Rajasthan Royals owners Jaipur IPL Pvt Ltd (JIPL) has run into trouble with the Enforcement Directorate (ED). The company has been found to have committed several irregularities, including foreign exchange law violations.
Last Wednesday, the ED served four notices to the directors of JIPL, said to be linked to ousted Indian Premier League (IPL) commissioner Lalit Modi.
The agency, which tracks overseas transactions and money-laundering deals, has asked the Royals’ owners to explain within 30 days the sources and transfer of foreign funds, which it believes were remitted in violation of the foreign exchange maintenance act (Fema).
The findings are part of a multi-agency probe launched in April last amid swirling allegations of financial irregularities and murky dealing in the cash-rich cricket league.
While income tax department is looking into tax evasion, ED officials are chasing foreign exchange law violations in a maze of transactions linking tax havens and mysterious stakeholders in the teams.
In its fourth edition, which is on, IPL is now a 10-team league, with Kochi Tuskers and Pune Warriors debuting this year.
JIPL received foreign remittances in violation of norms, say the ED notices accessed by HT. According to Fema, a person living outside India can remit money to a company against shares only through normal banking channel — cheque payment or electronic money transfer — involving a valid foreign currency bank account of a non-resident.
According to ED, remittances to JIPL, including R63.15 crore in foreign equity, violated Fema.
JIPL had sought to issue shares to EM Sporting Holding Ltd, a Mauritius-based company, against remittances from ND Investments LLP and Manoj Badale of the UK. Badale, a director of ND Investments, holds 32.41% stake in JIPL.
Notices have also been served on Suresh Chellaram, managing director and chief executive of Chellarams Plc Nigeria, which holds 44.15% stake in the JIPL.
"I have not received any show-cause notice to date," Chellaram told HT in an emailed reply. Badale, JIPL director Raghuram Iyer and London-based businessman Raj Kundra did not respond to emails sent by HT.
ED's findings also show that JIPL was incorporated long after the team was auctioned. Its prior dealings were done by another company and that, too, without the approval of the Foreign Investment Promotion Board.
Besides, the valuation of JIPL shares, done by its chartered accountant, violated Fema norms.
The franchisee agreement was signed by JIPL, while Emerging Media Cricket Ltd, UK, had won the bid for team. The cricket board received the deposit money from another entity and not JIPL.