Antrix Devas Scam continues: What I predicted in 2013 has happened.

I learn from the newspapers that an international arbitration court has directed Antrix, the commercial arm of Indian Space Research Organisation (Isro), to pay $672 million, (Rs 4,435.20 crore), in damages to Devas Multimedia for "unlawfully" cancelling a contract four years ago, and unanimously ruled "that Antrix is liable for unlawfully terminating the Devas-Antrix agreement in February 2011."

The tax payer of India is being mowed down yet again with another huge financial liability, a payment unwarranted and unnecessary, made possible only due to intentional collusion by the top brass of ISRO and Antrix with Devas, clearly blessed by criminal misdemeanour and corruption of the previous regime and its dispensation in the Space Department. But what is shocking is the inability of the present regime to have rectified it, even though the arbitration proceedings were on going for a good one year after it took charge.

I have been writing about this scandal ever since it came to light, more so, because it was happening right under the nose of the then Prime Minister, who was also the Minister for the Space Department and ISRO. I had predicted the fate of the Arbitration way back in 2013, after witnessing the completely anti-national and corrupt decisions being taken in the Department of Space.

Let me recall to my readers the history of this scam. On 24 December 2004, Madhavan Nair, Chairman of Antrix Corporation, a public sector undertaking under the Department of Space, approved a contract with Devas Multimedia at a board meeting, leasing 90% of S-band transponder capacity of two geostationary satellites to be produced and launched by ISRO, for 12 years. On 28 January 2005, the same Madhavan Nair, in his capacity as Secretary of Department of Space approved the contract. He then submitted the proposal for production of GSAT to the Space Commission, of which also he was chairman, not disclosing that in his capacity as chairman of Antrix, he had already concluded a deal with Devas in December 2004 or that Antrix was committed to giving away 90% of the transponder capacity of GSAT 6 without factoring in the launch and spectrum costs in the financial estimate. Having the approval of the Space Commission, Nair now put on his fourth hat as chairman of ISRO and commenced the process of production of GSAT 6. So a private player, Devas, walked away with a financially succulent contract, the burden of which is now being borne by the taxpayer. It later emerged that Devas was a company comprising of former ISRO employees who managed to pocket precious S-band spectrum for a song for their company.

However, it is said that this innovative Antrix Devas scam soon became a reference point for Raja’s own 2 G scam, and it wasn’t long that the media soon got a whiff of it. What followed was public outrage pertaining to a Department falling directly under the Prime Minister at having violated all financial and administrative procedures before taking this decision. By now, Dr K Radhakrishnan had become Secretary, Space Department and Chairman, Space Commission, consisting of the MoS in the PMO, Principal Secretary to the PM, National Security Adviser, Cabinet Secretary, Finance Secretary, and other eminent space scientists.

In July 2010, the Space Commission, directed ISRO (also headed by Radhakrishnan) to terminate the contract. The matter remained shrouded in secrecy until February 2011, when finally, the Cabinet Committee on Security (CCS), based on a Note submitted by Radhakrishnan, decided to direct the Space Department to ‘annul’ the contract, by invoking force majeure. The government had suddenly realised that the spectrum allocated to Devas was required for the nation’s genuine and urgent social and strategic objectives! 

Let me reproduce what I wrote in the Sunday Guardian and the New Indian Express in August 2013. My words hold good as on date:

“ISRO’s confidentiality immunity was unable to contain the public exposure of the scam, and risks for the PM as Minister for Space, were intensifying. Hence, a corresponding process for building an effective firewall around him was set in motion through the standard operating procedures -- setting up inquiries headed by cronies, selecting convincing scapegoats, and most importantly, drawing up an innovative post-facto blueprint for salvaging some of the losses of the aborted deal at the taxpayers’ cost. This hidden post-facto segment of the scam resonates of the Bhopal compensation case, where through deliberate, calibrated errors and omissions, state power conspired with the culprits to appropriate maximum compensation for common benefit, from India’s unfortunate taxpayer.”

Devas had claimed in the Antrix-Devas Contract of January 2005 (Clause 12 b) that it had the ability to design Digital Multimedia Receivers (“DMR”) and Commercial Information Devices (“CID”) and had the ownership and the right to use the intellectual property, viz. SDMB technology, involved in their designs. Allegations regarding the deal started mounting, including to the Space Department Vigilance Officer, who in his preliminary findings submitted to Dr.Radhakrishnan, intimated that the IPR of technology which Devas said will use, was highly suspect. This was in 2009. Perhaps to scuttle this, the ISRO chairman in December 2009 appointed B N Suresh, a senior retired scientist, to report on the technical, legal and financial aspects of the deal, which Financial Advisor G Balachandran was asked to examine in June 2010.

Balachandran’s findings, submitted to the ISRO chairman in January 2011, apart from revealing the absence of due diligence in the scrutiny of the contract, also revealed some shocking new facts. On December 2, 2010, the Financial Advisor had submitted a note to Radhakrishnan, based on the findings of a leading ISRO scientist, which stated, inter alia, that the SDMB technology claimed by Devas in the Antrix-Devas Agreement to be used by it is not a confidential and proprietary technology held by Devas. The note recommended that the ISRO chairman should get this confirmed by Antrix and if confirmed these facts should be intimated to the CCS and the contract should be cancelled on the grounds that Devas had given false information when signing the contract about its ownership and right over the technology and intellectual property. Balachandran reiterated his recommendation twice in January 2011 that this vital fact be incorporated in the Note to the CCS, so that the Contract/Agreement can be terminated on grounds that Devas had acted fraudulently.

This clearly reveals that the contract was induced by fraud and misrepresentation and was void. Stating this as a reason for cancellation would have greatly strengthened the government case against Devas in arbitration and compensation claims.

However, Radhakrishnan disregarded this unimpeachable advice of his Financial Advisor and concealed these facts from the CCS. On the basis of his misleading note, the CCS decided to ‘annul’ the contract in February 2011 and informed the Space Department that in view of the “increased demand for allocation for national needs and having regard to the needs of the country’s strategic requirements, the government will not be able to provide orbit slot in S band to Antrix for commercial activities, including for those which are the subject matter of existing contractual obligations for S Band.”

The government thus manipulated its own record to show that the contract was breached by it for its own needs and without lawful justification. The people of India, who were actually the plaintiffs were converted into defendants by the government. A red carpet was being spread to legally enable Devas’ sure success in the expected arbitration and extract maximum reparation.

The people of India are entitled to seek answers from the Hon’ble Prime Minister, also Cabinet Minister for the Department of Space:-

i) What was the compelling reason for Radhakrishnan to scuttle the vigilance enquiry in the Space Department, and constitute the Suresh Committee?

ii) Is it a fact that Secretary, Space, Radhakrishnan ignored without any credible reason, the advice of his Financial Advisor supported by the note of a senior Space Department scientist, that the DVB-SH/SDMB technology claimed by Devas in the Antrix-Devas Agreement, was not its confidential and proprietary technology?

iii) Is it a fact that Radhakrishnan concealed these facts from the CCS in his note in February 2011, which annulled the deal on a non-existent ground that it had no spare S Band spectrum to offer?

iv) Why was the real reason, that the Antrix-Devas contract had been induced by fraud and misrepresentation, excluded from our case as a ground for terming it null and void?

iv) What action is proposed to fix the responsibility on the then Secretary, Space Department for concealing the crucial and vital facts from the CCS, the consequences of which are going to cost the taxpayer several billion dollars in the near future.

v) Devas demanded around $2billion in damages and Deutche Telecom, which purchased a good chunk of the Devas shares after its Antrix contract separately demanded another $1 billion, amounting to Rs 19,500 crore (@Rs.65/USD) that the country would have to shell out, if the government lost the arbitration, a highly likely eventuality, judging from the government’s actions.

I had asked the then Prime Minister to appoint a panel of legal experts to put the Department of Space on the right legal track to safeguard national interest and the taxpayers’ money. Legal amends could still have been made to save the nation and the taxpayer from being robbed of the damages which were sure to come by way of the Arbitration Award. But, of course, nothing happened.

Well, the Arbitration Award of $672 million, (Rs 4,435.20 crore) has been ordered, just as I had predicted. Because the Space Department, still under direct charge of the Prime Minister, did nothing to rectify the wilful fraud on the people of India, regarding the closure of the contract, even though it could have.

More so, I learn that Antrix did everything possible not to win the case.

i) Even after Space Commission directed in July, 2010 that the contract be terminated, Antrix continued to write to Devas about the preparatory steps that are being taken to get the satellites ready for handing over to Devas. Radhakrishnan was Chairman of Space Commission and Antrix. How is it his right hand and left hand were taking different directions?

ii) Again, Antrix even failed to nominate an arbitrator to the arbitration tribunal and to have a say in fixing the terms of reference. Rather, it chose to petition the Supreme Court to commence a separate arbitration against Devas, an appeal that failed. In June 2011, when Devas commenced arbitration seeking specific performance of the agreement or a claim of damages, Antrix refused to participate. On August 19, 2011, when the ICA announced its decision to go ahead with the arbitration, Antrix did not send its nomination, which forced the ICA to nominate, on its own, Justice A S Anand. Who was responsible for this deliberate sabotage? 

May I ask the Prime Minister what action he plans to take on those who were at the helm of affairs both in the Department of Space and the PMO, for their misrepresentation to the Cabinet Committee on Security for terminating the Antrix Devas Contract in a manner that has caused this great financial loss to the nation? And against those who allowed the Arbitration to proceed in a manner which spelt sure failure for the Government?

The present NSA is a person of unimpeachable integrity and patriotism. How did he allow affairs to drift to this stage, so that the corrupt intentions of his predecessors were allowed to bear fruit, at the cost of India’s tax payer?