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Shilpa's Husband Raj Kundra Faces ED Heat

The Enforcement Directorate has written to RBI seeking details on the owners of IPL teams.  ED sources allege that Shilpa Shetty's millionaire husband Raj Kundra skirted FIPB rules and invested in the team without RBI
PTI May 01, 2010 17:09 IST
PTI

The Enforcement Directorate has written to RBI seeking details on the owners of IPL teams.  ED sources allege that Shilpa Shetty's millionaire husband Raj Kundra skirted FIPB rules and invested in the team without RBI sanction, reports Mumbai Mirror.

When BCCI president Shashank Manohar recently questioned the ownership pattern of Rajasthan Royals, with pointed reference to Shilpa Shetty and her millionaire husband Raj Kundra's involvement in the IPL team, Shilpa Shetty keyed in angry tweets, obliquely telling the “custodians of cricket” to mind their lingo, or at least do some homework before making “erroneous comments”.

However, one wonders how Shilpa will take on the Enforcement Directorate (ED), which is quietly investigating whether some IPL teams failed to secure RBI permission before accept foreign investments.

ED sources say, two teams – Rajasthan Royals and Kings XI Punjab – are clearly on the radar as officials suspect they flouted regulations set for ploughing in foreign investments into the country.

ED has written to the Reserve Bank of India (RBI) seeking details on the owners of these teams. Initial information, however, does point to some shady manoeuvring.

“There are strong indications that funds have been invested in IPL teams from Mauritius and Cayman Islands to save taxes. Some ILP franchisees have flouted RBI rules,” an ED officer told  Mumbai Mirror.

According to rules laid down by the Foreign Investment Promotion Board (FIPB), if an individual or company wants to invest foreign funds in India or abroad, they must seek RBI's permission.

Sources in the ED said Kundra, who owns an 11.7 per cent stake in Rajasthan Royals through Kuki Investments Ltd, and Lalit Modi's brother-in-law Suresh Chellaram, who owns a whopping 40 per cent stake in the Jaipur team, skirted FIPB rules and invested money into the team without RBI's nod.

Accordingly, sources in the ED said a communication has been sent to the RBI in this regard. Details that the RBI provides on the matter will then be compared with information gathered from the records available with the BCCI. Any discrepancy between the two versions, and Rajasthan Royals may be in for some big trouble.

Sources said stringent action will be taken against the errant parties. After sending a show cause notice to the violator, he or she may be called in for interrogation. When contacted, Alpana Killawala, public relations officer of the RBI, confirmed that ED has sought details about the pattern of foreign fund investments in the IPL.

The Income Tax (I-T) department conducted nationwide raids on the offices of IPL franchisees like Rajasthan Royals, Kolkata Knight Riders, Chennai Super Kings, Deccan Chargers and Kings XI Punjab. I-T officials also carried out raids on companies like Multi Screen Media (MSM), World Sports Group (WSG) and International Management Group (IMG), that handled IPL's broadcast rights.

During one such raid, I-T and ED officials found documents that indicated violations of foreign exchange rules and regulations. Sources said two weeks ago, ED had registered a case against the IPL under the Foreign Exchange Management Act (FEMA). The ED wants an open inquiry into the transfer of foreign money.