pay $1.3 billion to Devas; Close the chapter on the fabled scams of Vinod Rai

The Dewas deal goes back to 2005, when Dewas Multimedia, a company founded in India along with some former giants of India’s space administration and information technology types, entered into a contract with Antrix Corporation, the commercial arm of the India Space Research Organisation. -Year lease, in return for $300 million to be paid over the same period, 70 of the S-band spectrum used for communications as well as space on transponders on the yet-to-be-launched geostationary satellites GSAT6 and GSAT6A With MHz between ground and transponder. S-band covers an electromagnetic spectrum in the range of 2–4 GHz specified by the International Telecommunication Union for satellite communications. But spectrum can also be used for use.

Dewas plans to offer high-speed mobile broadband via satellite. Now, it is unlikely that this plan was perfect by today’s standards. Elon Musk’s Starlink satellite broadband service and others like it, such as OneWeb, in which Bharti is the largest stakeholder, use hundreds and thousands of satellites in low Earth orbit, while Devas proposes using geostationary satellites. For a satellite to remain stationary on a particular part of Mother Earth, it needs to be at an altitude of 35,786 km. Low Earth orbits are less than 2,000 km above land. The shorter the distance signals have to travel from Earth to the satellite and back, the lower the latency. Low Earth Orbital Satellite Broadband will not suffer the same lag as GSAT Broadband. But, for his time, Devas was out of the world thinking.

In 2010, the Comptroller and Auditor General of India, headed by Vinod Rai, came up with a report alleging estimated losses. Rs 1,76,000 crore to the exchequer due to allocation of spectrum to telecom operators without auction. Even before the report was submitted, media leaks had flooded the discourse with allegations of scam, making any deal in which spectrum was allotted without auctioning looked toxic. As a political justification, the then UPA government canceled the deal with Dewas.

It is pertinent to note that none of the television channels using Indian communication satellite transponders for broadcasting have participated in the auction for the use of transponders and associated spectrum. They pay the fee prescribed by Antrix Corporation. In 2005, when Devas struck its deal with Antrix, there were no other contenders for transponder space on GSAT6 and GSAT6A. Devas entered into a deal with Antrix for a mutually agreed fee. It is entirely conceivable that this was done in good faith, and for an exciting technological achievement, satellite broadband was far more advanced than the very small aperture terminal technology offered.

Yet, when the 2G scam hit public life in India, allotting spectrum without auction seemed like a crime. Instead of defending its stand, the government scrapped the deal with Dewas and found some procedural loopholes to boot. It is worth remembering that the actual trial of the 2G scam rejected the notion of a scam, and acquitted Telecom Minister A Raja and all other accused. He is subject to appeal. A two-judge bench of the Supreme Court canceled 121 telecom licenses in 2011 on the grounds of suspected irregularities, including the assignment of spectrum, a scarce natural resource. Without auctions, the government sought the President’s clarification from a larger, constitutional bench as to the mandatory use of auctions as the only valid method for the allocation of natural resources. The court clarified that the auction is not a necessary feature of propriety and the policy, being the prerogative of the executive, can allot spectrum as per the requirement. But by then, the scam story had become a part of the popular psyche, with the government losing the elections later.

The cancellation of the Dewas deal was not the result of an actual discovery of any scam, but a pre-emptive move by the government, which deviated from the CAG’s innovation of ‘notional loss’ based on widespread perceptions and critical public perception . Swallow the story of this scam. Devas Multimedia sued the government in the International Court of Arbitration at the ICC. Two more lawsuits were filed by the shareholders of Devas under the Mauritian and German bilateral investment treaties. India lost all lawsuits, and has been asked to pay at least $1.3 billion to pay Dewas’ compensation and interest.

India challenged the 2015 award. In 2020, a US court agreed to allow Dewas shareholders to confiscate government-owned assets other than those owned for sovereign purposes, such as embassies and other such assets. To do, to realize the rewards. Now a Canadian court has reiterated that decision.

India must pay and move on, as Vodafone and Cairn have on retrospective tax disputes. Allowing the controversy with Dewas to escalate is to remind investors how investments in India can be soured on the basis of political gains. We need to address this weakness, and change the public narrative surrounding it, by asking a state-owned entity or someone else to confiscate their assets abroad in order to obtain a compensation award of Dewas shareholders. The dispute should not be kept alive by forcing the continuation of the court orders for