The Enforcement Directorate (ED) has found several irregularities, including potential foreign exchange law violations, in Jaipur IPL Pvt Ltd (JIPL), the company that owns the Rajasthan Royals and is allegedly linked to ousted Indian Premier League (IPL) commissioner Lalit Modi.
The ED, which tracks overseas transactions and money laundering deals, suspected wrongdoing in incorporation, auction and purchase with regard to the team that's partly owned by London businessman Raj Kundra, who didn't respond to an email from HT.
The Board of Control for Cricket in India (BCCI) refused to offer any comment as the matter is under investigation.
"From what we gather, the future of the Rajasthan Royals, as an entity, is under serious question," a BCCI official said requesting anonymity.
The firm was incorporated long after the auction of team ownership, and its prior dealings were done by another company and had no approval from Foreign Investment Promotion Board (FIPB), the ED said in an internal note, a copy of which is with Hindustan Times.
Besides, the valuation shares of JIPL, done by its chartered accountant, violates norms laid down in the Foreign Exchange Management Act (FEMA)
"Irregularities and suspected contraventions under FEMA have been noticed consequent to investigations conducted so far by the Directorate of Enforcement," the note stated.
ED's findings are part of a multi-agency probe launched by the government in April amid swirling allegations of financial irregularities and murky deals in the three-year old IPL.
While the income tax department is conducting an investigation into tax evasion by entities involved in the league, ED officials are separately chasing foreign exchange law violations in a maze of transactions linking tax havens and mysterious stakeholders in teams.
JIPL has received foreign remittances in violation of norms, the note said.
According to FEMA rules, a person living outside the country can remit money to a company against shares only by the normal banking channel.
JIPL had sought to issue shares to EM Sporting Holding Ltd, a Maritius-based company, against remittances from ND Investments LLP and Manoj Badale of the UK. It had approached the FIPB for permission to give foreign equity to EM Sporting Holding Ltd.