Rajasthan Royals hit with $18.8 million penalty
The Enforcement Directorate of India's finance ministry has levied a penalty of approximately Rs 100 crore ($18.77 million) against IPL franchise Rajasthan Royals for violating India's foreign exchange laws. According to the order, the Royals' owners have a 45-day deadline to pay the fine but can appeal the order.
The ED issued three separate notices to the various owners, PTI reported, after two years of investigations under the Foreign Exchange Management Act (FEMA). Jaipur IPL Cricket Private Limited (JIPL) was hit with a Rs 50 crore penalty, EM Sporting Holding, Mauritius with Rs 34 crore and a notice of Rs 14.5 crore against Ms ND Investments, United Kingdom.
The ED has been investigating financial and foreign exchange irregularities against all franchises and this is the first big order against a team. The order said the ED found that foreign investment in JIPL was made in "flagrant contravention of FEMA" and the investment made in this regard was made "much prior to the incorporation of JIPL".
A statement issued by Royals said acknowledged receiving an order in respect of alleged breaches of FEMA. "We are discussing the contents of the order with our lawyers and intend to launch a full appeal against the order," it said.
The penalty was issued after investigations pointed out that funds in the firm had been remitted in an irregular manner and shares were allegedly issued in violation of forex rules stipulated and framed by the Reserve Bank of India, the country's topmost bank.
The ED issued the first penalty order against Rajasthan Royals in mid-2011 and it recently moved the FEMA Adjudicating Authority in Delhi to vet its investigation in this case and issue final orders. The agency, during its probe, relied on bank documents and statements made by the directors and investors of Rajasthan Royals.
The ED has issued almost 24 show cause notices, amounting Rs 2000 crore, under FEMA against various IPL franchises and the BCCI.