Satellite Information Services

Gerry Sutcliffe Excerpts

Wednesday 11th September 2013 Westminster Hall

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Gray. I thank you, and Mr Speaker, for allowing me to call this debate on an issue which, although having been mentioned in the House before, has never been the subject of a debate. Recent events, however, mean that it deserves to be aired, and I look forward to the Minister’s reply to the points that the debate will raise. I acknowledge the work that the Minister and his Department have done on the matter, and I know that he will have to speak to colleagues in other Departments about the issues that I will raise.

I speak as a friend of India and, indeed, of sport. I want to see India assume its rightful place at the high table of international sport. I sought this debate as much out of concern for India’s reputation as for the future of Satellite Information Services—SIS—important though that is.

As the Minister knows, in October 2010, under notoriously difficult conditions, SIS successfully delivered widely praised world-class broadcast coverage of the Delhi Commonwealth games for the global television market, on behalf of the Indian public service broadcaster, Prasar Bharati. The decision to host the games in India was made when I was Minister for Sport, and that is where my involvement comes from. I was involved in ensuring that we did our best to help the Indian Government to have a successful games. I believe that India was very successful, but the events that unfolded were perhaps a bit disappointing.

The SIS unit that was responsible for negotiating and delivering the contract was, in effect, the former BBC outside broadcasts, which SIS had acquired in 2008. However, regrettably, it seems that from almost the very day on which SIS was awarded the contract the company was the subject of sustained hostility from a wide range of interests. Before and during the games, it was the target of unwarranted accusations and serious, misleading media smears, compounded by what appeared to be at best obstruction, and at worst harassment, from official sources, including, oddly, a tax office inspection of the company’s accounts in the middle of the games. That should all be seen in the context of the maelstrom of rumours, accusations and charges of maladministration that followed the games.

One result of the situation has been that although SIS received partial advance payment, not a single payment has been made since the games concluded, and the company is still seeking in excess of £28 million in unpaid charges, costs and liquidated damages. This is a sorry story, which has overshadowed the games, sadly damaged India’s global reputation and seriously affected a company that has done nothing wrong, and everything right.

From the earliest stages of the contract, it was apparent that SIS and the ex-BBC colleagues had been caught in the crossfire between different political and commercial interests, and it also became clear that there were other interests that wished to see those involved in the Commonwealth games, and in the broadcast contract in particular, discredited. It also appears that, at some level, there is a marked reluctance to settle any debts associated with the games, employing every means—legitimate and otherwise—to avoid paying the bills. Indeed, almost every foreign contractor involved in the Delhi games has faced similar difficulties in obtaining payment. For SIS, however, the situation has been even more damaging than the failure to collect a commercial debt because the reputation of the company has been seriously and unfairly attacked, possibly resulting in a loss of future earnings and threatening the very viability of the company.

In an attempt to get to the bottom of the problems surrounding the games, the Indian Prime Minister commissioned a report from an independent committee, headed by Mr V. K. Shunglu, to investigate all the allegations of wrongdoing and to make recommendations. Let me be clear: I think that that was the right thing to do. The Prime Minister was absolutely reasonable and proper in holding such an investigation into the serious allegations. Sadly, the quality of the committee’s work fell a long way short of what the Prime Minister had every right to expect. That failure was a betrayal of the Indian Government, who were clearly determined to do the right thing, and of the Commonwealth games themselves.

The first report produced by Shunglu concerned the broadcast contract, but the manner in which it was prepared almost guaranteed that it would be flawed and inaccurate. It was notable that much of the false information published in the report echoed, almost verbatim, the false allegations that had been planted in the Indian media, yet the investigating committee made no attempt to approach SIS to verify the information before publishing it, apparently choosing instead to rely for its facts on the very same sources that had been feeding the media. Not only were the “facts” false, but they could easily have been corrected by looking at the publicly available and verifiable information, or by referring to SIS.

Most worrying however, was the committee’s recommendation that a criminal investigation into SIS by the Indian Central Bureau of Investigation—the CBI—was needed. Aside from the damage to the reputation of SIS, the existence of the criminal investigation has provided a reason for Prasar Bharati to avoid settling the outstanding payments.

[Heather Wheeler (South Derbyshire) (Con)]

I apologise for arriving a minute or so after the debate began. Does the hon. Gentleman agree that the report puts the viability of SIS at risk? I am looking for an opportunity for our Government to stand up for the company. It did a great job in India and it does a great job here—my local race course, Uttoxeter, relies on its great work.

[Mr Sutcliffe]

I am grateful to the hon. Lady for intervening because this is not about partisan party politics but about a company that did great work for the UK in its ambassadorial role to the Commonwealth games. We are all pleased with the successes of the Olympics and the Paralympics and what they mean to our great nation. The Government, through the Minister and his colleagues in the Department for Business, Innovation and Skills, need to help the company. SIS has been caught up in a situation that I found embarrassing. Having been Minister for Sport, I did not think that those sorts of things could happen, but clearly they have.

On 31 July 2012, the CBI investigation filed its report in court. Although the report is not yet public, it is known that the CBI has comprehensively dismissed all the allegations made against SIS by Shunglu. The Shunglu committee is now widely discredited. Most encouraging in that respect is a recent statement from the Indian Government that describes the central allegations in the Shunglu report as being based on the wrong premise and the wrong facts. However, under the Indian legal system, a criminal investigation is not formally closed until the CBI court makes its ruling following receipt of a CBI report and, unfortunately, although a date for considering the report has been set on no fewer than 15 occasions, each time there has been an adjournment to a later date. That is obviously a matter of great frustration for SIS, and it represents a continuing and unfair slur on what, as the hon. Member for South Derbyshire (Heather Wheeler) said, is a fine and highly respected British company. I do not think that any of us in the House would want external involvement in the Indian legal system, but the number of delays must surely create credibility issues for the company.

I think that the real reason SIS has remained unpaid is not the existence of the criminal investigation but because Prasar Bharati has refused settlement, and is locked in dispute with SIS over a range of contractual matters. As with any project of this scale, understandably there are areas of disagreement and dispute, but the contractual matters were not central to the delivery of the contract. Those peripheral issues are now subject to arbitration, and would have no obvious bearing on the payment of the greater part of the outstanding debt. Sadly, there seem to be few signs of any wish to expedite or facilitate fair payment. Indeed, since the games, SIS has continued to be the subject of a range of hostile initiatives from various agencies and, in the arbitration process, of a highly aggressive approach by lawyers acting on behalf of Prasar Bharati.

Although few would argue that the core contract was performed in anything other than spectacularly successful fashion, Prasar Bharati has seized a £3 million performance guarantee provided by SIS before the games and, arguing that the entire contract should be considered voidable, has even demanded the refund of the partial payments paid to SIS. As I have said, the court case is a fig leaf of justification. The real area in which the Government might offer assistance is in encouraging Prasar Bharati to engage constructively in the arbitration process and to settle the issue amicably, fairly and soon.

Not only have Prasar Bharati lawyers had SIS in their sights; at times, it has almost seemed as though one Indian Government agency after another has been lining up to take shots at the firm. I will give one example. In a sensible move to enable the necessary participation by foreign contractors in the Commonwealth games, the Indian Government passed a regulation to allow duty-free temporary imports of equipment for the games, but the Indian customs authorities have sought to exploit every possible loophole to seek payment of duty. One claim against SIS, which was thrown out, suggested that because SIS might have used some of the equipment, it was technically second-hand equipment and therefore subject to duty, as second-hand goods were not specifically mentioned in the Government’s duty waiver.

SIS’s achievement in delivering a quality product for global audiences under the most adverse circumstances—we all remember the preparation issues and problems of the games—has been applauded by client broadcasters all over the world. In most countries, SIS would be seen as a hero, but instead it has been persecuted as a criminal.

As I said earlier, I had the honour of serving the country as Minister for Sport when India was awarded the Commonwealth games. I shared the widespread view that that was a fine and well-deserved decision, and I still hold that view. There were many heart-in-mouth moments and nerve-jangling worries during the run-up to the games. On one occasion, I met Commonwealth games officials who were concerned that, three months before the games, things were not in place. However, the good news was that they were, and it was a great pleasure for me to see the success of the games, as it was to see a company such as SIS working with the Indian Government and showing national broadcasters that it was in an effective partnership.

It has also been a joy, over the past decade or two, to see India increasingly taking its place at the high tables of the world: with its economy and as a great, vibrant democracy, it has been playing its part in the world.

[Mr Laurence Robertson (Tewkesbury) (Con)]

I raised this issue in Foreign Office questions just last week. I, too, want to speak highly of the company. I know many of the executives quite well. They are generous in supporting charity events and many other things, for which I commend them. The hon. Gentleman is discussing India’s reputation, on which I do not wish to cast any doubt, but will he suggest to the Minister that he might look carefully at India’s record on such issues, because other companies have experienced questionable delays?

[Mr Sutcliffe]

I am grateful for the intervention of the hon. Gentleman, whom I will call my hon. Friend: he and I have been involved in many issues concerning great sports in the world. I would go back to the Olympics and Paralympics in London, which were the pride of our country, and India should have pride in the fact that it staged the Commonwealth games, but Governments should and must look at the people who have helped them to achieve such distinction.

I am involved in the issue because I believe that the company has been unfairly treated. We have tried to push the interests of British companies in the world of sport in relation to the next Olympics in Rio in 2016. British companies have brought fantastic expertise to the world of sport, and companies such as SIS should not, for the reasons that I have outlined, be in this situation.

I am not making an attack on India, which is a nation of great resolve that can do fantastic things, but its reputation is being impugned. I hope to go to India in the next few weeks, as part of a delegation to promote sport and its wider benefits, and to have an opportunity to speak to the Indian Minister for Sport to try to resolve the matter, because the very unfair situation has impacted on the country. Having been a Minister, I know that it is not for Ministers to involve themselves in the legal situation, but we need to send a strong message that the company has been treated badly, which has had an impact on the reputation of the country, and that the matter needs to be resolved as quickly as possible. I have mentioned the delays arising from the number of times that it could have been resolved and, quite frankly, that does not show positive input in relation to what the Indians should do.

As hon. Members will know, the Commonwealth games next year are in Glasgow. Such games are a massive part of our sporting environment and our sporting legacy. It is great to have the opportunity for people from the Commonwealth to come together. India showed its mettle by applying for the games and by, in the end, holding a successful games. All I ask is that it honours its commitments to companies such as SIS and stops the in-fighting, and that the Minister and his colleagues give people working in the sector the necessary reassurance that we are doing everything we can to resolve the issue.

I look forward to hearing what the Minister might be able to say today. I understand the problems about his and other Departments working together, but time has moved on, and we must ensure that he speaks to his Indian counterparts to express our concern and find a way to support this great British company, SIS, which through no fault of its own, has been put in a ridiculous situation. I hope that he can be positive in his speech, including if there need to be meetings with SIS or parliamentary colleagues. As I have said, this is not a partisan matter, but one on which colleagues from all parts of the House want to support the company and to see a successful end to the problem that it faces.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

It is a pleasure to serve under your chairmanship, Mr Gray. I am grateful to the hon. Member for Bradford South (Mr Sutcliffe) for calling this important debate, and to my hon. Friends the Members for South Derbyshire (Heather Wheeler) and for Tewkesbury (Mr Robertson) for their contributions.

I absolutely agree with the hon. Member for Bradford South that Delhi was a wonderful host for the 2010 Commonwealth games, and that Glasgow will be a wonderful host for the 2014 games. As we have seen with the Commonwealth games and the London 2012 Olympics and Paralympics, such events leave a lasting sporting legacy. That was the case in India and the United Kingdom, and it will be so in Scotland, with those countries enjoying world-class sporting facilities and a renewed interest in sport in all parts of their communities.

Our relationship with India goes wide and deep, not least because of our sporting rivalry. We, of course, beat India in 2012, and then India beat us—or, more accurately, England—in the Champions Trophy. One example of the legacy for India of the Commonwealth games was that it was a springboard for New Delhi to host a formula one grand prix. The purpose-built track has received great reviews from all involved in the sport, and it is now a fixture on the formula one calendar.

Unfortunately, concerns have been expressed in this debate by a senior Minister in the previous Government, as well as by senior Conservative Back Benchers, about the problem that SIS faces in relation to receiving payments for goods and services following the Commonwealth games. As the hon. Member for Bradford South has said, SIS is a highly reputable and successful British company that employs almost 1,000 people and has a multi-million-pound turnover.

It is therefore right and proper that the Government should seek to assist SIS in relation to its problems, and we have very much been engaged with the issue. Ministers, as well as two high commissioners in Delhi, have raised the matter a number of times with our Indian counterparts. The Business Secretary and the Minister for Trade and Investment have also raised it, as have Foreign and Commonwealth Office Ministers. Indeed I, too, have raised the matter, and I intend to write to the Indian Minister to raise it again. I understand that the Minister for the Cabinet Office is in Delhi tomorrow and also hopes to raise it. There is no shortage of Ministers raising this issue of concern.

I hope that our good friends in the Indian Government, with whom we work on a whole range of issues, will have noted our concerns and this important debate. Matters of little import are rarely raised in the House, and it is a measure of how important the British Parliament considers this issue that we are having this debate today. We are determined to engage with the Indian Government on it until it is resolved. I have met representatives of SIS Live and I have said that I am happy to help where I can. I remain in discussions with the company.

The hon. Member for Bradford South set out with great clarity the events that have led to the position that we are in today. It is absolutely right and proper that India should take seriously any allegations of corruption. It is also absolutely right and proper that those allegations should be thoroughly investigated, which is indeed what has happened. An investigation was called, and it was undertaken by the Central Bureau of Investigation. Although the report has not yet been published, it is pretty clear what the findings are. They are that no evidence of wrongdoing has been found in the SIS case. It is also the case, as we would expect, that all those alleged to have been involved in instances of bribery or corruption have consistently and strenuously denied it.

The CBI report came out at the end of July—not at the end of July this year, but at the end of July last year, so over a year ago. Again, it is absolutely right and proper that the judicial process should take its course. It would be unconscionable for the British Government to be seen to attempt to interfere in any shape or form. None the less, we note that the proceedings have been adjourned some 15 times, and we very much hope that they can come to their logical conclusion. As the hon. Gentleman said, SIS has been paid for some of its work, but is still owned some £12 million—40% of its contract—as well as the £3 million bond that has been cashed in, to which he referred.

To be blunt, if I were to choose to debate issues to do with India and our trade with it, I would want to spend this half-hour debating the fantastic commercial ties that the UK has with India, which are expanding and growing all the time. The Indian economy has remained vibrant even through the economic downturn, and India is, and should be, a fantastic place in which to do business. It would be extremely unfortunate if the continued publicity around this case were to give businesses in either country the impression that it is difficult to trade.

[Mr Sutcliffe]

The point is India’s reputation in the sporting world. As a former Sports Minister, I recognise that sport is high-profile. It covers the back pages and sometimes the front pages of our newspapers. India has a role to play because of the magnificence of Indian sport. None the less, this matter will damage the reputation of Indian sport if it does not get resolved.

[Mr Vaizey]

I note what the hon. Gentleman says. I am sure that anyone who knows about his experience as a successful Sports Minister under the previous Government, and his continued engagement in sport and sporting issues, will take those words with the seriousness that they deserve. As I have said, we have a fantastic relationship with India, and it is one we want to build on. We want good trading relationships. We want to remain one of the top destinations for Indian foreign direct investment, and we want to increase the business that we do with India. It is important to remind the Chamber that UK companies can, and do, succeed in India. The Prime Minister went to India in February. He took with him more than 100 businesses, including 30 small and medium-sized enterprises, demonstrating our continued commitment to do business with India.

We want to double our bilateral trade by 2015 to £23 billion. Despite tough global economic conditions, it was already worth more than £15 billion in 2012. India is the fifth largest foreign investor in our country and we are the third largest foreign investor in India, with more than 400 companies based there.

Jaguar Land Rover has recently announced the creation of 1,700 jobs as part of a £1.5 billion investment, which shows just what a strong British-Indian partnership can achieve. Tata Consultancy Services has set up a delivery centre in Liverpool, and Ashok Leyland has established its first overseas technical research and development centre in Warwickshire. Hinduja Global Solutions has expanded its TalkTalk operation in Preston. All such developments show the UK as a great place for Indian companies.

InterContinental Hotels is to expand in India by building 12 new hotels. Hampshire-based Serco has announced a partnership with ICICI Bank, India’s leading private sector bank, to service payment solutions for the Indian transportation industry jointly. There is the potential to do so much more. The UK excels in technology and expertise, which will meet India’s needs as it develops, and India offers complementary capabilities and innovations. As a Government, we are here to help British companies invest in India and Indian companies invest in the UK through the activities of UK Trade & Investment.

Later this month, the Minister for Trade and Investment will open India’s first British business centre in Delhi, headed by the UK India Business Council and supported by British business groups. There is a plan to open a series of centres across the major high-growth cities, forming a pan-India network by 2017, which will go a significant way to helping us do even more business together.

It is important to continue to improve the bilateral business environment and to remove obstacles so that more business can be done. We are working towards that with the help of the revitalised Joint Economic and Trade Committee, which was set up by Prime Ministers from both countries in 2010. The CEO forum led by Peter Sands and Ratan Tata has reported back with its recommendations of how we can capitalise on opportunities to increase trade and investment.

There is also the prospect of an EU-India free trade agreement, which would made a huge contribution to further liberalisation, and we strongly support the conclusion of such an ambitious deal. This is a truly cross-Government effort across Departments. Our relationship with India goes much wider than just trade and investment. We co-operate on a huge range of issues, including education, science and research, climate change, international development, defence, security, international issues and of course culture, which is my own subject area. We want more UK companies doing business in India, and we want more Indian companies investing in the UK, but we know that there are challenges. Bilateral business is good for both of us, and we want the UK to be India’s partner of choice.

Nevertheless, we will remain engaged, closely, with the SIS Live case. We want a great British company to have its difficulties resolved in India. As I have said before, it is absolutely right and proper that the Indian Government should wish to investigate any allegations of corruption. Given the findings of that investigation, we hope that there will be a speedy conclusion to the judicial proceedings and that, while we wait for that speedy conclusion, some kind of commercial negotiation can take place between the respective parties to see whether a conclusion can be put on the table for when those proceedings come to their appropriate end.