IPL Gate- BCCI Pay Foriegn Players Illegally

33 foreign players paid illegally

By: J Dey Date: 2010-04-24 Place: Mumbai

Rajasthan Royals among IPL teams that violated forex norms, says new I-T investigation report

IPL owners and the Board of Control for Cricket in India (BCCI) seem to have taken the famous Indian phrase for hospitality, ‘vasudhaiva kutumbakam’, to a whole new level.

Documents available with MiD DAY show that 33 foreign players were paid illegally to play for IPL teams.

Reserve Bank of India (RBI) norms were swept aside, the Foreign Exchange Management Act (FEMA) thrown out of the window.

A payment of $1,720,250 (approx Rs 7.63 crore) by BCCI-IPL to 33 foreign players was made without the RBI’s permission, says a new interim report by the special investigation team of Income Tax (I-T) probing corruption in IPL.

The BCCI also paid Rs 1.2 crore in violation of the Foreign Exchange Act, it adds.

The report says that in the Rajasthan Royals team, for instance, money was sent from two companies in the UK and Mauritius to the team holding company in India bypassing the RBI.

This implies that the country has lost on crores worth of foreign exchange and tax because of the violations. Also, that the black money routed from abroad went into paying the foreign players.

Initial investigation by the Income Tax department and Enforcement Directorate specially cites the Jaipur IPL Pvt Ltd, which owns the Rajasthan Royals team, accusing it of violating several FEMA regulations.

Same team, two faces?

The investigation report say that during questioning, BCCI and IPL officials failed to give any satisfactory reply as to how the franchise agreement was signed by Jaipur IPL Pvt Ltd when the franchise was won by Emerging Media Cricket Ltd, UK in the auction.

While the franchise money was paid to BCCI by EM Sporting Holding, Mauritius, it was Jaipur IPL Pvt Ltd which has claimed the deposit amount, according to the documents.

The deputy director, I-T zonal office in Hyderabad, is believed to have stumbled upon these financial irregularities.

Following allegations, I-T authorities conducted raids on various IPL offices.

A probe is on in the FEMA violation case. The documents say that Emerging Media Cricket Ltd had won the RR franchise.

The report says that UK-based Manoj Badale transferred GBP 2,58,206.72 (Rs 1.76 crore) and GBP 50,000 (Rs 34 lakh) on January 21, 2008 to Jaipur IPL Pvt Ltd. Investigations reveal the transaction was in violation of FEMA regulations.

When EM Sporting Holdings Ltd, Mauritius sought permission to infuse share capital in the Jaipur IPL Pvt Ltd, it was rejected.

On December 23, 2009, the RBI rejected the application by Jaipur IPL for approval to issue shares to Emerging Media (IPL) Ltd and EM Sporting Holdings Ltd Mauritius.

A senior IT official informed that some of the BCCI officials are likely to be prosecuted in connection for violating FEMA regulations. Statements of some of the office bearers have already been recorded, the IT officer added.

The Other Side
BCCI President Prof Ratnakar Shetty was not available for comment.
Chief Marketing Officer Raghu Iyer of Rajasthan Royals did not respond to phone calls and a text message.
The Punishment
FEMA violations can attract a fine three times the transaction amount. Primarily there is no imprisonment for violation of the law.

However, if the person cannot pay the penalty, then he can be arrested.

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