Franchisees accounts under ED scanner

The Finance Ministry is learnt to have issued a directive to the ED to look into the probable use of dubious foreign funds sourced from overseas tax havens in the financial transactions of the Twenty20 cricket show, sources close to the investigations told Deccan Herald. (The ED is the competent agency to detect the induction of foreign funds through illegal routes.)

The directive was issued after preliminary investigations carried out by nine directorates generals of Investigation (DGI) of the Income Tax (I-T) Department indicated “strong possibility” of the use of foreign funds in various financial transactions, especially during the bidding for some of the IPL franchisees, sources said.

The DGIs, who are now looking into the source of funding during the bidding for all the ten IPL franchisees, including  IPL Kochi and IPL Pune, have reportedly found some “gaps” in the fund arrangements of some of them, according to the sources. I-T sleuths suspect that these “gaps” could have been bridged by the induction of foreign funds through illegal routes, the sources said.

After processing the preliminary investigation inputs submitted by the DGIs, the Central Board of Direct Taxes (CBDT)  suggested to the Finance Ministry to engage ED to track down the involvement of illegal foreign funds during the bidding.

Preliminary investigations by the DGIs located in Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Chandigarh, Delhi, Jaipur and Kochi have revealed that individuals as well as consortium of companies, who  own IPL teams, have their companies registered in offshore tax havens, sources said. I-T sleuths suspect the involvement of massive foreign funds in the bidding for the franchisees for the Jaipur, Kolkata and Bangalore teams, sources said.

The Jaipur team—Rajasthan Royals–– is partly owned by  cine star Shilpa Shetty and her husband Raj Kundra. The bidding for Jaipur IPL was settled at $ 67 million.

The Kolkata team––Knight Riders–– is owned by cine stars Shah Rukh Khan, Juhi Chawla and her husband Jay Mehta. The bidding price for the team was $ 75.09 million.  
The Bangalore team –– Royal Challengers –– is owned by Vijay Mallya. The bidding for the team was $116.6 million.