Mumbai: The Enforcement Directorate (ED), the agency that probes foreign exchange violations in India, says the Board of Control for Cricket in India (BCCI) has violated norms on the advance remittance of money to an overseas entity while conducting the Indian Premier League (IPL) in South Africa.
ED is also probing the role of four banks—Vijaya Bank, HDFC Bank Ltd, Yes Bank Ltd and Axis Bank Ltd—in BCCI’s alleged non-compliance with Reserve Bank of India (RBI) norms for remittances, according to a person familiar with the matter, who did not want to be identified.
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BCCI has been under the scanner of multiple investigating agencies, including the income-tax department, ED and RBI, for alleged violations of the Foreign Exchange Management Act (Fema) and income-tax rules.
According to the directorate, BCCI had made an advance remittance of at least Rs100 crore to Cricket South Africa for conducting the second season of IPL in that country in 2009 without getting approval from RBI.
Under Fema norms, advance remittances worth more than $500,000 (Rs2.34 crore) made by an Indian entity for any current account transaction requires RBI’s prior approval. Current accounts are maintained to run the day-to-day business of an organization.
“Under Fema, there is a huge responsibility of a bank that deals with such transactions to check the credibility of the business and the transaction,” added the person familiar with the matter.
Fema also makes it mandatory for banks to verify whether an entity has received requisite approvals before carrying out such transactions and has the right to turn down the request, in case of any discrepancy.
Samir Bajaj, deputy director, ED in Mumbai, was not available for comment.
Ratnakar Shetty, chief administrative officer of BCCI, told Mint: “When the enforcement directorate sends us the letter, we will reply to it.”
An RBI spokesperson said the banking regulator is not investigating the case.
The department has called for documents from Cricket South Africa, which had organized the event on behalf of BCCI and executed several other contracts related to travel arrangements and accommodation.
In an email response to Mint’s query, S.A. Panse, executive director of Vijaya Bank, said, “Vijaya Bank has not received any such communication from enforcement directorate till date.”
Neeraj Jha, head of corporate communications at HDFC Bank, said, “As you are aware, as a matter of policy, we don’t comment on these matters. However, I’ll take this opportunity to reiterate that we as a bank are extremely cautious in all our dealings. Have always been. So, it’s extremely unlikely that we will ‘default’ on any of our legal obligations, no matter what. We have been furnishing details to authorities as and when these have been asked for. Needless to say, we’ll continue to do so in future as well.”
A spokeswoman for Yes Bank said, “The information provided to you is incorrect. All transactions of Yes Bank are compliant with RBI regulations.”
An Axis Bank spokesperson said, “The bank has not undertaken any remittances on behalf of BCCI.”
In 2009, BCCI was forced to move the second season of IPL to South Africa after the Indian government expressed its inability to provide security cover during the tournament because the dates of the popular Twenty20 tourney clashed with the general election in India.
The onus was then on IPL to provide security and get state governments to promise protection, especially in the face of a terrorist attack on the Sri Lankan cricket team in Lahore. But most state governments expressed their inability to provide security cover during the time.
Faced with the prospect of scrapping the tournament completely as player schedules did not allow for an alternative timetable or taking the tournament out of India, BCCI chose the latter option.
Following talks with Cricket South Africa, BCCI decided to move the six-week-long tournament to that country.
ED is set to take over investigation of the purchase of a private jet by former IPL chairman and commissioner Lalit Modi.
The income-tax department has questioned Modi’s secretary about a payment of about Rs80 crore towards the purchase of a private jet, confirmed an official of the department, who spoke on condition of anonymity.
According to media reports, an income-tax investigation was able to link this payment to the Rs425 crore facilitation fee paid to World Sports Group, the agency that owned the global media rights for the cricket tourney, by Multi Screen Media Pvt. Ltd (formerly Sony Entertainment Television), for broadcast rights to the IPL. This could not be independently confirmed by Mint.
The facilitation fee was part of the renegotiation of the media rights contract in 2009.