U.S.-based non-resident Indian (NRI), Ramachandran Viswanathan is an unhappy man. Fighting the Government of India for a fair deal, he has been implicated in a dozen or so cases by Indian entities such as the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). His mistake? Accusing the government (then under the Congress-led United Progressive Alliance) of treating his company unfairly. Ironically, Devas Multimedia, the company he set up, got him in trouble.
The idea of setting up Devas was to ally with the Indian Space Research Organisation (ISRO), the Indian Department of Space, and ISRO’s marketing arm Antrix, to create a hybrid platform with terrestrial and satellite components, to deliver rural broadband and digital entertainment. (Devas is an acronym for digitally enhanced video and audio services.)
Trouble started when the government annulled the contract with Devas, claiming that the spectrum and satellite technology that Devas would use was needed by the defence forces. In 2015, the International Court of Arbitration of the International Chamber of Commerce found that Antrix was liable for unfairly terminating the agreement, and awarded Devas damages worth $672 million (Rs 4,245 crore).
But that is not enough for Viswanathan. In an hour-long chat with Fortune India from his residence in the U.S., he spoke about the case, his disappointment with the treatment meted out to him, and his willingness to fight till the end. Edited excerpts:
What stage of completion was the project at when the annulment was announced?
We invested significantly in two aspects of the project. First, money was put in for the contractual obligatory payment to Antrix for developing the satellite. Second, significant investments were made in technology. Once the satellite was operational, Devas was supposed to develop the technology to deploy it as a service provider and launch in 2011. Between 2001 and 2009, we conducted full technology trials in Bengaluru, and developed the terrestrial network, devices, and components for ISRO. When you cancel a deal at such an advanced stage, you cannot recover the investments made.
How much money did the three major investors—Deutsche Telekom, Columbia Capital, and Telecom Ventures—pump in?
The three investors joined the project between 2006 and 2008. By 2011, they had invested over $130 million, after acquiring necessary approvals from the government.
Were you kept in the loop regarding the developments [i.e., the annulment]?
Absolutely not. That was the biggest issue. We were not kept in the loop. Even the International Chamber of Commerce (ICC) tribunal pointed out that neither the company nor its shareholders were ever kept informed about the annulment for the better part of the year. Fundamentally, it was a breach of good faith. Moreover, if we had been informed, we could have helped the Indian government just as we helped the U.S. government and various investigative agencies with their defence communication needs. We have the credentials and capabilities.
How did you learn about the annulment?
We came to know about it from the press—like the rest of the public. It was only after several months that we were informed, in writing, that indeed the government had made the decision to annul the deal.
What do you have to say about the awards given out by the ICC tribunal?
The award against Antrix [the counterparty in the contract] was announced in September 2015, and it included liability and monetary damages of $672 million, with a post-award interest of 18%. The amount has gone up to nearly $750 million today. The second arbitration was regarding the Mauritian shareholders [owned by Columbia Capital and Telecom Ventures]. Here the arbitration was split into two phases: the liability phase and the monetary damages. While the Republic of India has already been found liable for breach of the Indo-Mauritius Bilateral Investment Treaty, the quantum of damages is yet to be finalised. The third arbitration is regarding Deutsche Telekom’s investment, for which the hearing was held in April in Paris, with judgment still reserved. This one is about the breach of the Indo-German treaty.
The CBI recently filed a charge sheet against you. Will it have any impact on the cases pending in other tribunals?
Investigations by the CBI, ED, and other authorities like the Registrar of Companies have all been reactionary because they have all occurred at various stages in the past five years—either on the eve of a hearing or shortly after the announcement of the awards. The timings have struck me as rather unusual because none of these agencies, prior to 2011, had any issue with Devas or its shareholders. I think it is a reaction to the assertion of our rights. However, we don’t believe that it will have any impact on the legal arbitration process because, in a large part, there is no case. I would also like to point out that even in the past two years, when the CBI has been investigating the matter, it did not raise this issue with the tribunal.
There have been attempts to pressurise the company and its shareholders. As the matter has lingered, the agencies are trying to escalate the pressure. However, I believe this will have a limited impact. Even though there have been a dozen cases pending with the CBI, none of them is about wrongdoing on the part of the company.
Is the government in favour of a negotiated settlement?
Clearly that doesn’t seem to be the case. But I can’t comment on behalf of the government. Its response has been quite remarkable given the circumstances, at least on the face of it. However, we continue to be open to a negotiated settlement and ultimately finding a resolution. We will continue on this path to the very end, but I don’t think it is in the best interests of anybody because the outcome will be disadvantageous and problematic for India. [The government has already lost two international arbitration awards and is likely to lose the third, which will only mean that the amount of damages that it will have to pay will mount.]
What are you looking for in a negotiated settlement?
Shareholders have made significant investments over the last decade. If the government chooses to utilise these investments, technologies, and assets that have been created, it has every right to do so. But it needs to provide a fair and just compensation to the shareholders who have helped to create these assets and technologies. And that is what the tribunals have awarded.
What are your options in case the government is not willing to negotiate?
We have always been open to having a dialogue, not just with the previous government, but with the current one as well. But we have to also stand by our legal rights and will have to continue to assert them, and protect them for us to move forward. [It means that the company will try to enforce the award—$ 672 million in damages—by seizing assets of Antrix/ ISRO in India and abroad.]
What is the impact of such decisions on the government’s ability to attract foreign direct investment?
If you look at the proposition of the present government, it has been around the notion of India as an investment destination. It is true that China slowed down last year and India has had better growth, so the relative attractiveness of India has gone up. But if India is looking for long-term investments to fund infrastructure and new capabilities in technology, and to be able to make substantial difference in economic growth over the next decade, it will require long-term stable policies. The environment cannot be unpredictable because investors are not just seeking political stability but also legal maturity to adhere to international laws. Not doing so will be detrimental to India, which claims to be a law-abiding country. How can it claim [to be law abiding] if it flouts international arbitration and law, and also files charge sheets to implicate people in criminal proceedings in response to what transpired in a commercial dispute?
What has been most disappointing for you?
It’s disappointing that this has happened in my own country. As an NRI, I wanted to bring innovative value to the country where I was born and brought up and to make a significant difference, not just commercially, but also to improve certain segments of society. I am disappointed to see the manner in which the government has reacted, not just to me but also to many other NRIs. If this is the kind of treatment that is meted out, it will be quite challenging to attract both talent and capital to India.