ED serves notice on Devas Multimedia for FEMA violations in Antrix deal

The Enforcement Directorate has served show-cause notice on Devas Multimedia for receiving foreign direct investments (FDI) worth Rs578 crore in alleged violation of Foreign Exchange Management Act (FEMA).

The Enforcement Directorate and the Central Bureau of Investigation (CBI) are conducting a probe into the 2005 deal between Devas Multimedia and Antrix Corporation Limited (ACL), the commercial arm of Indian Space Research Organisation (Isro), for alleged forex violations.

Overseas investors in Devas Multimedia included CC Devas Mauritius Limited, Telecom Devas Mauritius Ltd, Deutsche Telkom Asia Private Limited and Devas Employees Mauritius Private Limited.

Bangalore-based Devas has allegedly bagged the deal despite its ineligibility, raised investments worth Rs578 crore from foreign investors based in the US, Mauritius and Singapore and then pocketed them, said an agency source. It was alleged that Devas Multimedia has a subsidiary incorporated in the US to park a substantial portion of the foreign funds it had received as remittances on the pretext of ''services, salaries, etc,'' reports quoting sources said.

''It was alleged that the Bangalore-based firm submitted false information, claiming it had the technology to provide the services as per the pact to Antrix, and sent away a good portion of the wrongful gain to its US-based subsidiary'' the report quoted the source as saying.

Investigators are now examining the role of a US-based firm in the irregularities. ED is conducting a FEMA probe against the firm and is likely to upgrade it into a money-laundering probe.

The agreement on delivery of video, multimedia and information services to mobile phones via two geo-stationary satellites was later scrapped in 2011.

Devas has denied all allegations of wrongdoings levelled against it by ED and the CBI.

In May, the CBI had twice questioned Isro's former chairman G Madhavan Nair in connection with probe in the case since March last year. It grilled Nair on issues, including Devas Multimedia's technical competence to enter into a deal with Antrix.