JOIN USRBI looks into alleged FEMA violation by BCCI
The Reserve Bank of India (RBI) is looking into the alleged violation of foreign exchange rules by the Board of Control for Cricket in India (BCCI) in remitting Rs 1,600 crore to two overseas cricket associations, according to sources with knowledge of the matter.
BCCI allegedly paid Rs 800 crore to Cricket Australia (CA) and Cricket South Africa (CSA) as 'additional participation fee' for the now-defunct Champions League T20 tournament.
BCCI remitted a similar amount in 2015 as their share of the Rs 2,500 crore received as compensation from the media rights holder, Star India, for terminating the USD 975-million, 10-year-deal in July 2015, they said.
BCCI has denied any irregularity in the payments saying that all necessary procedures were followed.
Sources said the payments were capital account payments that required explicit RBI approval and the central bank is now looking into the alleged irregularities that surfaced when BCCI accounts were being reconciled for Rs 2 crore shown as receivable from CA for the last 10 years.
The Supreme Court-appointed Committee of Administrators headed by former Comptroller and Auditor General of India Vinod Rai has submitted documents pertaining to the payments to RBI.
The penalty for the violation of the Foreign Exchange Management Act rules is 300 per cent of the amount in question.
BCCI treasurer Anirudh Chaudhry, however, denied any irregularity saying that all payments have been made after following due process and it was incorrect to state that these transactions were a capital account payments.
The board maintains these were current account payments just like the participation fee paid to CA and CSA.
"The entire process of the remittance of money to Cricket South Africa and Cricket Australia was undertaken by the then Honorary Secretary, Mr.Anurag Thakur's office under professional advice obtained from a FEMA consultant based in Mumbai and the necessary contract for the termination of the Champions League T20 was drafted in accordance with the advice from the BCCI's legal consultants, M/s Cyril Amarchand Mangaldas. As far as I am aware, the sum was paid to the respective Boards after going through the necessary legal framework," he said in an email response to PTI.
A tax of over Rs 500 crore was deposited with the Income Tax Department pertaining to this transaction, he said.
He said the issue cropped up when a member of the COA raised queries with regard to the requirement of travel of the CFO to Australia probably with a view to see "if it was frivolous".
"It is only when the travel was questioned that some really strange ideas started erupting out of nowhere for the first time ever and it appears that an effort was made to propagate those ideas," he said.
"It is my view that someone wishes to obfuscate this issue for some purpose and therefore is attempting to plant things that may not be factually correct."
Emails sent to COA and its chief executive officer Rahul Johri for comments remained unanswered.
Under FEMA, overseas remittances are categorised as capital account transactions, for which RBI permission is needed, or current account transactions, which banks are authorised to approve.
BCCI had in 2008 started the Champions League Twenty20 as a joint venture with CA and CSA. BCCI held a 50 per cent stake in the joint venture while CA had 30 per cent and CSA the remaining 20 per cent.
Apart from the participation fee that the teams from Australia and South Africa got, their respective boards were paid the surplus. This surplus was transferred as 'additional participation fee'.
But since BCCI's rules and regulations did not allow the board to form such joint ventures a sub-committee - CLT20 Governing Council - was formed. The panel had former BCCI head N Srinivasan, former IPL commissioner Lalit Modi, and two other members.
None of the current BCCI functionaries were on the board when the CLT20 was scrapped and its accounts settled in 2015.