Taxmen swoop down on IPL franchisees

BCCI office-bearers sharpen knives for post-April 25 coup detat

The simultaneous raids, carried out in eight cities across the country, were targetted at IPL franchisees Kolkata Knight Riders, Chennai Super Kings, Deccan Chargers and Kings XI and also on companies handling the broadcast rights of the cash-rich cricket league.
Income Tax authorities broad-based their probe into the alleged financial irregularities in the IPL, surveying offices and looking into documents in tandem with the Enforcement Directorate (ED) which is investigating the routing of funds from tax havens into the three-year-old league.

ED case
The ED registered a case against IPL — the first — under the Foreign Exchange Management Act (FEMA) to inquire into unauthorised transfer of foreign funds, Directorate sources said.

The searches signalled a tense build-up to the expected showdown between embattled IPL chief Lalit Modi who is under pressure to resign and his detractors in the BCCI ahead of the April 26 meeting of the IPL’s Governing Council meeting. Summons were issued to the BCCI by the Income Tax authorities to furnish complete details of all eight original IPL franchisees.

The Chennai Super Kings (CSK) team fully owned by the Chennai-based India Cements Limited (ICL) came under the I-T scanner after raids were carried out on least five premises related to the CSK owners, including the residence of India Cements Vice-Chairman N Srinivasan who is also Board of Control for Cricket in India (BCCI).

The historic India Cements holds the entire 100 per cent equity in CSK and hence everything is under Srinivasan’s indirect control.   

Simultaneous visits
In Kolkata, a seven-member IT team surveyed the offices of Bollywood star Sharukh Khan’s Kolkata Knight Riders and Cricket Association of Bengal. There were simultaneous searches on the offices of the Red Chillies Entertainment which owns KKR at the Eden Gardens and then on Gameplan, a sports management group which looks after KKR’s affairs, on Shakespeare Sarani.

In Chennai, Tax sleuths today surveyed the office of CSK owned by India Cements. BCCI Secretary N Srinivasan is the Vice-Chairman and Managing Director of India Cements.
In Secunderabad, an IT team visited the office premises of Deccan Chargers Sporting Ventures limited.

“Our investigation team was there in the Deccan Chargers office,” an IT official said. Company officials denied any searches or raids.

I-T officials also went for a survey of the Kings XI office in Gurgaon, sources said.

In Mumbai, the I-T department searched the premises of companies associated with the IPL in the wake of allegations that telecasting agency Multi Screen Media had paid a facilitation fee of USD 80 million to marketing agency World Sports Group. The searches were conducted at  the office premises of Multi-Screen Media (MSM) in suburban Malad, the telecasting agency of IPL, World Sports Group (WSG), the marketing agency of IPL, International Management Group (IMG), the organising agency, and the Bandra house of WSG CEO Venu Nair.

The raids are related to a “facilitation fee” of USD 80 million paid by MSM (formerly Sony Entertainment Television) to WSG, a source close to the development said.

“The Tax officials requested details of the contractual arrangements in relation to the BCCI and IPL and WSG cooperated fully with the investigating officers and will continue to do so,” a WSG statement said.

I-T officials spent more than three hours in the offices of the ‘Deccan Chronicle’ newspaper group in Hyderabad, poring over records and papers concerning the deals of the Deccan Chargers franchise.

Muthiah’s outburst
Significantly, the I-T raids on the premises of India Cements and CSK have come close on the heels of Srinivasan's former rival in the Tamil Nadu Cricket Association (TNCA) and former BCCI president A C Muthiah calling for a “ban on IPL” itself and the Centre taking over BCCI’s activities.

Stating that the BCCI’s decision to spin-off the IPL organisation was wrong in the first place, Muthiah said in Chennai that it paved way for the unabashed convergence of commercial and cricketing interests.

Calling for sensitively handling this utterly disturbing episode that has exploded after the Sashi Tharoor controversy, Muthiah charged without naming anybody that “some people” were allowed to “swindle huge sums of money” when all the income should have legitimately gone to the BCCI from the IPL auctions and tournaments. Hence, the IPL set-up should be banned, he emphasised.

T Venkatram Reddy, owner of the DC group and Deccan Chargers franchise said that in the event of a beleagured Modi stepping down, one of the 10 franchise owners should be appointed to the post considering it was the franchise money that was running the tournament. A BCCI member could be made joint commissioner, he suggested.