Mumbai:The Enforcement Directorate (ED) on Monday issued show-cause notices to India’s apex cricket body and the State Bank of Travancore (SBT) citing foreign exchange violations of Rs 1,650 crore during the second Indian Premier League (IPL) season in 2009.
ED, which probes forex violations and money laundering, cited violations of Foreign Exchange Management Act (Fema) norms in its notices, a top ED official said. He did not want to be named.
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.
Overseas edition:A file photo of a 2009 IPL match in South Africa
Fema makes it mandatory for banks to verify if an entity has received requisite Reserve Bank of India (RBI) approvals before carrying out such transactions; banks have the right to turn down such requests in case of discrepancies.
The Board of Control for Cricket in India (BCCI) had to transfer funds to South Africa to organize the second IPL season, for which it entered into an agreement with Cricket South Africa. IPL’s second season was shifted to South Africa over security issues as elections were being held in India at the time.
To facilitate the fund transfer, Cricket South Africa asked BCCI to open and operate a bank account in the name of IPL South Africa. According to ED officials, BCCI violated forex norms during these transactions.
Under Fema rules, any entity has to take RBI’s nod before transferring money abroad for certain types of transactions.
ED found that BCCI did not receive RBI approval to transfer money to the account in South Africa though SBT.
SBT did not follow the required due diligence process before executing the transfer when the lender was supposed to verify RBI clearance and the end use of funds, said the ED official cited earlier.
In an emailed response, SBT said it has received “no notice...as on date” and that it does not have any “pending issues with ED as on date”.
BCCI hadn’t received any show-cause notice in this regard till Monday evening, said Ratnakar Shetty, chief administrative officer.
ED began investigations into the issue last year and had summoned former IPL chief Lalit Modi and BCCI officials more than once for interrogation. The ED official said the department will complete all investigations by January.
This is the second time ED is issuing a show-cause notice to BCCI and SBT on the matter this year. In July, it issued its first notice to SBT, BCCI, the sporting body’s then secretary N. Srinivasan, then honorary treasurer M.P. Pandove and Modi for alleged irregularities in a related Rs 90-crore deal.
ED observed at that time too that BCCI hadn’t obtained RBI permission prior to transferring the money.