BCCI may face ED probe into its foreign payments
RBI unlikely to grant exemption; BCCI brass had met RBI officials last week to explain why it paid Australia & South Africa cricket boards without approvals.
BCCI chief executive Rahul Johri and chief financial officer Santosh Rangnekar had met senior RBI officials last week to explain why the money related to the nowdefunct Champions League T20 (CLT20) tournament was remitted overseas without express approval from the banking regulator, RBI insiders said.
“Yes, a meeting did take place where BCCI representatives sought exemption from the Reserve Bank of India under India’s foreign exchange rules, but the regulator may reject the request and send the matter to the Enforcement Directorate for investigation,” one of them told ET.
ET had first reported on April 26 that BCCI may find itself in a spot over possible violation of foreign exchange rules for remitting over Rs 1,600 crore without RBI approval to two Cricket Australia (CA) and Cricket South Africa (CSA) with which it ran the CLT20 tournament.
Following ET’s story, BCCI wrote to the RBI, seeking an exemption.
While the central bank may have entertained an exemption request and not taken a final decision on the matter yet, insiders said the banking regulator is in no mood to budge.
RBI did not respond to ET’s email seeking comment as of press time Sunday.
Email queries sent to the Supreme Court-appointed Committee of Administrators (COA) of BCCI and Johri also did not elicit any response till press time Sunday.
BCCI had started CLT20 in 2008 as a joint venture between itself (50%), CA (30%) and CSA (20%).
During the course of the international club tournament, BCCI paid over Rs 800 crore to Cricket Australia and CSA as ‘additional participation fee’, equivalent to their share of profit, although the three boards had not signed any agreement on this. The other half was paid as compensation following termination of the tournament, BCCI records show.
BCCI’s new finance department had flagged the transactions, following which the board decided to seek the RBI’s approval for them.
The COA, appointed by the Supreme Court to run the BCCI’s affairs, sent a letter to the RBI earlier this month, following which, the regulator called BCCI officials for an explanation.
One key issue is whether the ‘additional participation fee’ and the termination compensation, which were paid without the RBI’s approval, were capital account transactions or current account transactions.
Under the Foreign Exchange Management Act (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.
According to some members of BCCI at that time, CLT20 operated as an unincorporated joint venture, with the three boards receiving profit in a pre-decided ratio.
None of the current BCCI functionaries was on the board when the CLT20 was scrapped and its accounts settled in 2015.