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The IPL has always been a candidate for Enron-sized corruption. Modi operated with impunity, and Indian cricket laid itself open to becoming a vehicle for tax minimisation and money laundering
April 27, 2010
Rahul Bhattacharya : A blueprint for the IPL
Features : A timeline of the IPL mess
Jayaditya Gupta : BCCI bitten by its own buzzword
Sambit Bal : Lalit's last hurrah
Sambit Bal : The crisis the IPL needed
In Focus: The IPL Mess
Audio/Video: Lessons from the IPL mess
Players/Officials: Lalit Modi
Series/Tournaments: Indian Premier League
In the aftermath of the first final of the Indian Premier League, two years ago, its impresario, Lalit Modi, had no doubt what the event embodied. "It is a global representation of India," he argued, "and what the modern-day India stands for and its successes."
Right then, Modi is still pretty right now, except that how it represents India is assuredly rather different. In the heady days of that first tournament, it stood for India's vitality, imagination and economic heft; if even a tenth of the allegations aired in last few weeks are true, it shows the country at its corrupt and dysfunctional worst.
"What must you think of us in Australia?" emailed an Indian friend last week - an unanticipated role reversal, given the recent state of India-Australia relations. The good news, I assured him, is that we do little thinking here, at least in the sports pages. During the biggest cricket story in a decade, football-obsessed newspapers in my hometown have been delving in depth into such big issues as "Is Jonathan Brown as good as Wayne Carey?" and "The Return of the Power Forward".
A strapline in the Age last week shrieked of "Sport's Greatest Scandal", but it referred, horribile dictu, to a salary cap breach by the local rugby league team. "Sport's Greatest Scandal"? Dear God, it wasn't even sport's greatest scandal of the day. The IPL? Oh, there was some coverage when a bomb went off in Bangalore with all the force of a car backfiring and an Australian cricketer in the same postcode might have had his hair mussed or spilt his margarita, because that fit the cliché of violent, unpredictable, scary Asia; but when Indian turbo-capitalism meets Indian realpolitik, it's all a little esoteric for the average Australian sports editor - and they are so very average.
Yet here was a story that everyone should have seen coming. On the eve of the first tournament, I prophesised on the ABC's Offsiders that the IPL would be rocked within five years by a corruption scandal that would "knock Hansie Cronje into a cocked helmet". But that's not to claim great foresight. It simply stood to reason. Opaque finances, negligible regulation, a host of related party transactions, asset valuations plucked from thin air, an over-mighty chief executive, supine non-executive directors, politicians already with their hooks in - here, surely, was an Indian Enron in the making. To fail to grasp that you needed to be either ignorant or implicated - alas rather too many kiss-ass commentators and columnists were both.
Now, of course, they're all feigning outrage, like Captain Renault in Casablanca: "I am shocked, shocked, to find gambling going on this establishment."
"Get off the front page," read the headline on Harsha Bhogle's say-nothing column for Cricinfo. But why? The front page is an excellent discipline. Jamie Dimon, boss of JP Morgan Chase, the only American bank to come away from the global financial crisis with reputation enhanced, tells his staff they should undertake no financial transaction they wouldn't be happy to see described on the front page of the New York Times. And the front page is exactly where the IPL belongs.
The magic word is now transparency - transparency will apparently set us free. But transparency where? The owners are only one constituency. Will the commentators be forced to declare their interests? Will the journalists have to reveal their connections? Will the various state governments be compelled to divulge the extent of their subsidies to the IPL in the form of grounds, facilities and taxation relief? Will the state associations that compose the BCCI be required to lay open their finances to public scrutiny? Will the BCCI make its elections genuinely democratic?
The truth is that genuine transparency in the IPL has been impossible from the inception because of its adoption of a private ownership model. You know why they call it "private ownership"? Because it's private.
In fact, as Shashank Manohar reminded Modi when Modi tweeted the night away about the equity holders in the new Kochi franchise, conditions of confidentiality are integral to commercial transactions. You might not like it, but it is the way of business. And if business has imposed its values on IPL, that's only because it was invited, even entreated, to do so, in order that the maximum sums be extracted from the sale of franchises. Face it: the money changers aren't in the temple, they were sold the keys to the temple; and since then they have changed the locks.
|Coverage of the story in India has dwelt in exhaustive detail on the money sluiced through numerous entities in Mauritius. Yet almost half of the foreign direct investment in India comes through Mauritius, because it has a double tax treaty with India and insignificant corporate tax rates, and members of the Indian elite also use it freely|
Coverage of the story in India has dwelt in exhaustive detail on the money sluiced through numerous entities in Mauritius. Yet almost half of the foreign direct investment in India comes through Mauritius, because it has a double tax treaty with India and insignificant corporate tax rates, and members of the Indian elite also use it freely, clearly subscribing to the view of the New York property diva Leona Helmsley, that "only little people pay tax". And even if more exacting disclosure requirements were introduced, they would be facile to avoid: throw enough investment bankers, corporate lawyers and tax accountants at a corporate structure and any trace of beneficial ownership can be effaced. In pursuing its franchise dream, then, Indian cricket laid itself open to becoming a vehicle for tax minimisation and money laundering. This just took longer to dawn on some people than others.
Why? This, perhaps, is the most intriguing question of all. The IPL exercised strict controls over its coverage, suborning some, excluding others, demanding an atmosphere of constant celebration, deriding doubters as rheumy-eyed romantics. Modi moved fast - faster, sometimes, than the eye could see. He was the chairman of the IPL's 14-member governing council, but came to be called the "IPL commissioner", in imitation of that role in American professional sport. The distinction was more than semantic. A chairman implies consultation; "commissioner" implies… well… committing, which Modi clearly did, to a fault. Courtiers as considerable as Ravi Shastri and Sunil Gavaskar competed to praise him. Possible party poopers, like the ICC Anti-Corruption Unit, were held at arm's length. No wonder Modi operated in an atmosphere of impunity. And no wonder rumour and innuendo accumulated around the IPL when it showed so little interest in giving a proper account of itself.
Modi's modus operandi was to keep doubling the bets in his own charisma, and indeed, the story of his triumph enjoyed widespread appeal. Here was the personification of India Shining, bringing moolah and market forces to a game that, so the story went, had previously languished in the dead hands of Anglo-Australian overlords. In fact, India has been the most significant force in global cricket for a decade, but until the IPL, may have kept that fact from itself; the league became an annual celebration of that development for Modi's countrymen and a few well-paid guests. About its second- and third-order effects on cricket, the impact on other countries... well, who cared? They were having fun. And how could all those DLF Maximums and Citi Moments of Success be wrong?
Sambit Bal may be right that this is a scandal the IPL needed. It certainly brings fans face-to-face with the tangled reality of their amusement, based as it is on a self-seeking, self-perpetuating commercial oligarchy issued licenses to exploit cricket as they please. Whether the fans care is another matter: one of the reasons Indians have embraced economic liberalisation so fervently is a shoulder-shrugging resignation about the efficiency and integrity of their institutions. Given the choice between Lalit Modi, with his snappy suits and his soi-disant "Indian People's League", and the BCCI, stuffed with grandstanding politicians and crony capitalists, where would your loyalties lie?
And if Modi is toast, it will in one sense be a tremendous pity. In his way, he represents a third generation in cricket's governance. For a hundred years and more, cricket was run by administrators, who essentially maintained the game without going out of their way to develop it. More recently it has been run by managers, with just an ounce or two of strategic thought. Modi was neither; he was instead a genuine entrepreneur. He has as much feeling for cricket as Madonna has for madrigals, but perhaps, because he came from outside cricket's traditional bureaucratic circles, he brought a vision and a common touch unexampled since Kerry Packer. It's arguable, in fact, that the more culpable in this affair are the likes of Sharad Pawar and Inderjit Bindra, allegedly wise heads who pandered to Modi's ego and ambition because it suited their particular purposes. The clock is now ticking for the fourth IPL. It may look quite different to the third - indeed, it had better.
Gideon Haigh is a cricket historian and writer. This article first appeared in the May issue of Seriously Cricket Chronicles.Feeds: Gideon Haigh
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