

An official in the MHA is designated as the central authority to forward notices on behalf of the ED to the US under a Mutual Legal Assistance Treaty.

The ED has sought to declare Viswanathan, the founder-CEO of Devas Multimedia Pvt Ltd, a start-up in Bengaluru, which was liquidated in May 2021 by the National Company Law Tribunal, an FEO in a money laundering case filed against him and nine others for allegedly diverting to the United States 85 per cent of a total of Rs 579 crore of FDI it received following a 2005 satellite deal with the Indian Space Research Organisation after the satellite deal was annulled in 2011.

The declaration of an individual as an FEO will allow the ED to seek confiscation of properties in India and abroad which are identified as proceeds of a crime.

Viswanathan is a satellite communications entrepreneur in the US and is now the president of Omnispace LLC, a satellite communications start-up in the US, which is putting together a constellation of satellites to power 5G from space – especially to provide connectivity to remote areas where terrestrial mobile networks do not work.

The Devas Multimedia founder Viswanathan is among 10 individuals and entities accused of money laundering by the ED in a charge sheet filed in July 2018.

The others accused in the case under the PMLA are Devas Multimedia director M G Chandrashekar, Devas CTOs Desaraju Venugopal and Nataraj Dakshinamurthy, a finance director Ranganathan Mohan, three Devas subsidiaries, and the former executive director of ISRO’s Antrix Corp K R Sridharamurthy.

While the others who are accused of money laundering have responded to summons issued by the special court for the start of the trial in the ED’s money laundering case, Viswanathan, the founder-CEO of Devas Multimedia, has not responded.

The case against Devas Multimedia officials and others has roots in a 2005 deal between the start-up and ISRO’s Antrix Corp to use two ISRO communication satellites to provide multimedia services to mobile devices in remote areas where conventional, terrestrial telecom networks do not have reach.

Under the 2005 satellite deal with Devas, ISRO was contracted to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia.

The start-up 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 the space agency.

The Devas Multimedia-Antrix Corp agreement was annulled by the UPA government in February 2011 following allegations of the contract being a “sweetheart deal” in the backdrop of the 2G scam. After the NDA government came to power in 2014, the CBI and ED began full-fledged investigations into the 2005 satellite deal.

The ED and the CBI have filed charge sheets alleging corruption and money laundering in the matter.

The CBI filed a charge sheet in 2016 against Devas and Antrix and their executives, including former ISRO chairman G Madhavan Nair, on charges of corruption.

Following the cancellation of the 2005 deal, Devas Multimedia and its foreign investors approached international arbitration tribunals to seek compensation for losses they incurred. Devas and its foreign investors have been awarded compensation by three arbitration tribunals over the failed deal.

The biggest compensation award has been a September 14, 2015 ICC tribunal award of over $ 1.2 billion which was confirmed by a US federal court on October 27, 2020. Antrix Corporation has filed an appeal against this order in the US Court of Appeals for the Ninth Circuit.

Based on the CBI and ED cases against Devas Multimedia, the National Company Law Tribunal in India ordered the liquidation of Devas in May 2021 on charges that the company was created in a fraudulent manner. This order was upheld by the Supreme Court of India in January this year.

Further on August 29 this year, the Delhi high court set aside the ICC tribunal arbitration award of $ 1.2 billion compensation to Devas and its investors and said that “the impugned award dated 14.09.2015 suffers from patent illegalities and fraud and is in conflict with the public policy of India”.

Devas Multimedia and its investors — including the German telecom major Deutsche Telekom — are involved in a protracted legal battle across the world over the decision of the government of India in 2011 to annul a 2005 satellite deal between Devas and ISRO’s Antrix.

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