Lalit Modi involved in betting, murky deals: I-T report
‘Mr Lalit Modi has had a trail of failed ventures and defaults till four years back but has a lifestyle now that includes a private jet, a luxury yacht and a fleet of Mercedes S class and BMW cars all acquired in the last three years.’
Thus opens a highly confidential and explosive report by the income-tax department that has been in the possession of the government for six months now but formed the basis of any action only on Thursday evening after a raging controversy over secret ownerships and sweetheart deals in the Indian Premier League, or IPL, stalled both houses of Parliament.
Highly-placed sources in the I-T department and the Congress party told ET that Mr Modi has been on the government radar for quite sometime. The alleged opaqueness with which he conducted the multi-billion dollar cricket tournament and the manner in which he took on home minister P Chidambaram in 2009 seem to have resulted in a detailed enquiry into his activities by the I-T department.
The report, whose contents were described to ET reporters, paints a startling picture of the alleged activities of the controversial IPL commissioner, ranging from his manipulation of land deals in Rajasthan and the existence of a maze of shell companies and offshore entities used to route payments and equity stakes worth hundreds of crores of rupees. The report also makes the startling allegation that Mr Modi—through his associates—was ‘involved’ in ‘betting’, while “insider information and outcome fixing of IPL matches were hinted at”. The six-month-old report, which I-T sleuths maintain is the basis of current investigations, is obviously referring to betting and insider information in the first two IPL tournaments, not the current one.
In preparing the report, investigators seem to have accessed his email account, confidential conversations on a UK-registered cell phone number and regulatory filings from across the globe, from Mauritius to Ireland to the US. Some other Indian cell phone numbers have also been unearthed which the I-T sleuths claim Mr Modi “keeps changing”. The report alleges that Mr Modi is “apparently deeply embroiled in both generation of black money, money laundering, betting in cricket (match fixing of certain IPL matches)”.
An email sent to Lalit Modi remained unanswered on Sunday evening. His lawyer was also sent the same email. A number of his associates named in the report might come under the scanner as the investigation, which started with visits to Mr Modi’s offices on Thursday evening, progresses through the coming weeks. Even though the report detailed the premises the tax department wanted to raid and sought permission to go ahead, political clearance was not granted until junior minister for external affairs Shashi Tharoor stepped into IPL’s murky quicksand and with him dragged the government and the Congress party into one of the biggest scandals in recent times.
“This is not just a Pandora’s box but a Pandora’s chest that has been opened,” said a senior Congress leader who has knowledge of the report. “This will indict everyone,” he said, speaking on condition of anonymity. When contacted about the contents of this report, the official spokesperson of Central Board of Direct Taxes (CBDT), Shishir Jha, SMSed a terse ‘no comment’ to the ET reporter.
The report refers to one Deepa Raizada as a close associate of Mr Modi “who handles his cross-border transactions and offshore companies”. Ms Raizada is CEO of Modi Entertainment Networks and has worked at the firm for nearly 10 years, according to two persons who work at the company. The I-T report says she has previously worked with Equity Associates, a boutique investment firm based out of Ontario, Canada. Ms Raizada did not take calls made on her mobile number and did not respond to a text message from the ET reporter. Her home phone remained unreachable through Sunday and an email sent to an id listed under her name on the Modi Group’s website bounced.
Thus opens a highly confidential and explosive report by the income-tax department that has been in the possession of the government for six months now but formed the basis of any action only on Thursday evening after a raging controversy over secret ownerships and sweetheart deals in the Indian Premier League, or IPL, stalled both houses of Parliament.
Highly-placed sources in the I-T department and the Congress party told ET that Mr Modi has been on the government radar for quite sometime. The alleged opaqueness with which he conducted the multi-billion dollar cricket tournament and the manner in which he took on home minister P Chidambaram in 2009 seem to have resulted in a detailed enquiry into his activities by the I-T department.
The report, whose contents were described to ET reporters, paints a startling picture of the alleged activities of the controversial IPL commissioner, ranging from his manipulation of land deals in Rajasthan and the existence of a maze of shell companies and offshore entities used to route payments and equity stakes worth hundreds of crores of rupees. The report also makes the startling allegation that Mr Modi—through his associates—was ‘involved’ in ‘betting’, while “insider information and outcome fixing of IPL matches were hinted at”. The six-month-old report, which I-T sleuths maintain is the basis of current investigations, is obviously referring to betting and insider information in the first two IPL tournaments, not the current one.
In preparing the report, investigators seem to have accessed his email account, confidential conversations on a UK-registered cell phone number and regulatory filings from across the globe, from Mauritius to Ireland to the US. Some other Indian cell phone numbers have also been unearthed which the I-T sleuths claim Mr Modi “keeps changing”. The report alleges that Mr Modi is “apparently deeply embroiled in both generation of black money, money laundering, betting in cricket (match fixing of certain IPL matches)”.
An email sent to Lalit Modi remained unanswered on Sunday evening. His lawyer was also sent the same email. A number of his associates named in the report might come under the scanner as the investigation, which started with visits to Mr Modi’s offices on Thursday evening, progresses through the coming weeks. Even though the report detailed the premises the tax department wanted to raid and sought permission to go ahead, political clearance was not granted until junior minister for external affairs Shashi Tharoor stepped into IPL’s murky quicksand and with him dragged the government and the Congress party into one of the biggest scandals in recent times.
“This is not just a Pandora’s box but a Pandora’s chest that has been opened,” said a senior Congress leader who has knowledge of the report. “This will indict everyone,” he said, speaking on condition of anonymity. When contacted about the contents of this report, the official spokesperson of Central Board of Direct Taxes (CBDT), Shishir Jha, SMSed a terse ‘no comment’ to the ET reporter.
The report refers to one Deepa Raizada as a close associate of Mr Modi “who handles his cross-border transactions and offshore companies”. Ms Raizada is CEO of Modi Entertainment Networks and has worked at the firm for nearly 10 years, according to two persons who work at the company. The I-T report says she has previously worked with Equity Associates, a boutique investment firm based out of Ontario, Canada. Ms Raizada did not take calls made on her mobile number and did not respond to a text message from the ET reporter. Her home phone remained unreachable through Sunday and an email sent to an id listed under her name on the Modi Group’s website bounced.
A league of extraordinary betting?
What will come as most disturbing to cricket fans is that the report suggests pervasive betting and outcome fixing in the IPL. According to the report, Modi himself is involved through Samir Thukral, a Delhi-based “page 3 personality” with an “opulent lifestyle despite having no apparent source of income”.
Mr Thukral is a permanent fixture at all IPL matches with VIP access, the report says, adding that he “carries out the betting on behalf of Lalit Modi”. I-T sleuths are investigating “a lot of matches of IPL, especially involving the three teams in which Modi has an interest”. The mobile number listed in the report against Thukral actually belongs to Samir Thukral, a co-founder of Shree Capital Advisors, a Delhi-based private equity advisory firm.
His bio-data says he has interests in online lottery business and real estate. “I have known Lalit for 30 years and he is a good friend. And yes, of course, I went to South Africa for IPL matches, but these are wild and baseless allegations,” Mr Thukral told ET. On Sunday afternoon, Rahul Nayar, founder of Shree Capital Advisors, told ET that Mr Thukral doesn’t work for him anymore. He refused to answer other queries and hung up on ET reporters. Mr Thukral, however, maintained that he is the co-promoter of Shree Capital Advisors.
Ownership issues
The report alleges that Modi has silent ownership in three IPL teams—Rajasthan Royals, Kolkata Knight Riders and Kings XI Punjab. According to the report, Rajasthan Royals’ owner Emerging Media is controlled by Manoj Badale, Mumbai Education Trust and Ranjit Thakre, a former employee of ITC Ltd. It says a 25% stake in the team is with “hidden owner” Suresh Chellaram, a Nigeria-based co-brother-in-law of Mr Modi. Manoj Badale did not respond to an email seeking comment from ET.
Incidentally, Rajasthan Royals won the first IPL tournament in 2008. The report also says Kolkata Knight Rider’s co-owner Jay Mehta, who is married to actor Juhi Chawla, is “partly fronting” for Lalit Modi. Industrialist Jay Mehta denies these allegations. According to an official response from KKR, the team is wholly-owned by actor Shah Rukh Khan and Mr Mehta and there are no other shareholders. “Kolkata Knight Riders is owned by Mr Shah Rukh Khan and The Sea Islands Ltd (a company incorporated in Mauritius), which is a wholly-owned subsidiary of Mehta International Ltd—the holding company of the Mehta Group. The shareholding pattern is as follows: Mr Shah Rukh Khan-55%; Sea Islands Ltd-45%. There are no other investors in Knight Riders Sports Private Limited,” said a spokesperson of KKR.
The report claims that Modi owns a stake in Kings XI Punjab through Akash Arora, owner of Delhi-based BPO Netlink Blue. Arora is a part-owner of the team along with Ness Wadia and Mohit Burman, according to the report. “Akash does not and has never owned a stake in our team,” said Mohit Burman. He, however, declined to categorically state that 100% of the team’s ownership rests solely with himself, Preity Zinta, Ness Wadia and Karan Paul.
Mohit’s younger brother, Gaurav Burman, who is married to Lalit Modi’s stepdaughter, told ET that he also owns a stake in the Mohali team. He volunteered this information while responding to allegations in the report that he is linked to Betfair, a UK firm that runs one of the world’s largest betting syndicates on the Internet. As readers of ET would know, betting is a legal activity in the UK. The report says that according to information contained in Modi’s email account, the IPL chairman is helping Betfair, which is seeking to enter the casino and hospitality business in India.
“Gaurav Burman is to receive equity on behalf of Lalit Modi,” the report says. “This is completely baseless, I have no links whatsoever with Betfair,” Gaurav Burman told ET. From Modi’s emails, the tax department also accessed details of a transaction relating to the purchase of a luxury yacht in Malta that is to be delivered in Mumbai or Dubai.
Conflicts of interest
WSG and IMG, two companies that received BCCI contracts, are both old business partners in Modi’s own businesses. Modi Entertainment Networks runs Fashion TV in India. IMG did business with Fashion TV for years before it won the contract for managing IPL. IMG, a powerful global firm with interests in sports, media and entertainment, was to get 10% of IPL’s revenues as management fee. In July 2008, following murmurs that this was too sweet a deal, BCCI terminated the contract.
The two parties later renegotiated and IMG was back in the game with a substantially reduced fee.According to the report, WSG, which owns IPL’s overseas rights, was owed $2.5 million by Modi Entertainment Network from an earlier transaction over which Modi had lost litigation both in India and the UK. The report alleges that by awarding WSG rights at favourable terms, Modi was settling the old dues from his private business. Netlink Blue, whose owner Akash Arora is a part-owner of Kings XI Punjab, according to the report, is another firm that has received favourable BCCI contracts.
“The close links of Modi with Netlink are established through a series of emails wherein Lalit has illegally given Netlink live feeds of Australia-India series before BCCI president intervened and stopped this illegal sale of rights,” the report says. Sure enough, the favour is not without a quid pro quo. “From Netlink, a part of payoff is by way of a commitment to bail out Mr Modi’s sick venture Voyages TV through cash injection of Rs 8 crore in the form of equity,” the report says, citing emails that were available to I-T sleuths.
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