The Enforcement Directorate has slapped a penalty notice of Rs 98.5 crore on Indian Premier League (IPL) team Rajasthan Royals for allegedly violating forex laws, a day after player auctions for the sixth edition ended in Chennai.
The agency, which issued the penalty notice after two years of investigations under the Foreign Exchange Management Act (Fema), had sent out three notices to the IPL franchise, sources said. Similar notices had been sent earlier, too, sources said.
A Rs 50-crore penalty was slapped on Rajasthan Royals owner Jaipur IPL Cricket Private Limited (JIPL) and its directors. A Rs 34-crore notice for evasion of forex duties was issued against EM Sporting Holding, Mauritius, and its directors. A fresh notice of Rs 14.5 crore was issued against Ms ND Investments, UK, and its directors. The order requires the IPL team to pay up in 45 days.
Bollywood actor Shilpa Shetty and her businessman husband Raj Kundra have stakes in the Royals.
The agency had issued the first penalty order against the Royals in mid-2011 and it recently moved the Fema Adjudicating Authority in Delhi to vet its investigation in this case and issue final orders.
The Royals said it “intends to launch a full appeal” against the Enforcement Directorate (ED) order. “Rajasthan Royals has today received an order from the Enforcement Directorate in respect of alleged breaches of Fema. We are discussing the contents of the order with our lawyers and intend to launch a full appeal against the order,” the franchise said in a statement. “We will not be making any further statement on this matter at this time.”
The ED has been investigating financial and foreign exchange irregularities against all the IPL franchises for almost two years. This was the first big order against any team.
The penalty order said the probe agency found that foreign investment in JIPL was made in “flagrant contravention of Fema” and the investment made in this regard was made “much prior to the incorporation of JIPL”. The penalty was issued after investigations pointed out that funds in the firm were remitted in an irregular manner and shares were allegedly issued in violation of forex rules.
The penalty order states that the ED probe has found that foreign investments of the firm were in contravention of Section 6 of Fema, which deals with transfer or issue of security by a person resident outside India, and other sub-sections of the said Act.
The ED has issued almost 24 notices, amounting to Rs 2,000 crore, under Fema on various IPL franchises and the BCCI in such cases.
