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 each.

"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 M G 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, K R Sridhara Murthi and K N 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.