New Delhi: The Enforcement Directorate (ED) slapped a Rs 1,200 crore Foreign Exchange Management Act (FEMA) violation notice to private multi-media company Devas by Antrix, the commercial arm of ISRO, on June 5 in connection with alleged “wrongful” gain made.
An order issued by the agency’s special director (southern region) in Chennai found Ms Devas Multimedia Private Limited, Antrix and others “contravening” the provisions of the FEMA on at least three counts after completing the over three year investigation in the deal that was struck in 2005.
The agency had registered a FEMA case in 2012 and is also probing the deal under anti-money laundering laws. Antrix had signed a deal with Devas in January 2005 to provide it with crucial S-Band wavelength, which is primarily kept for strategic interests of the country.
As per the order, accessed by PTI, the total violation under FEMA that has been established in the case is Rs 1,217.76 crore.
If the charges stand after the adjudication process that will begin now, the accused will be liable to penalty which could be three times of the amount contravened.
The showcause notice said the ED probed the foreign direct investment (FDI) received by Ms Devas Multimedia Private Limited Bangalore from various overseas investors, including Ms CC Devas Mauritius Limited, Ms Telecom Devas Mauritius Ltd, Ms Deutsche Telkom Asia Private Limited, Ms Devas Employees Mauritius Private Limited and the Indian firm (Antrix), between May 2006-June 2010.
The notice said the FDI, totalling $131.44 million (about Rs 578.54 crore), was in violation of FEMA and Foreign Investment Promotion Board rules.
The second contravention pertains to Devas Multimedia assuring overseas investors an annual 8% priority dividend (in addition to the other dividends and distributions) on a cumulative basis.
“Such assured dividends are not the nature of any equity instrument and contrary to the provisions of FDI regulations under FEMA. The investments received by the Indian company with such assured returns is Rs 571.72 crore,” it said.