The Foreign Exchange Management Act (FEMA) Adjudication Authority has held Devas Multimedia, its directors, and overseas investors guilty of an illegal foreign investment of ₹579 crore, and imposed a penalty of ₹1,585.08 crore, based on the Enforcement Directorate’s (ED) probe into the Antrix-Devas case.
The ED investigation followed inputs that Devas Multimedia had received the funds in violation of FEMA rules.
The company was incorporated in 2004 by some former employees of the Indian Space Research Organisation (ISRO). It entered into an agreement with ISRO’s commercial arm Antrix Corporation to get bandwidth facilities in two proposed satellites for a range of services in the digital media and broadcasting business.
Based on the findings, the Directorate served a show-cause notice to the accused persons. “After completion of the adjudication proceedings, a total penalty of ₹1,585.08 crore has been imposed on them,” said an official.
FEMA provides for a maximum of 300% penalty on foreign exchange rule violations.
Money laundering investigation
In a separate case, which is based on an FIR registered by the CBI, the ED had conducted money laundering investigation against Devas Multimedia and others. A special court in Bengaluru took cognisance of its charge sheet on February 1.
The agency, in the money laundering case, has alleged that the company and others illegally entered into the agreement with Antrix Corporation by making false claims that it had the ownership and intellectual property rights to use the technology for delivering multimedia services in India. It turned out that Devas Multimedia was incorporated on December 17, 2004, and the claims were made days later, on January 28, 2005.
“Employees of ISRO/Antrix Corporation also conspired with the company for entering into the agreement. On the strength of the agreement, the company raised foreign investment of ₹579 crore and subsequently, illegally transferred 85% of the funds to its subsidiary in the United States on the pretext of investment, payment for services or legal fee,” the official said.
Under the Prevention of Money Laundering Act, the ED has attached assets worth about ₹80 crore of Devas Multimedia and requested the court for its confiscation.
