Showcause notices concern collective responsibilities: Modi

MUMBAI: Former Indian Premier League (IPL) chairman, commissioner Lalit Modi has said that allegations levelled in show cause notices by the ED for alleged forex law violations of over Rs 13.10 billion in the conduct of the second edition of the event in South Africa concerned "collective responsibilities" rather than being personal.

"The Enforcement Directorate (ED) show cause notices reveal that ED has been investigating alleged violations under Fema in relation to BCCI contracts and in respect of the general conduct of the IPL.

"The allegations reflect collective responsibilities rather than personal responsibilities. It is significant to note that the Enforcement Directorate has not identified any specific contravention under Fema committed by our client," a legal firm representing Modi said in its reply to the Directorate.

The 11 notices were issued by the ED against BCCI, Modi and six others for alleged contravention of Foreign Exchange Management Act (Fema) involving about Rs 13.17 billion in November last year in connection with the conduct of IPL in South Africa during 2009.

"My responses to the show cause notices show my commitment to complying with all requests made to me by the authorities in order to clear my name of any association with these investigations," Modi said.

He said the notices are to establish whether or not an inquiry should be held for the purpose of making an adjudication.

"I continue to remain confident that I have done nothing to warrant the continued investigation of my role as chairman of the IPL," Modi, who is in London, said.

Last month, the ED slapped show cause notices on Modi, officials of the Board of Control for Cricket in India, and HDFC Bank for contravention of Fema regulations to the tune of Rs. 600 million while awarding various contracts.

"This week, I have presented my reply to the Directorate of Enforcement?s 11 Show Cause notices relating to the Foreign Exchange Management Act (Fema). In simple terms, the act requires certain foreign exchange transactions to be approved by the Reserve Bank of India (RBI) and the current investigations surround the potential contravention of the law in the BCCI?s dealings with Cricket South Africa [CSA) for IPL 2. The ED delivered the notices to several recipients including me and in doing so they gave me an opportunity to fully reflect the activities surrounding the tournament in South Africa. I have always said I have nothing to hide".

He has also said that there was no direct allegation against him and he chose to receive the notices so he could explain the issues.

" Within the 11 notices I have received, there is not one single allegation against me personally. I was, of course part of the IPL at the time and that is why I regard the receipt of the notices as an opportunity to explain the issues at hand and, in doing so, clarify the innermost workings of the BCCI at the very highest level. It?s also worth noting that I voluntarily received the Show Cause notices in order to do so."

The allegations are related to the second edition of the IPL in 2009, which was shifted to South Africa after failing to get security clearance to stage the event in India.

According to Modi?s reply, all activities of IPL had approval of the Governing Council, headed by him and involving members of the BCCI.

"All activities of IPL are acts that have documented approval from collective Governing Council or Working Committee Meetings in accordance with BCCI/IPL process.

"Our client has earlier provided documentary evidence to the complainant which illustrate collective council or board approval for all activities. Thus, no action of our client can be termed as unauthorised, unilateral actions on his behalf," the reply said.

Modi said that IPL like any other committee of BCCI for example finance committee, legal committee or marketing committee is merely to assist and aid the BCCI.

"The members of such Committees including the chairman thereof cannot be said to be person in-charge or responsible to the BCCI for the conduct of business of the BCCI.

This is so because IPL is merely a sub-committee of the BCCI and has no control over the affairs of BCCI rather it is controlled by BCCI. IPL also has no say upon any financial drawings, disbursements or remittances as such matters are controlled by persons who are incharge of BCCI namely the president, the secretary and the treasurer. IPL does not also have any separate existence".

He said the ED is investigating claims that the BCCI made payments to Cricket South Africa (CSA) and administered an account in South Africa without the necessary permissions required under Fema.

"At the time, I was, of course, IPL Chairman. As a sub-committee of the BCCI, the IPL does not have an independent existence or any financial drawing or disbursement powers. All accounts are operated by the BCCI. When it became clear that IPL 2 couldn?t take place in India because of security issues relating to the elections, we made the collective decision to take the tournament to either England [ Images ] or South Africa. That decision was taken at a meeting of the BCCI Working Committee on 22nd March, 2009. During the meeting, it was also agreed that an overseas event meant that a  new bank account would be required somewhere abroad to take care of all financial considerations and that, in accordance with the constitution, the Secretary of the BCCI, should seek clearance from the RBI".

He was following the instructions of BCCI president N Srinivasan, when it came to setting up of the bank account in South Africa. "On 25th March, I was one of several recipients of an e-mail sent by the then Secretary, Mr. N Srinivasan, which explained that RBI policies in South Africa meant the accounting set up would need to follow the methods adopted by the ICC during international tournaments. Specifically, this meant that CSA would administer the account on behalf of the BCCI with the latter making payments to balance the transactions. As was reflected in the meeting on 29th March, the appropriate BCCI offices were required to ensure all regulatory processes were adhered to. That is a singular responsibility, which constitutionally rests with the Secretary in association with the Treasurer.

"Significantly, however, it was Mr. Srinivasan?s view that because the IPL 2 account was now going to be operated by CSA, any transfer of funds would be covered under current account transactions and would not require RBI approval."

Modi was also surprised that the BCCI has said that IPL 2.0 was owned by South Africa.

"I was surprised to learn that the BCCI in its reply to ED is now portraying IPL 2 as a CSA-owned tournament in its own responses to the Show Cause notices. This is just untrue. IPL 2 was a BCCI tournament all along. The fact is that throughout the tournament, CSA administered the accounts, but was not authorised to make ANY unilateral payments from the account as the money was regarded as BCCI funds. Any transaction required BCCI authorisation and CSA was considered a service provider for which fees were paid. For additional clarity on this point, it?s important to note that all vendors, contractors and suppliers were selected and appointed by the BCCI. It?s therefore interesting to consider why the BCCI is now painting a different picture."

"For the record, I had no transactional mandate, nor any cheque signing powers" He said that should not be held responsible for any wrongdoings as all decisions were taken by the then secretary Srinivasan.

"Everyone knows the tournament was an outstanding success. The CSA and the South African people embraced the event in a manner that was beyond our wildest dreams and IPL 2 brought in exceptional revenue for the BCCI - and consequently for India. The route for all funds was administered in accordance with the agreed principles. As Chairman of the IPL I created the tournament, while the Treasurer operated the accounting process and at all times, only did so following approval by the Secretary. It has been standard practice for the BCCI that all Fema compliances and RBI approvals are required to be actioned from the Treasurer?s office but in turn all decisions and approvals in respect of the IPL, which had any financial implication, or required the drawing or disbursing of funds - including RBI approvals - were taken by the then Secretary. For the record, I had no transactional mandate, nor any cheque signing powers.

"So these are the salient points I have reflected in my reply to the ED. It is important for me to explain the matter publicly because on 15th September, the BCCI meets in Chennai when they will apparently discuss the issue of changing the constitution to allow longer terms for officials - including of course, those currently in office. That meeting will take place under a cloud of issues that the cricket fans of India are awaiting answers to. It?s up to you to work out wether or not, they deserve your patience any longer."

Modi adds that the BCCI meets in Chennai next weekend, knowing that it has many problems to solve and the list appears to be getting longer and longer by the day. "The Deccan Chargers issue is the latest problem that?s dragging the IPL through the mud, but as well as that, sponsors are fleeing and new partners appear reticent to jump on board a ship that the beleaguered crew is finding harder and harder to steer."