New Delhi : ED has slapped a show-cause notice on the Board of Control for Cricket in India (BCCI), Multi Screen Media (Singapore), a division of Sony Entertainment, and World Sports Group (Mauritius) for forex violation to the tune of Rs 425 crore.
The notice has also been sent to Srinivasan, Lalit Modi, Raman, MSM CEO Manjit Singh, International Management Group (IMG) legal counsel Paul Manning and seven other directors of WSG and MSM. ED has accused all parties of fraudulently creating an asset worth Rs 425 crore outside India under the guise of a facilitation fee.
The scam revolves around the 10-year media rights of IPL matches awarded to WSG, starting 2009. The total contract value was Rs 4,792 crore. It seems ED had finalised its interim investigation and issue notices based on the investigation.
In 2009, BCCI awarded IPL media rights to WSG for 10 years, at first. Later, it awarded the rights to MSM. MSM was made to pay Rs 425 crore to WSG for relinquishing rights. But in reality, there was no agreement between BCCI and WSG, and WSG had no rights to relinquish either.
The ED notice says Lalit Modi might be a beneficiary of the Rs 125 crore paid by MSM to WSG Mauritius (WSGM). MSM was paying the money in installments and had paid WSG Rs 125 crore till June 2009, according to a statement by Venu Parmeshwaran Nair, director of WSG, recorded on August 19, 2010.
WSG Mauritius was brought in later just to park rights with them. Then, Modi sent certain e-mails to various broadcasters and sponsors, including MSM, saying that the BCCI was barred from signing any new agreement till a certain court verdict was pronounced. Later, in another mail, he said that the verdict has been pronounced and the BCCI was free to enter into any agreement for media rights. The e-mail also said BCCI just signed a new agreement with WSG.
“It appears that the BCCI and Modi manipulated the terms of the contracts between BCCI-MSM and BCCI-WSG, so that the asset of Rs 425 crore created under the deed for provision of facilitation services, could be transferred to WSG and the contract could be made legally enforceable,” said the notice. By finalising a financial transaction in India, the BCCI, WSG (Mauritius) and MSM Satellite (Singapore) appeared to have contravened the provisions of forex regulation, says the notice.
“N Srinivasan, Lalit Kumar Modi, Paul Manning, Sunder Raman, Manjit Singh and other officials were in charge and hence responsible for the conduct of its business pertaining to the said transaction,” said the notice.
Under the FEMA Act, if any person contravenes any condition subject to which an authorisation issued by the Reserve Bank, he will be liable to pay a penalty up to thrice the sum involved. If such a contravention continues, further penalty may extend to Rs 5,000 for every day of continuation, said ED sources.
The notice was served Under Section 3 (d) of Foreign Exchange Management Act (FEMA),1999, and Section 6(3) (j) (ii) of FEMA,1999, read with regulation 3 of the Foreign Exchange Management (Guarantees) regulation, 2000.
