Mumbai: The Enforcement Directorate (ED), which investigates foreign exchange violations, has issued a show-cause notice to the Board of Control for Cricket in India (BCCI), its secretary N. Srinivasan, honorary treasurer M.P. Pandove and former Indian Premier League (IPL) chief Lalit Modi for alleged irregularities in a Rs 90 crore transaction.
It has issued another show-cause notice to State Bank of Travancore, an associate of State Bank of India, through which the transaction was made.
According to an ED official, who declined to be identified, the notice is regarding the violation of Foreign Exchange Management Act (Fema) norms in IPL, the popular Twenty20 cricket tournament that held its fourth edition this year.
A show-cause notice is not an indictment. It only requires the company that receives such a notice to explain its position, typically within a month.
The agency had begun investigations into the issue last year and has summoned Modi and BCCI officials more than once for interrogation.
According to the show-cause notice, in 2008, BCCI had entered an agreement with sports and event management firm IMG Worldwide Inc.’s UK office for consultancy services for IPL. BCCI remitted Rs 90 crore to the company for its service through State Bank of Travancore. This transaction, according to ED, was in violation of Fema norms as it was not cleared by the Indian central bank.
“Under Fema, BCCI should have taken Reserve Bank of India (RBI) permission before transferring the money. We found that BCCI had neither informed nor taken permission from RBI for the transaction,” the same ED official said.
All parties have received the show-cause notice, he added.
Ratnakar Shetty, BCCI’s chief administrative officer, declined to comment. Pandove was unavailable for comment.
Srinivasan, currently in England with the Indian cricket team, maintained that he had not been told of any such development. “I am in England, watching the match. I don’t know about this,” he said. India is currently playing its 100th Test against England at Lord’s.
Modi’s lawyer Mohammed Abdi of Wadia Ghandy and Co said he had no knowledge of the development. “This is the first time I am hearing this. I am not aware that another show-cause notice has been issued (to Modi),” he said.
ED had earlier issued a show-cause notice to Modi for his alleged non-cooperation with the investigation. It also wrote to the ministry of external affairs, asking it to revoke Modi’s passport, alleging non-cooperation with the agency’s investigation.
Modi, whose passport has been revoked, is currently believed to be in London. His legal representatives are contesting the revocation of his passport.
State Bank of Travancore said the bank was not aware of the development.
Fema makes it mandatory for banks to verify whether an entity has received the requisite RBI approvals before carrying out such transactions and has the right to turn down the request, in case of any discrepancies.
The agency, in its show-cause notice, has accused Modi, and Pandove of violating foreign exchange laws.
Modi had allegedly negotiated the deal with IMG while Srinivasan and Pandove were instrumental in carrying out this particular transaction.
BCCI has been under the scanner of multiple investigating agencies, including the income-tax department and RBI, besides ED, for alleged violations of Fema and income-tax rules.
In 2010, BCCI had summoned officials from IMG, the sports and event management company that has been organizing the league since its inception in 2008.
The meeting had apparently been convened by the board to clarify whether IMG had been aware of Modi’s alleged misdemeanours, including charges related to the rigging of the initial bids for some franchises in 2008 and the award of media rights to World Sport Group Pte Ltd and Multi Screen Media Pvt. Ltd.
The 2010 meeting, termed by BCCI as “routine”, was attended by the cricket board’s senior officials, including president Shashank Manohar, secretary Srinivasan and then interim IPL chairman Chirayu Amin.
Andrew Wildblood, an IMG senior vice-president, was accompanied by senior legal counsels Paul Manning and John Laffhagen at the meeting.
IMG’s role in the running of the league had come under a cloud following the suspension of Modi as IPL chairman and commissioner.