Labouring under the shadow of the 2G scam in 2011, the UPA government hastily cancelled a big contract between ISRO’s commercial arm Antrix Corporation, and a Bengaluru-based telecommunications firm, Devas Multimedia. The government cited a CAG report on the deal – which pointed out irregularities and deviations from standard operating procedures – as the reason for the deal’s demise; essentially a cancellation over procedural lapses. Over the course of subsequent investigations, no evidence of bribery was ever found. So was it really a scam, or just a government playing it safe in fear of another scandal?
In the years that followed the deal’s junking, two international arbitration hearings ruled against the Indian government for wrongful cancellation of a deal. However, to date, the government continues to blacklist four of India’s top scientists, alleging irregularities. Among them is G Madhvan Nair, former ISRO chairman and Padma Vibhushan awardee.
On Nair’s birthday, The Quint looks at the controversial deal, which has trapped one of the most celebrated scientists in the country under the weight of an unproven ‘scam’.
The Deal
In 2005, Antrix, the commercial arm of ISRO, signed an agreement with Bangalore-based Devas Multimedia, to lease the S-band satellite spectrum. S-band is meant specifically for satellite-based communication and Devas was allowed use of 70 MHz of 150 MHz of space that ISRO owned in the S-band spectrum, to launch satellite-based applications on mobile devices. As per the agreement, Antrix would launch two satellites G-SAT6 and G-SAT6A and 90% of these satellites’ transponder capacity would be leased out to Devas.
The CAG Report and Irregularities
In 2011, months after the 2G scam surfaced, a draft report on the deal by the CAG was leaked to the media. The report pointed out irregularities and non-compliance with standard operating procedures. One of the issues raised by CAG was that despite Devas planning to use the satellites for telecommunication and broadcasting services, permissions were not sought from the Department of Telecom and Ministry of Information and Broadcast.
Later, it was found that no proper tenders were called for an auction of the spectrum leased out to Devas. The CAG also pointed out that the development and use of the satellites were favouring Devas, as the satellites were custom-made operational requirement of Devas. The deal also read that in case of failure to launch, Devas would not pay for the losses. These were taken to be serious enough infractions to cancel the deal.
However, within the ISRO community, it was felt that these were not sufficient reasons for cancellation. For one, the S-spectrum had been left underutilised at the time of the deal, which made the deal mutually beneficial, and made calling an auction a mere formality rather than an essential procedure to check corruption. Second, as the commercial arm of ISRO, Antrix had to serve the purposes of the customer, so custom-making operational equipment for Devas was just good sense.
Calling Off the Deal
After the CAG report became public, the UPA government, which was facing the heat of the 2G scam, called off the deal. The Cabinet Committee on Security (CCS), headed by Prime Minister Manmohan Singh, declared that the government would not be able to provide the orbit slot in S-Band to Antrix for commercial purposes, including for its existing contractual obligations, in view of ‘strategic requirements’.
Was It a Scam, Though?
The government didn’t mention corruption or conflict of interest as reasons for cancellation of the deal. Rather, it was violations of protocol and lack of transparency were pointed to necessitating the cancellation. Neither CAG, nor the five committees that later probed the case, found any evidence of bribes paid to ISRO officials by Devas.
Arbitration Hearings
The sudden withdrawal from the deal led to Devas approaching the International Chamber of Commerce (ICC) tribunal and the Permanent Court of Arbitration (PCA), demanding damages.
In the first hearing in 2015, even though the Indian government argued the deal was annulled due to lack of transparency, ICC ruled that the annulment of the agreement was unlawful, and awarded Devas damages of nearly Rs 4,400 crore.
Even in the second arbitration hearing, the Permanent Court of Arbitration (PCA) ruled in favour of Devas, stating that the annulling of the ISRO-Devas contract was a breach of treaty commitments and India needed to pay the damages.
Booking the Scientists
Despite the two international tribunals finding against the government’s decision to cancel the contract, four scientists – Madhavan Nair, Sridhar Murthi, A Bhaskaranarayana and KN Shankara – were chargesheeted by the Central Bureau of Investigation (CBI), accusing them of facilitating a wrongful gain of Rs 578 crore to Devas through the deal.
Pinning the culpability for the deal’s irregularities squarely on them, the government barred these four from holding any official position.
Since the first initial days of the controversy, Nair has maintained that the agreement would have been beneficial for the country as it was aimed at providing mobile and multimedia services through satellite anywhere in the country. In an interview following the arbitration hearings, Nair expressed his hopes of removal from the blacklist. He said that the three scientists who worked with him were absolutely clean and no ‘shady business’ took place.
Apart from the cost to the country of the 2G scam, did the government impose another cost by getting cold feet over a deal that could have bettered mobile services for its citizens?
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