‘UPA’s hasty termination of Devas deal will cost India dear’

‘UPA’s hasty termination of Devas deal will cost India dear’

By ANANDO BHAKTO | NEW DELHI | 31 July, 2016
When Antrix Corporation sealed a pact with Devas Multimedia in 2005, it seemed an attractive collaboration under which two ISRO satellites would be built and launched by Antrix.
Experts say that the UPA-2 government kind of jumped the gun as it was in a state of panic at the time as 2G and several other scams were coming up.

The Manmohan Singh-led UPA government had acted in a hurry to terminate the Antrix-Devas deal in 2011, a decision which now may cost India up to Rs 6,700 crore as the International Tribunal in The Hague presses for liability, experts told The Sunday Guardian. Most defence experts this newspaper spoke to were unanimous in their view that the UPA 2 government was in a “panic mode” at the time, as one scam after the other unfolded and it terminated the bill to “save its own skin” soon after the media reported the first whiff of a scandal.

“The government kind of jumped the gun as it was in a state of panic at the time. 2G and all these other scams were coming up. I definitely think it acted in haste. It was kind of a knee-jerk reaction. They were facing charges of corruption all over the place,” Manoj Joshi, distinguished fellow at Observer Research Foundation and former defence editor of a national weekly, told this correspondent.

Some defence analysts are also of the view that the Hague Tribunal’s judgement demonstrates India’s ill preparedness to defend itself before an international jury.

They added that the best way the UPA II government of the time should have scrapped the deal was by creating a “viable commercial dispute” with the Mauritius based investors of Devas Multimedia, which could have provided India ground for defence at the tribunal now. Instead, the termination of the deal was unilateral and according to Joshi, in the absence to justify a “force majeure”, which takes place when a war breaks out or if there is some emergency in one of the countries that signed the deal, the arbitration council was most likely to come up with an adverse verdict.

When ISRO’s commercial unit Antrix Corporation sealed an agreement with Devas Multimedia in 2005, it seemed an attractive collaboration under which two ISRO satellites — G-SAT6 and G-STA 6A — would be built and launched by Antrix, which would then lease the corresponding S-band satellite spectrum to Devas. The telecommunication firm Devas Multimedia, which had a few former ISRO scientists in senior managerial role, was to use this S-band spectrum to provide internet services. The deal was lucrative for India as Devas promised to make satellite-based mobile services affordable to the common man, thereby resolving issues such as non-coverage and broken signals that arise from terrestrial services.

“It was a very innovative technological deal and option, which would help spread the (internet, mobile) far and wide,” remarked Joshi. But trouble started brewing when a major Indian English newspaper broke the news in February 2011 that a draft audit report has mentioned in its findings that the agreement was underlined with serious irregularities, including financial mismanagement, conflict of interest, favouritism. It also alleged non-compliance of rules in inking the agreement. The UPA II government cancelled the agreement almost immediately, with the official reason touted by ISRO chief K. Radhakrishnan being that the scarce S-band spectrum was needed for larger “national and strategic purposes”.

Experts contend that ISRO’s decision to use the S-band spectrum commercially was arbitrary; it should have ideally discussed the matter with other ministries, in particular with the Ministry of Communications as it did not have the mandate to unilaterally decide to commercially use the spectrum.

A committee headed by former Cabinet Secretary B.K. Chaturvedi and the subsequent committee headed by former Central Vigilance Commissioner Pratyush Sinha found several procedural lapses and lack of transparency, while finalising the agreement. When this newspaper contacted a former senior ISRO director, he refused to comment on the matter. “I had said what I had to, even in print. Subsequently, I decided to stay out of it,” he told this correspondent.

On Tuesday, a Hague based Arbitration Tribunal ruled in favour of Devas Multimedia, asking Government of India to pay damages. The ruling comes in less than a year after the International Court of Arbitration, in September 2015 asked India to pay damages to the tune of Rs 4,400 crore to Devas.

In light of these sentences, there is a general contention that most of the Bilateral Agreement Treaties that India has been signing with other countries are tilted in favour of private foreign investors and that these BITs generally do not allow a level playing field to indigenous companies. Defence expert Jayadeva Ranade seconds the thought. “I don’t think it’s so much a case of our not being able to safeguard our interests (at the arbitration tribunal) as our not having safeguarded our interests at the time we entered into the agreement/treaty,” Ranade told The Sunday Guardian. He explained further: “Treaties and agreements are negotiated between two parties. And it all depends on the wording of the treaty and what we accept as a government. So, when we are negotiating it, we must ensure that our interests are taken care of. Therefore, we should have been more specific that we will abide by the rulings of the court in India, adding that it will be our courts that will exercise its jurisdiction.”

Joshi feels that it will be unrealistic to hope for a level-playing field. “We are the people who are looking for investments. So, you got to accept that the table will be probably tilted against you. They (foreign companies) will not invest until and unless you give them some advantage. There will not be much of a level playing field. He (foreign investor) has other options. He can go to Brazil, Vietnam or Indonesia, which are other attractive investment destinations,” he explained.

He summed up by saying that the Antrix-Devas incident might undermine India’s face value as an investment destination, especially if there is an attempt to avoid paying penalties. He said: “Apparently, the ED has put some demand on the company. And they are trying to ensure that they don’t have to pay anything. In all these international business dealings, at the end of the day, if there is a dispute between two parties, there is recourse to arbitration. And in many cases, the arbitration necessarily has to be without appeal, because if you give an appeal clause then there is no point having arbitration.”


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