Satellite Information Services

Debate between Heather Wheeler and Gerry Sutcliffe

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.