Hyderabad Blues: Scrutiny of HCA accounts reveal web of corruption in association

The inefficiency extends to mismanagement of fixed assets, uncertainty over cash balance, gifting of gold to executive members, forged cheques, and unaccounted distribution of funds to districts and clubs. The scale of incongruities, as listed by auditing firm Deloitte who were commissioned by the BCCI, boggles the mind.

The Deloitte report is in the hands of the Supreme-court appointed Lodha committee and it has dirt on not just HCA but other associations like Orissa, Kerala, Assam and Goa as well. The Indian Express is in possession of the report on HCA and here are some key findings.

ACB probe: Gold coins, Rs 87.91 cr irregularity

Report: We were informed that the ACB team has raised various allegations covering financial irregularities amounting to Rs. 87.91 crore, non-production of records in respect of various items amounting to Rs. 17.65 crore, procedural irregularities in respect of various items amounting to Rs 9.39 crore and other irregularities covering the period 2003-04 to 2010-11.

Some of significant allegations made by the ACB are as follows:

Fixed Deposits Receipts for the years 2003-04 and 2010-11 were not available.

Several advances are pending for adjustments from 2003-04 to 2010-11.

Travelling allowance paid without any bills/prior approval for the years 2003-04 and 2010-11 in respect of 291 items.

Payments made through self cheques and in cash.

Variation in the receipts made available for the government audit and amount mentioned in the annual report for the years 2007-08 and 2008-09.

Gold coins purchased for distribution to 22 Executive Committee members.

Rs 17 lakh in forged cheques

Report: We understand that two forged cheques alleged to have been issued by HCA amounting to 0.17 crore were presented at UCO bank, Secundarabad during November 2012 in favour of Blue Enterprises, Mumbai as the payee.

Clubs without PAN, rules

Report: Some of the associations and clubs do not have PAN numbers, bye-laws, rules, regulations, minutes of the meeting and are not registered entities incorporated under any law and regulation.

We understand that the district associations were placing fixed deposits which have been considered as utilisation in each year.

Our sample review of the Nizamabad District Cricket Association noted that the closing bank balance as per utilisation certificates was not matching with the closing balance as per the bank account of the district cricket association.

Qualifications in Audit report

Report: The statutory auditors of the association have included 22 qualifications (including 15 sub points) in their audit report for the period ended 31 March 2015 on various matters such as non-adherence to the policy of tenders, incomplete details of legal cases filed by/against the association, non-availability of utilisation certification with respect to cricket development fund to clubs/districts, non-availability of valuation of land at Mahaboobnagar & Nizamabad etc.

The 8 members who were issued notice by ACB

Arshad Ayub (President), DS Chalapathi (former secretary), MV Sridhar (former secretary), S Venkateshwaran (former joint secretary), Naresh Sharma (former treasurer), John Manoj (secretary), R Devraj (Treasurer), G Vinod (Former President) were issued notices by the ACB.

Rs 39 lakh, unaccounted advance

Report: We understand that the Association has a policy wherein for purpose of incurring match-related expenses, an advance will be first given to the manager of the team. The respective managers are then required to submit the bills along with supporting vouchers. In most of the cases, the advance is not settled by the respective managers on a timely basis and the total amount outstanding as on March 31, 2015 is 0.39 crores. We understand that based on the bills/vouchers submitted by the respective managers, the advance given earlier for each tournament/matches are subsequently adjusted.

ACB notice for Arshad Ayub

We understand that the Anti-Corruption Bureau of Telangana has sent notices to 8 present/ex-office bearers in February 2016 alleging misappropriation of funds in connection with construction of canopy. We understand that the total amount capitalised in the books was Rs 20.41 crore as against revised agreed value of Rs. 19.75 crore (Work order of Rs 21 crore-Rs 1.25 crore for lighting and Sprinkler) and there is a change in scope/terms (such as inclusion of service tax/no insurance etc) as per Tender Schedule and actual work carried out. However, the modifications were not formalised by the way of a supplementary agreement.

Fixed Assets

Report: The association has not updated the fixed assets register for financial years 2012-13, 2013-14 and 2014-15. On our physical verification of the fixed assets, it was found that several assets have not been identified and labelled. Further, it was noted that few assets such as super sopper (placed in the gym) are damaged and not in useable condition.

There are 647 assets amount to Rs 23.15 crore as per the books of account out of which only 548 assets amounting to Rs 22.73 crore have been identified and tagged. The association has continued to charge depreciation on such unidentified assets costing Rs 0.62 crore due to which depreciation for the year ended 31 March 2015 is overstated by Rs 0.31 crore which has been highlighted in the statutory auditors report.

Travel Expense

Report: On Our review of travel invoices on a sample basis, we noted that in case of an Under-19 match held at Mysore, invoices were raised by the two travel vendors for the same journey and both have been paid by HCA. (Vyravi International Travel Services, and International Travel House Limited)

Theft of electricity

Report: An amount of rs 1.64 crore has been provisionally assessed and a criminal case on account of theft of energy registered against HCA and a demand was received for compounding fees of 0.39 crore.

Tax authorities home in

The Income Tax department raised demands aggregating to Rs 38.26 crore… association paid 13.10 crore under protest. Further, the Income Tax department attached the bank accounts and immovable properties (ie land) of HCA.

On October 1 2015, APIC demanded 14.26 crore towards outstanding property tax.