Kolkata: Sponsorship from the Saradha Group, which ran Ponzi schemes till April last year, has turned toxic and now threatens the existence of Kolkata’s iconic football clubs Mohun Bagan and East Bengal, whose bank accounts were frozen by the Enforcement Directorate (ED) in the past two days.

At least three other leading football clubs in Kolkata which received sponsorship from the Saradha Group and other deposit-taking companies fear similar action could be taken against them by ED—the central agency which probes money laundering and foreign exchange violations.

ED officials weren’t immediately available for comment.

Though an East Bengal official cried foul over the development, asking why no punitive action had ever been taken against the Board of Control for Cricket in India (BCCI) for receiving sponsorship from the Sahara Group for the Indian cricket team, the crisis into which Mohun Bagan and East Bengal have plunged will make clubs across India deal with sponsorship proposals more cautiously.

With their bank accounts frozen, Mohun Bagan and East Bengal will not be able to pay their employees and players, said officials of these clubs, asking not to be identified. For the clubs, which typically have several foreigners on their teams every year, it might become extremely difficult to attract players, especially from abroad, if it is unable to diffuse the crisis quickly.

If the clubs are unable to pay over a sustained period, the foreign players are likely going to lodge a complaint with the Federation International de Football Association (Fifa), an East Bengal official said, adding that the world football federation might not take kindly to the delinquency.

Though both Mohun Bagan and East Bengal, which received 2 crore and 4.5 crore, respectively, under sponsorship deals, will appeal to ED to unfreeze their bank accounts, they appear to be on a sticky wicket as the central investigating agency is slowly casting its net on all recipients of money from the Saradha Group and other similar financial enterprises.

It isn’t immediately known if the embattled UB Group, which funds these clubs under a long-term arrangement, will bail them out.

The group provides 75% of the funds to both the clubs and they raise the remaining 25% on the own. An email to the UB Group’s spokesperson remained unanswered.

One of East Bengal’s key official, Debabrata Sarkar, has been taken into custody by the Central Bureau of Investigation (CBI) for allegedly receiving pay-offs from the Saradha Group.

Sarkar, who was arrested on 20 August, is believed to have told CBI that the money he received from the Saradha Group was used for improvement of club facilities, according to officials.

CBI is probing the operations of the Saradha Group under an order of the Supreme Court. It took over the investigation from the local police earlier this year.

In a tell-all later to CBI, written days after he fled Kolkata in April 2013, Saradha Group chairman Sudipta Sen had alleged that he used to pay Sarkar to secure his firms from the regulatory glare of the Securities and Exchange Board of India, or Sebi.

Sen claimed to have paid Sarkar 5 crore in 2010 to start the relationship and thereafter 80 lakh a month.

Mint couldn’t verify the veracity of these claims.

“After ED, CBI, too, has asked us to provide details of our club’s financials," said an East Bengal official. “In our view, what Neetu (the name by which Sarkar is known in the club) told CBI led to the freezing of our bank account."

Similarly for Mohun Bagan, one of its key officials, Srinjoy Bose, has been interrogated by CBI for his dealings with the Saradha Group.

The club’s officials, however, said Mohun Bagan had nothing to do with the Saradha Group except receiving a 2 crore sponsorship in 2011-12. It didn’t even receive the entire sum, they claimed.

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