The Enforcement Directorate will begin next month adjudication proceedings against Lalit Modi in a Foreign Exchange Management Act (fema) case. The case deals with alleged irregularities in a contract awarding media rights for IPL matches.
Sources said that in February, ED’s western region special director, Sajjad Naqvi, issued the latest showcause notice in the case to Modi’s attorneys in India. According to ED officials, Modi’s attorneys filed an interim reply, and adjudication proceedings will begin July after a final reply.
“The last notice was issued in February, and his constituted attorneys gave an interim reply in which they sought more time. A full and final reply is expected in July, that is when the special director will begin adjudication proceedings under FEMA,” said an ED source.
The case against Modi pertains to contravention of Section 3 (d) of FEMA in a ‘financial transaction’ that led to creation of assets of Rs 425 crore outside India through an agreement between Multi Screen Media and World Sports Group.
ED sources say that MSM was to pay the amount to WSG as “facilitation fee” for assistance in securing a BCCI-MSM contract in March 2009, by which media rights for IPL matches were transferred from WSG to MSM. According to the ED, WSG did not hold the media rights for IPL matches in the first place, and Modi had signed a “sham” contract with WSG in 2009, when he was the IPL Commissioner.
“The FEMA violation pertains to the financial transaction that created assets of Rs 425 crore outside India, and the ED is probing the actual beneficiaries. It is suspected that Modi himself was the beneficiary of around Rs 125 crore that MSM Singapore paid to WSG in a Standard Chartered Bank account in Mauritius,” said the ED source.
According to sources, the ED is handling 16 FEMA cases or complaints of alleged FEMA violations by Modi, involving an amount of around Rs 1,700 crore, which are at various stages of adjudication. Adjudicating authorities could also issue penalty notices in the months to follow, they said.