SINCE 2010, Lalit Modi has been under investigation by the Directorate of Enforcement (DoE) primarily on charges relating to Foreign Exchange Management Act (FEMA) violations. These relate to four cases—the World Sports Group (WSG) contract, transfer of funds to South Africa for the Indian Premier League (IPL) Season II held in 2009, guarantee for IPL players in 2008, and consultancy payments abroad. The FEMA violations cited by the DoE run to several crores of rupees. According to the DoE cases, the total amount involved is about Rs.1,975 crore. The DoE sent 15 show-cause notices between 2013 and 2015 but Lalit Modi did not respond to any of them. There is yet another money-laundering case against Lalit Modi on the basis of the first information report filed in Chennai by the former Board of Control for Cricket in India (BCCI) chief, N. Srinivasan. Apparently, no progress has been made on this.
The biggest of these cases in terms of money involved is the one relating to the transfer of funds to South Africa. The FEMA notice on this cites violations to the tune of Rs.1,350 crore. This essentially relates to the absence of the Reserve Bank of India’s (RBI) approval while transferring the funds to South Africa and not remitting foreign exchange earnings back to India from the proceeds of the IPL second edition. The DoE case underscores that the BCCI working committee had given specific directions to Lalit Modi to seek RBI approval, but he did not heed the direction. Instead, he transferred funds to the South African Cricket Association and towards other expenses. Also, the ticket sales and stadium rights were not remitted back to India within the mandatory one-year period.
The second biggest case in terms of money involved is the WSG contract, where there is a FEMA notice of Rs.425 crore. This is related to the contract Lalit Modi, as IPL commissioner, gave to Mauritius-based WSG at 3 a.m. on March 15, 2009. He cancelled the telecast rights (in the subcontinent) which were originally with Sony’s subsidiary Multi Screen Media (MSM) before granting the new contract. But WSG, which had no previous experience in the field, failed to produce the bank guarantee of Rs.335 crore or find a subcontractor for the telecast. In a matter of a week, Lalit Modi informed the BCCI working committee that both WSG and MSM had arrived at a settlement and that MSM would pay Rs.425 crore “facilitation fee” to WSG. The DoE’s show-cause notice alleged that in the absence of a formal contract, the BCCI’s bank guarantee constituted foreign exchange violation.
The other two cases involving sums of Rs.160 crore and Rs.88.5 crore are related to the guarantee for IPL players in the game’s first edition in 2008 and consultancy payments abroad respectively. The FEMA notice on the latter states that a payment of Rs.88.5 crore made for consultants abroad on tendering, security and media campaign did not have RBI approval. While Lalit Modi is yet to appear before the DoE and make a formal defence, his statements to the media from time to time suggest an elaborate conspiracy involving political and non-political personalities to fix him. He has also periodically named different persons as partners to this conspiracy.
A Special Correspondent
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