The Enforcement Directorate report spelling trouble for the BCCI — charging it with violations of foreign exchange exceeding Rs. 1,600 crore — asserts that the board’s top rung was fully aware of the illegalities and was party to the FEMA violations. These are charges the BCCI’s lawyers have denied, saying the ED had not raised any serious issue against the board.
The ED even drew Shashank Manohar, BCCI chief at the time, into line of fire. Its report points to the BCCI’s working committee meeting on the IPL on March 22, 2009, where the former IPL Commissioner, Lalit Modi, asked for the opening of an overseas account. Responding to his request at the same meeting, Mr. Manohar said the account would be opened after getting RBI clearance, which means the board was aware of the rule. Yet this was never done. “Mr. Manohar was in a position of authority as president of the BCCI and member of the IPL Governing Council. He appears to have failed in taking reasonable steps to prevent contravention of the provisions of FEMA,” the ED report concludes.
However, Mr. Manohar approached the Bombay High Court and has been spared appearance before the ED. The court has backed his argument that he was not in-charge of running the day-to-day affairs of the board and had offered his advice that RBI permission should have been taken in the IPL South Africa transaction. The court said the ED had not considered Mr. Manohar’s argument carefully. He had told the ED, “I had suggested permission from Reserve Bank should be obtained and the account be operated by the treasurer.” But he was unaware if this was done because it was an operational matter and did not, in his view, involve him.
The BCCI’s lawyers strongly rebut the ED’s charges. “There is absolutely no violation of substantive laws by the BCCI. There is not even a one rupee loss to the exchequer. The only violation that has been alleged is that it had not taken permission from the RBI for an activity which is not inherently prohibited,” says one of the lawyers handling the case.
Mr. Modi, for his part, has challenged the ED probe in court. “The allegations reflect collective responsibilities rather than personal responsibilities,” media reports quote a legal firm representing Mr. Modi as saying in a reply to the Directorate on September 3. “It is significant to note that the ED has not identified any specific contravention under FEMA committed by our client.”
The ED has also sent notices to other office-bearers of that period, including treasurer M.P. Pandove, chief administrative officer Ratnakar Shetty and Prasanna Kannan, India Cements employee. That’s a company of which Mr. Srinivasan is vice-chairman and managing director.
The ED says Mr. Pandove was fully aware of the transgressions since he was in-charge of the cricket body’s financial affairs. And that he was the one who finally gave instructions on remitting the money.
In his defence, Mr. Pandove said that he used to ask for money to be transferred to the Cricket South Africa (CSA) account on the instructions of Mr. Srinivasan. On the charge of not taking RBI approval, Mr. Pandove said they were under the impression that it was not needed while transferring money between two national sports federations.
Mr. Shetty has also been named by the ED for allegedly actively participating in the negotiations with the CSA. The ED says the agreement between the BCCI and the CSA was signed with his knowledge and so he was aware of the violations. In his defence, Mr. Shetty said he had little to do with the conduct of the IPL tournament. He said the IPL Governing Council had appointed a set of officials specifically to handle it.
The ED has also named Prasanna Kannan, who was working as manager of business and commercial services in the IPL. The ED says that all IPL-related bills were checked by him and forwarded to Mr. Modi and Mr. Srinivasan. It has accused him of connivance in FEMA violation. In his defence, Mr. Kannan has told the ED that his main responsibility in South Africa was to ensure that invoices approved by Mr. Modi were sent to Mr. Srinivasan for approval and then follow it up with the CSA to release payments.
The ED’s investigation report was submitted to its Special Director in November 2011 and is now under quasi-judicial adjudication. The ghosts of IPL South Africa could soon return to haunt the BCCI.