‘The Government is being kept in the dark about the real identity of the person responsible for this muddle’.
New Delhi: Last month, Finance Minister Nirmala Sitharaman had pointed to the Congress-led United Progressive Alliance government for perpetrating the “Devas Multimedia scam” while citing the Supreme Court’s verdict on the matter. FM Sitharaman had said that while the Ministry of Corporate Affairs had initiated the liquidation process of the controversial firm, law enforcement agencies would take action against those involved in the crime. The Finance Minister, quoting the judgement of the apex court had said that “It is a fraud by Congress, of Congress [and] for Congress” and that the Congress party was the “master of corruption”.
A key official, who was entrusted with investigating the deal, has revealed that top officials whose actions led to India being inflicted with huge monetary fines by foreign arbitration courts are still awaiting action despite evidence allegedly existing to “prove their wrongdoings”.
Gopalan Balachandran, a 1977 batch IAS officer, who joined the Department of Space (DoS) in April 2009 as Financial Advisor in the rank of Additional Secretary, was asked to review a report submitted by B.N. Suresh, a senior scientist, who studied the technical, legal and commercial aspects of the deal.
What Balachandran found is yet to be communicated or forwarded to the Union Cabinet. The Sunday Guardian spoke to Balachandran, who is now retired.
Q: What was the role played by you in the Antrix-Devas issue? When did you first come into this matter?
A: I was asked to undertake three assignments, namely:
- To comment on the B.N. Suresh Committee report, which was constituted by Secretary, DoS to study the technical, legal and commercial aspects of Antrix-Devas Agreement;
- To prepare the Agenda Note for Space Commission on the matter; and,
iii. To prepare the Cabinet Note for termination of the Agreement.
I entered into this issue due to these three assignments. In all the three, I had elaborately pointed out the fraud committed by officers of Antrix and ISRO to further Devas’ interest at the cost of the Government.
Q: The reason given by the then Government for termination of the Agreement was “force majeure”. In your view was that the best reason that the Government had for terminating the Agreement?
A: At the time of terminating the Agreement, Government of India (GoI), as represented by the Cabinet, had in its disposal and in its knowledge only one ground for termination i.e., “force majeure”. In other words, since the discussions in the Space Commission had brought out that some of the officers in ISRO and Antrix had been doing irregular acts amounting to illegal ones in favour of Devas and since the Space Commission felt that the precious spectrum should not be handed over to a private party, it was decided, as per advice of Law Ministry, that the GoI would terminate the Agreement on “force majeure”.
Force majeure was not the best or strong reason for termination of the Agreement. The Law Ministry had also cautioned the possibility of Arbitration being invoked when “force majeure” is used for termination.
Before the Note was sent to the Cabinet, I came to know that Devas did not have IPR on the technology that they were to use in furtherance of the Agreement. This was the strong ground for termination of the Agreement.
Q: Did you put on record the fact that Devas did not have IPR for the said technology for the use of which it had entered into an Agreement with the GoI? Who did you forward your note to?
A: Originally, I had prepared the Cabinet note, as per the advice of the Law Ministry, to terminate the Agreement on grounds of force majeure. I had sent it to the Secretary, DoS in October 2010.
On December 1, 2010, I got information that Devas did not have IPR for the technology for the services they were to provide. On the very next day, I sent a note to the Secretary, DoS asking him to incorporate this important piece of information in the Cabinet note which was with him.
I had also pointed out that once the termination was done on grounds of fraud indulged by Devas, even if Devas tried to go for arbitration, they would not be successful. I had reiterated this advice and request again in my comments on the Suresh Committee report submitted on 9 January 2011.
Q: What happened to that note? Was it shared with the GoI?
A: No, very unfortunately Secretary, DoS did not share this note with the GoI. The Cabinet note he submitted in February 2011 was devoid of this fact and it just suggested that the Agreement be terminated on grounds of force majeure.
Q: What was the impact of suppressing your note from the GoI?
A: The impact was:
- GoI has spent a few hundred crore rupees in fighting these arbitrations and court cases abroad: and,
- Devas & Co went for three arbitrations internationally and won all of them, by which the GoI stands to pay around US$3 billion, i.e., around Rs 22,000 crore.
Q: Don’t you think that with the Supreme Court’s order dated 17 January 2022, where they have upheld the decision to dissolve Devas because of it being a fraudulent company, GoI is no longer required to pay any of these arbitration awards?
A: The Supreme Court’s jurisdiction is within India. So, within India, Devas will not have chances of claiming any compensation. But outside India they have already got two orders, one from Canada and another in Paris courts and they have also made clear their intention to go on picking up properties of GoI or its PSU in any part of the world and will try to get attachment orders from the relevant courts. Therefore, the problem still remains.
Q: Is there any other adverse fallout because of Devas still being in a position to follow this case outside India?
A: Yes. The Supreme Court themselves have pointed out in their order dated 17 January 2022. They have said, “…We do not know if the action of Antrix in seeking the winding up of Devas may send a wrong message to the community of investors. But allowing Devas and its shareholders to reap the benefits of their fraudulent action, may nevertheless send another wrong message namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores.”
Q: Do you think there is a way out for GoI to make it clear abroad that their action is not an action against foreign investors but action against fraud?
A: Yes, I firmly believe that there is a way out. Let me explain—the Agreement was terminated on weak grounds of force majeure. While fighting these arbitration cases abroad, GoI pointed out that Devas did not have IPR. However, this was not accepted as a plea by the arbitrators on the basis that if they did not have IPR, then that is the grounds on which the Agreement should have been terminated. So, that point holds water no more.
But there is another important point which has also been brought out by Antrix in their averment before the National Company Law Tribunal, as has been stated by the Supreme Court also, “that as part of the conspiracy, the Agreement dated 28.01.2005 was terminated by Antrix by a letter dated 25.02.2011by invoking the force majeure clause”.
The inference is that Devas not only did not have IPR but they also succeeded in suppressing this information from reaching the Cabinet. Available documentary evidence informs that this was accomplished by Devas by entering into a conspiracy with one of the highest levels of Government namely, Secretary level, to prevent the facts from reaching the Cabinet.
If this fact is presented to the courts abroad, there is a strong possibility of the Courts dismissing Devas’ plea for execution of the Arbitration Awards. We can also successfully convince investors from abroad that India honours all its commitments to foreign investors, but does not tolerate fraud.
Q: You retired as an IAS officer in 2012 after joining the service in 1977. Does the suppression of your finding from the GoI amount to a criminal act?
A: Yes, undoubtedly.
Q: Do you believe that the people responsible for the monumental financial loss to the GoI in lieu of the arbitration awards and those who were part of the criminal conspiracy should be punished?
A: They should be punished for two reasons. The prosecution against them and the resultant punishment would make it clear to the foreign courts that there was a conspiracy which the GoI was able to unearth and book those responsible for it. This will also ensure that foreign investors do not lose confidence in us.
This kind of criminal conspiracy should be punished for the simple reason that the Indian State should not tolerate any such crime, whereby a fraudulent company can get away with $3 billion of arbitration awards just because a few people played a sinister role to help such a company.
Q: Has the CBI case caught all the perpetrators of this scam who were a part of the Indian government?
A: No. There are two distinct parts of the Devas episode.
The first is the signing of the Agreement heavily and illegally loaded in favour of Devas. CBI has filed a case against Devas and a few Government officials about this part of the episode.
The second part of the episode is the way the Agreement was cancelled on weak grounds by suppressing the stronger grounds for termination from the Cabinet. Government having had to spend hundreds of crores of rupees in fighting arbitrations and resultant court cases abroad, and Devas winning three arbitrations amounting to around US$3 billion (INR 22,000 crore approximately) were all due to this cancellation on weak grounds. Though Antrix has brought this fact in their averment before the National Company Law Tribunal, the higher levels of the GoI seem unaware of the person responsible for this. CBI strangely has not yet looked into this part of the matter. As a consequence, an officer who suppressed information from the Cabinet is repeatedly getting rewarded with plum assignments.
It is clear that the Government at the highest level is being kept in the dark about the real identity of the person who is responsible for all this muddle. If the GOI does not wake up now, they will be seen to be of the same type that they fault the previous government of.