ED set to slap penalty notices on Lalit Modi over forex violations

  • HT Correspondents, Hindustan Times, New Delhi/Mumbai
  • Updated: Jun 16, 2015 00:43 IST

The enforcement directorate (ED) is set to conclude adjudication proceedings over alleged forex violations by Lalit Modi and other cricket officials involving transactions of about Rs 2,000 crore, as a political storm rages amid accusations that external affairs minister Sushma Swaraj favoured the former IPL boss.

After the adjudication process is completed, the ED may issue final orders for payment of penalty but no decision on this has been taken so far, sources said. A penalty worth three times the amount involved could be ordered by the adjudicating authority, which would then have to be realised by the ED, said an agency source.

“On completion of the adjudication process, the ED is likely to issue final orders for penalty in the coming months against those facing the probe, including Modi,” said the source.

ED officials said Modi’s lawyers were attending the adjudication proceedings. Modi’s lawyers have denied any wrongdoing.

“Showcause notices have been served and are under adjudication but we cannot predict the outcome of the process,” the source told HT.

News agency PTI said the ED is “in the process of serving final penalty notices” in 16 alleged forex violation cases amounting to an estimated Rs 1,700 crore against Modi and others as part of its wide-ranging probe into alleged financial irregularities in various editions of the T-20 cricket extravaganza.

“UK authorities, the country where Modi is currently based at, treats FEMA (Foreign Exchange Management Act) as a civil law. And they share information only in criminal cases,” said a top ED officer, indicating that not enough information was forthcoming from that country.
Other than Modi, most parties, including Board of Control for Cricket in India (BCCI) office-bearers involved in conducting the IPL, had recorded their statements, ED sources said.

“A probe was initiated in 2010 on various counts of irregularities that came to light. One of the issues involves BCCI operating a bank account in South Africa without requisite permissions from the Reserve Bank of India (RBI),” said an ED officer, requesting anonymity.

As per FEMA rules, to open and operate an account abroad, an Indian person or entity needs to seek the RBI’s permission.

Sources said the BCCI transferred over Rs 200 crore worth of foreign exchange to that account through Cricket South Africa, again in contravention of FEMA provisions. The ED found that the BCCI spent money from that account for IPL season two.

Also on the ED radar are FEMA violations whereby the BCCI allegedly received ‘performance deposits’ from foreign companies.
The probe revealed the board had not taken permission from the RBI to accept such deposits from persons residing out of India, ED officials said.

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