Devas Multimedia eyeing foreign assets of Indian govt to enforce $1.3 bn arbitral award
The Economic Times | 19 October 2021
Devas Multimedia eyeing foreign assets of Indian govt to enforce $1.3 bn arbitral award
By Alnoor Peermohamed
Devas Multimedia’s investors are eyeing several properties owned by the Indian government across the world, as they seek to enforce a $1.3 billion arbitral award the satellite company won against Antri,, the commercial arm of India’s space agency. Jay Newman, a senior advisor to the company, told ET that it is "nearly impossible" for the country to avoid enforcement action.
Newman is a former Elliott Management executive who has been roped in by Devas’ shareholders, including Columbia Capital, Telcom Ventures and Deutsche Telekom, to advise them on how to make the government pay up.
"For a sovereign that’s as worldly and as present as India is, it’s very diIicult to ultimately prevail in avoiding enforcement. I would say it’s nearly impossible if the litigants have the will and the skills to pursue enforcement," Newman, who successfully led Elliott’s 15-year-long battle to get Argentina to repay debt it had defaulted on, said.
Elliott Management is a New York-based investment Nrm that is one of the largest activist funds in the world with about $48 billion in assets under management as of June. The investor has made a name for itself by investing in mid-size (and some larger) technology Nrms, then pushing for management changes, sell-outs and even buyouts to maximise returns.
In the year 2000, Elliott began buying Argentinian debt, the default of which resulted in a $4.65 billion payout in 2016 to Elliott and three other hedge funds. Newman, who retired from Elliott in 2016, led Elliott’s charge to get Argentina to pay it $2.4 billion, booking returns of 10-15 times its initial investment, according to news reports.
Earlier this year, Devas’ shareholders Nled a petition in a New York court seeking to seize the assets of Air India (which was recently sold to the Tata Group), arguing that it was the "alter ego" of the Indian state and, therefore, liable to pay for sovereign debts. Devas was the second company to do so after Cairn Energy Plc.
In August, Air India wrote to the US court asking for the claims to be dismissed. On whether Devas’ shareholders would pursue the seizure of Air India’s assets now that the state-run company had been privatised, Newman said India owned a lot of property overseas and that investors in the beleaguered satellite maker had their eyes on many opportunities.
The 69-year-old said he had come back from retirement to pursue the case as he found it to be a "...disturbing trend when countries don’t observe the rule of law, and particularly when courts don’t observe the rule of law, which is what we’re seeing with the NCLT (National Company Law Tribunal)."
Antrix has argued previously that the deal with Devas, signed in 2005, was fraught with fraud. It Nrst made the allegation only after losing the arbitration awards against Devas.
Earlier this year, NCLT ordered the winding up of Devas Multimedia, ruling that the incorporation of the company itself was done with fraudulent motives to siphon oI funds to foreign accounts. The order was upheld by the National Company Law Appellate Tribunal (NCLAT).
Devas’ shareholders have told US courts that Antrix, in collusion with the Indian government, had turned the company into a "Ghost Ship" by placing it in liquidation. India’s motion to stall the enforcement proceedings - by arguing that the company was in liquidation over charges of fraud - were, however, found lacking in merit by a US federal judge.
"It does seem that the NCLT is, without any real investigation, simply taking the side of the Indian government. I think we’re all hopeful that when these cases get to the Supreme Court, there will be adult supervision," Newman said.
He added that India had never really put forward any real evidence to prove fraud in the deal with Devas. Antrix did not respond to ET’s queries, while senior NCLT oIicials did not return calls till press time Monday.
