The net is ever widening on all aspects of the cash awash Indian Premier League. Even as a case was registered to investigate the foreign exchange violations by the IPL franchises, Income Tax sleuths Wednesday searched the premises of telecast rights holders Multi Screen Media (owners of Sony Entertainment Television Asia) and World Sports Group, as well as the organising agency International Management Group and Pat Magnarella Management, IPL’s event management company. Also raided was the Bandra residence of WSG South Asia CEO Venu Nair.
According to reports, a group of more than 50 I-T officers are participating in the overarching searches.
The raids are partly a consequence of allegations that MSM had paid a $ 80 million “facilitation fee” to WSG in 2009 to ensure that it retained the 10-year telecast rights it had won for cricket’s biggest blockbuster in 2008. This whole episode is linked to the unilateral cancellation of MSM’s rights to the IPL that was initiated in early 2009 by Lalit Modi. MSM finally retained the rights (for the remainder of the nine years that the deal had to run) after committing to fork out $ 1.63 billion, a substantially higher rights fee than the $ 918 million it had negotiated in 2008 for the whole ten years.
According to a Hindustan Times report: In the capital, another investigative wing of the finance ministry, the Directorate of Enforcement, registered a preliminary case against the IPL and its franchises to probe possible violations of foreign exchange rules and regulations.
The case was registered under the provisions of the Foreign Exchange Management Act in a bid to help the directorate’s officers to search the premises of suspected people, seize incriminating material and hold enquiries, officials said.
A probe by the tax department had first started with the Kochi franchise of IPL last Wednesday. A day after, officials from the income tax department visited the various offices of the IPL in Mumbai and questioned its commissioner Lalit Modi.
Based on the documents collected, the tax probe was then extended to other cities as well, following which all the wings of the finance ministry were roped in for parallel investigations.
Finance ministry officials said their main concern was whether ill-gotten money stashed abroad was being brought back into the country, as also whether there was tax evasion by IPL and its franchises.
Officers of the Income-Tax department, Government of India today (Wednesday) visited the office of WSG in Mumbai seeking information in relation to matters concerning the Board of Control for Cricket in India (BCCI) and the Indian Premier League (IPL).
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.
WSG acquired the international media rights for the IPL in January 2008 for a period of ten years following a public tender process for these rights. The arrangements between WSG and each of its sub-licensees have been agreed in the normal course of business and each approved by all relevant parties. WSG strongly refutes the allegation of any impropriety in relation to these matters and totally rejects unsubstantiated comments reported in the media about its business transactions.