Under pressure over external affairs minister Sushma Swaraj aiding Lalit Modi on ‘humanitarian grounds’, the government is examining the possibility of contesting a Delhi high court decision to restore the ex-IPL chief’s passport in the Supreme Court.
It has begun looking at various aspects of Modi’s alleged involvement in financial irregularities in the popular cricket league, including tax evasion and unlawful foreign remittances.
The ‘light blue corner’ notice issued against Modi by the Department of Revenue Intel-ligence in 2010, on the request of the Enforcement Directorate (ED), remains valid even after restoration of his passport in August 2014.
In a delicate political situation following disclosures about Swaraj and Rajasthan chief minister Vasundhara Raje’s links with Modi, the government hopes decisive action against the fugitive former cricket administrator will help it counter an Opposition onslaught.
However, any decision on appealing against the high court order and seeking the impounding of Modi’s passport is unlikely to be taken until finance minister Arun Jaitley returns from the United States on June 25.
The ED, which tracks overseas transactions and money-laundering, had found several irregularities involving sources and transfer of foreign funds linked to Modi during his three-year stint as IPL commissioner since the league’s inception in 2008. Its findings were part of a multi-agency probe launched by the government against the fallen cricket czar in 2010.
Sources said the agencies were examining Modi’s involvement in foreign exchange law violations in a maze of transactions linking tax havens and mysterious stakeholders in one particular team.
According to Foreign Exchange Management Act rules, a person living outside the country can remit money to a company against shares only through normal banking channels — by cheque payment or electronic money transfer involving a valid foreign currency bank account of a non-resident individual.
There were allegations of remittances as foreign equity to one team during IPL’s initial years and that some teams may have been incorporated in the league long after the first team auction in 2007 under Modi’s supervision.
One forex violation case the ED is pursuing involves the routing of R21 crore from a Mauritius-based firm in 2007, in connection with which the agency is set to seek records from the income tax department, including annual returns, of a firm controlled by Modi and another that was then controlled by BJP MP and Raje’s son Dushyant Singh.
The ED suspects Modi’s Anand Heritage Hotels Pvt Ltd (AHHPL) received the R21 crore from Wilton Investment Ltd in Mauritius in the form of foreign direct investment (FDI) but it was not deployed for the “intended usage, for instance upgradation of the hotel”.
Anand Heritage Hotels is suspected to have passed on part of the FDI to Singh’s Niyant Heritage Hotels Private Limited (NHHPL) in the form of an unsecured loan of R3.80 crore and through the acquisition of 815 shares in two instalments — R10 shares were reportedly bought at a premium of R96,180 each.
Modi’s lawyers have denied any wrongdoing. In a statement released on Thursday, Singh said, “The transactions done by my firm, Niyant Heritage Hotels Private Limited, were in accordance with company rules and income tax rules. The facts on them were mentioned in full in income tax returns and are on record. My company did not flout any rule, nor did it commit any irregularity.”
The source, however, clarified “NHHPL is currently not in our FEMA probe scanner since the case is against the primary recipient of the FDI, AHHPL. Had our probe been on money laundering, we could have examined NHHPL”.
“We have examined a few officials of the hotel firm (AHHPL), including one of its then directors,” said the source. “We have not been provided details that could reflect that assets were created in proportion to the received FDI.”
The ED does have some records on the two firms that it received from the Registrar of Companies, the source added.
Pointing out that more summons were being issued to individuals under the scanner, the source said the agency may also ask Modi to “join the probe” when his presence is required. “If he wants to cooperate, he should come back and join our probe.”
Agency officials recently met with revenue department officials to look into Modi’s passport issue as well as the cases pending against him.