Indian cricket board charged with forex violations in IPL
The Enforcement Directorate is set to charge the BCCI with having violated foreign exchange regulations. In a confidential report, the ED has said the Board entered into agreements with as many as 72 foreign players to pay them a base fee in foreign exchange without seeking necessary approvals. Gaurav Choudhury reports. Graphics: Breaking the lawUpdated: Sep 07, 2010 07:41 IST
The Enforcement Directorate (ED) is set to charge the Board of Control for Cricket in India (BCCI) with having violated foreign exchange regulations. It believes the BCCI kept the Reserve Bank of India (RBI) in the dark about financial guarantees of around $13.4 million (R62 crore) it gave to international cricketers to ensure their participation in the Indian Premier League (IPL).
In a confidential report, the ED has said the Board entered into agreements with as many as 72 foreign players to pay them a base fee in foreign exchange without seeking necessary approvals.
This payment was entirely separate from whatever the IPL franchisees paid to buy players at the auctions, and has never been disclosed publicly.
"Investigations have revealed that in order to facilitate the franchisees to contract international players, the BCCI-IPL entered into a memorandum of understanding with 72 foreign players as per which the BCCI extended guarantee to pay the base fee to the foreign players irrespective of the outcome of the bid,” the ED says in its report. “These guarantees were given by the BCCI without the permission of the RBI.”
When contacted, BCCI officials claimed ignorance. "I am not aware of it (alleged violation)," said Prof Ratnakar Shetty, the Board’s chief administrative officer.
Under the Foreign Exchange Management Act (FEMA), no resident Indian can offer financial guarantee in foreign exchange without RBI approval.
The ED’s findings are part of a multi-agency probe launched by the government in April, after allegations of financial irregularities relating to the tournament and its then chief organiser, Lalit Modi, surfaced.
The ED has also found that foreign exchange payments worth $2.5 million (R 11.5 crore) were made by BCCI to different entities in South Africa where tournament was held in its second year in 2009, says the report.
"The expenses incurred by the BCCI for staging the tournament in South Africa are stated to have been 'netted off' with the money earned in South Africa through the tournament," said a senior official, who did not wish to be identified by HT.
This means that the BCCI told finance authorities that whatever payments it made in advance to South African entities should not be considered as loss of foreign exchange.
Instead, these should be deducted from the foreign exchange earnings during the tournament. "But remittances made as advances and netting off of accounts amounts to contravention of FEMA rules,” the official pointed out.