ED Rs 1,200 crore notice to Antrix

The ED on Monday slapped a Rs 1,200 crore Fema violation notice in connection with alleged “wrongful” gain made to private multi-media company Devas by Antrix, the commercial arm of Isro. An order issued by the agency’s special director (southern region) in Chennai found M/s Devas Multimedia Private Limited, Antrix and others “contravening” the provisions of the Foreign Exchange Management Act on at least three counts after completing the over three year investigation in the deal that was struck in 2005.

The agency had registered a Fema case in 2012 and is also probing the deal under anti-money laundering laws. Antrix had signed a deal with Devas in January 2005 to provide it with crucial S-Band wavelength, which is primarily kept for the country’s strategic interests.

As per the order, accessed by PTI, the total violation under Fema established in the case is Rs 1,217.76 crore. If the charges stand after the adjudication process that will begin now, the accused will be liable to penalty which could be three times of the amount contravened. The showcause notice said the ED probed the foreign direct investment received by Devas from various overseas investors, including M/s CC Devas Mauritius Limited, M/s Telecom Devas Mauritius Ltd, M/s Deutsche Telkom Asia Private Limited, M/s Devas Employees Mauritius Private Limited and the Indian firm (Antrix), between May 2006 and June 2010, received a total of $131.44 million (about Rs 578.54 crore). It said this FDI was in violation of Fema and FIPB rules.

The second contravention pertains to Devas Multimedia assuring overseas investors an annual 8 per cent priority dividend (in addition to the other dividends and distributions) on cumulative basis.

“Such assured dividends are not the nature of any equity instrument and contrary to the provisions of FDI regulations under FEMA. The investments received by the Indian company with such assured returns is Rs 571.72 crore,” it said.