Thaindian News

New Delhi, April 28 (IANS) A probe into sources of overseas funds of Jaipur IPL Cricket, owners of Rajasthan Royals team of the Indian Premier League (IPL), has been initiated by the Enforcement Directorate after it discovered a host of changes in its original shareholding.A letter has also been dispatched to the Reserve Bank of India (RBI) seeking details of overseas transactions of the franchise and whether due permission was sought and received under the Foreign Exchange Management Act, finance ministry officials said.

The probe follows information made available by the Foreign Investment Promotion Board that the application from Jaipur IPL Cricket “for induction of 100 percent foreign equity by way of consideration other than cash” was deferred twice since August 2009.

Ministry officials said the corporate structure of its franchise owners — and the process involved from the time it bid for the cricketing extravaganza till it was formalised — had been quite complicated and called for closer scrutiny.

“Franchises themselves admitted there are multiple owners. The source of funds for some entities is not from within India. So the issue is whether or not proper procedures were followed,” a finance ministry official told IANS on condition of anonymity.

Rajasthan Royals have themselves admitted that their original bid for the franchise was submitted Jan 23, 2008, using a consortium, led by Britain-based Emerging Media IPL, and an Indian company was set up on March 8 the same year.

The ownership pattern of the consortium did not change till the agreement was signed, but thereafter, 11.7 percent stake was offloaded to Kuki Investments, promoted by the family of actor Shilpa Shetty’s husband Raj Kundra, a London-based businessman.

Shilpa Shetty and her husband are widely seen as the owners of Rajasthan Royals.

What has also intrigued the probe team is this stake was acquired in a company called EM Sporting Holdings, which was subsequently disclosed as the holding arm of Jaipur IPL Cricket.

Rajasthan Royals has so far maintained that it had already disclosed this information to the Board of Control for Cricket in India and also offered to pay the 5 percent pro rata value of the franchise as per rules, but was awaiting a response from the board.

“For absolute clarity, the payment has been fully accrued for within our books,” the franchise said in a statement.

What has also caught the probe team’s attention is that some more shareholders had since emerged from the time company signed its agreement with IPL.

The current owners are: Emerging Media of Manoj Badale with 32.4 percent, Tresco International of Suresh Chellaram with 44.2 percent, Blue Water Estate of Lachlan Murdoch with 11.7 percent and Kuki Investment of Kundra with 11.7 percent.

The franchise was acquired for $67 million, payable over 10 years. Based on the $15.4 million paid by Kuki Investment for the 11.7 percent stake, the valuation stands at nearly $140 million.