Rs 1,200 crore violation notice to Devas Multimedia by ED

Chennai, June 6 (IANS) The Enforcement Directorate (ED) has issued a notice to Devas Multimedia Private Ltd for violation of foreign exchange laws to the tune of around Rs 1,200 crore, a statement said.

According to the government statement, Devas Multimedia is suspected to have received foreign direct investment worth Rs 578.54 crore between May 2006 to June 2010 from various overseas investors including CC Devas Mauritius Ltd, Telecom Devas Mauritius Ltd, Deutsche Telkom Asia Pvt Ltd and Devas Employees Mauritius Pvt Ltd in violation of the provisions of the Foreign Exchange Management Act.

The ED said the share subscription agreements entered by Devas Multimedia with the investors contained clauses relating to settlement of disputes at courts other than that of India and applicability other than Indian laws on matters of dispute, and as a result, the FDI received by it was contrary to the conditions specified in the approvals granted by Foreign Investment Promotion Board.

The extent of contravention on the said count is Rs 578.54 crore, the ED said.

The ED also charged Devas Multimedia by contravening FDI regulations under FEMA for assuring foreign investor an annual eight per cent priority dividend in addition to other dividends on cumulative basis.

The investments received by the Indian company with such assured returns is Rs 571.72 crore, the statement said.

According to ED, Devas Multimedia, for one tranche of receipt of funds, issued a security akin to an External Commercial Borrowing (ECB) promising higher returns than the ceiling fixed by RBI. The extent of violation on this count is Rs 67.50 crore, the ED said.

According to the probe agency, show cause notice has been issued to the Indian investors, the persons responsible in the Indian company including the directors and also the foreign investors.

The ED has initiated the adjudication process. In case, the alleged contravention is proved in the adjudication proceedings, the noticees are liable for penalty under FEMA, which may be imposed upto thrice the sum involved in such contravention.

Indian space agency’s commercial arm Antrix Corporation and Devas Multimedia had some years ago signed an agreement whereby the latter will be able to use GSAT-6 satellite for high-speed beaming of video content on mobile devices on the S-band spectrum.

The then UPA government cancelled the controversial contract in February 2011, invoking sovereignty and decided to use the advanced satellite for the country’s strategic use.

Under the annulled deal, Antrix was to lease transponders of the satellite to Devas for allowing it to offer digital multimedia services using the S-band wavelength (spectrum), reserved for strategic purpose.

The space agency launched the GSAT-6 on August 27 from its spaceport at Sriharikota in Andhra Pradesh, about 90 km north of Chennai, as a communication satellite, using a heavy rocket.

–IANS

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