Probe Devas operations since inception: HLT

The High Level Team has recommended investigation into the functioning and operations of Devas since its inception.

Bangalore: The Pratyush Sinha-chaired High
Level Team (HLT) has not just indicted former ISRO chief G
Madhavan Nair and three other space scientists, but has
recommended investigation into the functioning and operations
of Devas since its inception.

According to conclusions and recommendations of the five
member HLT, Devas was established by Forge Advisors USA
(FA-USA) in December 2004 (a month before it signed the deal
with Antrix) with a share capital of Rs one lakh and two
shareholders Venugopal D, a former ISRO scientist, (holding
9,000 shares) and Umesh M (holding 1,000 shares) (which
indicates a face value of Rs 10 per share).

The agreement with Antrix was signed in January 2005 and
by December 31 that year, the ordinary share capital had
increased to over Rs five lakh with 12 shareholders, including
three members of the FA-USA team involved in presentations to
ISRO, who held 60 per cent of the ordinary share capital, and
two Mauritius based entities Columbia Capital Devas
(Mauritius) Ltd and Telecom Devas (Mauritius) Ltd, who held
one ordinary share and 50 per cent of the preference shares

"As on March 31, 2010, Devas had 17 shareholders with
Deutsche Telecom (holding 20 per cent), the two Mauritius
based entities (holding 17 per cent each) and Dr MG
Chandrasekhar, another ex-ISRO scientist (holding 19 per cent)
being the largest ones together holding over 73 per cent of
the ordinary share capital, the HLT said.

Nair and three other senior scientists, A
Bhaskaranarayana, KR Sridhara Murthi and KN Shankara, who
were barred from holding any government posts, have been
indicted by the committee for acts of commission in the
Antrix-Devas deal.

The report prepared by a committee headed by Pratyush
Sinha, former Chief Vigilance Commissioner, said Antrix-Devas
deal lacked transparency and recommended action against the
scientists, all of whom have retired.

The HLT said the premium paid by foreign investors for
allotment of shares in Devas ranged from Rs 25,505 per share
in 2007-08 to 1,26,821 per share in 2009-10. In all, Devas has
accumulated share premium of Rs 578 crore.

In 2007-08, Venugopal and the FA-USA team divested part
of their original shareholdings to the Mauritius-based
entities and based on the premium per share of Rs 25,505, they
stood to earn a profit ranging from Rs two crore to Rs 7.4
crore each on the share divested.

"For Devas, an internet service provider with a share
capital of Rs one lakh (about Rs five lakh on March 31, 2007
and about Rs 18 lakh on March 31 2010), with no asset base
and no IPR or patent in the relevant technology, and which has
been making losses since inception, to collect Rs 578 crore as
share premium from foreign investors appears to be unusual and
can only be attributed to the agreement that it had with
Antrix", the HLT said.

Further, as a result of the increased share valuation,
some of the early shareholders, including an ex-ISRO scientist
and members of the FA-USA team stood to make significant
profits while divesting part of their shareholding in 2007-08.

"Changes in the shareholding pattern of Devas have led to
two Mauritius-based entities holding 34 per cent and foreign
entities holding over 54 per cent of Devas ordinary share
capital as on 31st March 2010", it said.

"..In order to get a clear picture of the changing
pattern of ownership of Devas, the economic interest of
various individuals in Devas and the extent to which the
increase in share value has been encashed by individuals, the
shareholding pattern of the company and of the Mauritius-based
entities needs to be looked into by an appropriate
investigative agency", the HLT said.


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