Sinha panel wants close scrutiny of Devas investor pattern, Mauritius link

The investor pattern and Mauritius association of Bangalore-based start-up, Devas Multimedia, call for close scrutiny by the Government, the five-member Pratyush Sinha committee that probed the Antrix-Devas deal last September has highlighted.

It also significantly concludes that some individuals associated with the deal may have colluded to push the controversial and now annulled agreement of January 2005 through.

Details not divulged

Many vital details such as the follow-on satellite, GSat-6A, for Devas were deliberately not divulged to higher bodies such as the Space Commission.

The report says Antrix, in a subsequent Cabinet note, misled the authorities to believe that there had been fair competition for the same bandwidth: that it had received competitive expressions of interest from many other service providers for the same commercial satellite application that Devas was preferentially granted.

Of the two reports that ISRO released late on Saturday, the Pratyush Sinha panel raises some hard-hitting questions. Only nine pages of Chapter 6 of this report have been released, although the full report of a preceding inquiry by Mr B.K.Chaturvedi and Prof. Roddam Narasimha are now in the open.

Both the reports of 2011 find serious lapses in the agreement that “was heavily loaded in favour of Devas.”

Devas Multimedia India P Ltd was formed just a month before the agreement was signed in January 2005, by a few individuals who formerly held senior positions in ISRO. Its Managing Director, Dr M.G. Chandrasekhar, was ISRO Scientific Secretary in the early 1990s.

The Sinha report says, “There have been not only serious administrative and procedural lapses but also suggestion of collusive behaviour on the part of certain individuals and accordingly responsibilities have to be fixed for taking action under relevant service rules.”

[A January 13, 2012 order by the Department of Space bars four former technocrats including Mr G. Madhavan Nair, former ISRO Chairman, from re-employment in any government position. Mr Nair has cried foul over this and said they have not violated any guidelines.]

Remained silent

“There is an attempt at obfuscation by key players as they have remained silent on issues like the arbitrary selection, lack of proper financial and technical evaluation, undue favours at Government cost to Devas, lack of transparency and finally exposing Antrix and Government to unwarranted commercial risks.”

It suggests a probe into the financial aspects of Devas: “...in order to get a clear picture of the changing pattern of ownership of Devas, the non-legitimate financial/pecuniary interest, if any, of various individuals and officials concerned, the extent to which the increase in share value has been encashed by individuals, the shareholding pattern of the company and of the Mauritius-based entities and any possible illegitimate financial gain by officials concerned needs to be looked into by an appropriate investigative agency.”

“In the Cabinet note an apparently erroneous impression was sought to be created that ISRO was in receipt of several firm expressions of interest by service providers for the utilisation of satellite capacity on commercial terms. ...This appears to be deliberate as the existence of the agreement was not disclosed even when seeking approval later of the Space Commission for the GSat-6A [or second] satellite.”

Other key remarks of the panel:

* A few individuals brought to fruition a proposal with adverse implications for ISRO/DoS with no resistance from many others who were charged with the responsibility of ensuring transparency and objectivity in decision-making.

* Negligence by four successive senior bureaucrats posted to DoS for not “paying enough attention to details and not ensuring that the various notes put up for decision to authorities included all necessary details.”

Though their role in a scientific establishment was minor, they could have rectified the defects in time. As such they cannot be absolved of onus in the affair.

Each of the four served as Additional Secretary at DoS during the 2004-11 period: Mr S.S.Meenakshisundaram; Ms Veena S.Rao; Mr G.Balachandhran; and Dr R.G.Nadadur.

While the first three have retired, Dr Nadadur chose to retire early around September 2011, ostensibly after being pulled up by the Sinha panel.

[Mr Madhavan Nair had last month questioned why only the four technocrats were singled out for action and not the bureaucrats who were passing the Devas-Antrix file to and fro.]

* Dr K.N. Shankara, former Director of ISRO Satellite Centre where GSat-6 and 6A, the two satellites for Devas, were to be built, headed a committee to give the broad framework of the pact, but finally made way for a pro-Devas agreement.

* The Sinha panel terms “specious” Antrix's argument that its board need not seek approval from the Space Commission. This project involved a government expenditure of Rs 766 crore on two satellites and their launches. Yet all the risks and penalties were loaded only on ISRO.

THE CHATURVEDI-NARASIMHA PANEL:

The Chaturvedi-Narasimha committee report made in March 2011 says, “The [60 mHz of] spectrum allocated for the project seems disproportionately large considering that reportedly in the US, Korea and Japan 20-25 mHz of spectrum in this band had been used for similar services.

However, it dismisses fears that spectrum was sold cheap to Devas as it cannot be compared to terrestrial spectrum.

Dr Narasimha is a respected aerospace expert and a long-standing member of the Space Commission. Mr Chaturvedi is a former member of the commission.

They agree that there were serious lapses in concluding the agreement. “It does, however, indicate certain financial and strategic gaps. Chairman, Antrix board/Secretary DoS; Director Satcom ISRO; and Member (Finance), Space Commission, were primarily responsible for the lapse.

ISRO Chairman and Antrix head [the same person held both posts until last year] who finalised several areas of agreement must also share the responsibility for some of the gaps.

This panel faults the lack of transparency in the functioning of the DoS with respect to apprising the Space Commission, the Government and other centres.

It also suggests reforms in the Space Commission, ISRO and Antrix. Antrix has since been revamped under a separate CMD.

Panel questions Rs 578-crore foreign investment in Devas

The Sinha committee has raised the issue of a 2007-08 investment of Rs 578 crore by Deutsche Telekom for a 20 per cent stake in Devas Multimedia and its outcome — but without naming the German major.

Some early shareholders of Devas, including a former ISRO scientist, gained from this transaction by divesting their stake in 2007-08, it has said in its September 2011 report.

As a fall-out of this, “two Mauritius-based entities [hold] 34 per cent and foreign entities [hold] over 54 per cent of Devas' ordinary share capital as on March 31, 2010.”

The Department of Revenue and Ministry of Corporate Affairs are already investigating the matter.

Columbia Capital Devas (Mauritius) Ltd and Telecom Devas (Mauritius) Ltd are the two entities it has named.

Between December 2004 and March 31, 2010, Devas' shareholders had swollen from two to 17; Deutsche Telekom held 20 per cent stake; the Mauritius companies 17 per cent each; and Dr M.G. Chandrasekhar, said to be the brain behind Devas and who was a former ISRO Scientific Secretary, 19 per cent.

Mr A. Bhaskaranarayana, one of the senior ISRO officials until December 2009 and recently blacklisted by DoS, was hosted by the private company.

How can a loss-making Devas Multimedia India P Ltd, with a share capital of Rs 1 lakh [Rs 18 lakh on March 2010) attract a foreign investment of Rs 578 crore, the panel asks.

According to the panel, Devas has no asset base, no IPR or patent in the relevant technology of S-band operations. Yet it managed to collect the chunky share premium from the foreign investor. It appears “unusual” and can only be attributed to the agreement it had with Antrix.

Devas was formed in December 2004 — barely a month before the controversial agreement was signed. It was started by ex-ISRO scientist, Mr D. Venugopal, and Mr M. Umesh, with a share capital of Rs 1 lakh.— Our Bureau

>madhu@thehindu.co.in

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