Antix corporation was set up as a marketing arm of ISRO in 1992. Articles of association of this company state that objectives of the company included promotion of commercial exploitation of space products, technical consultancy services and transfer of technologies developed by ISRO along with efforts to facilitate development of space-related industrial capabilities in India. No one can really find any fault with these objectives. So when Antrix Corporation negotiated and signed a memorandum of understanding with a US based strategic consultant , ‘Forge Advisors’ in March 2003, for exploring opportunities in digital multimedia services,, everything appeared in order.
However things started becoming queerer, when in December 2004, ‘Forge Advisors’, instead of advising Antrix, suddenly floated a company in India with an objective of providing internet services in India with just two share holders and with initial subscribed capital of just Rs. 1,00,000. Surprisingly, one of the two shareholders, Mr. D. Venugopal, was an ex-ISRO scientist and the other shareholder was an unknown person called M.Umesh. The company was named as ‘Devas Multimedia’. However ‘Forge Advisors’ were not represented at all on the board of the company.
Within days of the floating of this company, Board of Directors of Antrix Corporation approved a draft agreement between Antrix and Devas on December 24, 2004. And in just over a month, the final agreement was signed on January 28, 2005. The agreement provided leasing of 90% of the space segment capacity on two satellites for 12 years to Devas. The agreement also stipulated the compensation, which Devas was expected to pay to Antrix. An advance capacity reservation fee of $20 million per satellite and annual lease charges starting at $9 million per satellite was to be paid by Devas to Antrix. Thus over 12 years, Devas would have ended up paying $300 million to Antrix. The agreement terms were heavily loaded in favour of Devas. If a satellite provided by Antrix was to fail, the Department of Space would bear the risk.
The most interesting part of this agreement is about the satellites, which were to be provided by Antrix to Devas. The agreement said that Antrix committed to build and launch two satellites – Primary Satellite-1 and Primary Satellite-2. Now comes the interesting part, ISRO never had any authorization to build these satellites on the day of this agreement. Yet the transponder capacity was already committed to an unknown company having no asset base, no experience or patent in the relevant technology with a share capital of only Rs. 1,00,000, with heavy penalty clauses for Antrix and rigidly stipulated compensation figure, which had no provision of an adjustment year wise or in such cases where Devas earned much more than estimated profits.
After the Antrix deal was signed, by December 2005, the capital of Devas was increased to 5,00,000 rupees . Now there were 12 shareholders, including three from Forge Advisors, holding 60% of ordinary share value, and two Mauritius entities. Between 2007-2008, the initial shareholders divested their holdings at a premium of Rs. 25,505 per share to Deutsche Telekom(20%), two Mauritius entities(17%) and one ISRO scientist Mr. M.G.Chandrashekhar (19%). By March 2010 Devas had 17 shareholders. Within 3 years , or by March 2010, the share premium had increased to Rs. 1,26,821 per share. Initial share holders of the company, earned a profit of Rs. 2 crores to Rs. 7.4 crores without company even commencing its business.
How could it happen? For this, we would have to go back to ISRO. I have mentioned above that when the Antrix-Devas deal was signed, Antrix had no satellites available to lease to Devas and ISRO had no plans to build any satellites which would be suitable to Devas. However ISRO chairman was also the secretary, department of space.
After Antrix deal was signed, the secretary, department of space, put up a cabinet note in May 2005 for financial sanction to build GSAT-6 satellite. In this note, the cabinet was given the impression that several firms had submitted ‘Expression of Interest’ for leasing the transponders, whereas in reality, the deal with Devas was already signed. Similarly in October 2009, cabinet sanction was sought for GSAT 6A satellite. Even in this meeting, the fact that these two satellites are being developed for Devas was hidden by the Secretary, Department of space. It is fairly easy to link the rise in Devas share premiums, with the financial sanction approval dates, given by the cabinet, which explains the phenomenal rise in the Share prices of Devas. The question of who actually benefited from this rise in the price of shares,would need a proper criminal investigation.
In the beginning of year 2011, news media broke the details of this scam for the first time.
(To be concluded)
6 February 2012