Tax investigation hits Indian cricket league

Scandal has already embroiled minister of state, IPL's Modi

NEW DELHI -- Clearly, there's more action off the cricket field than on it, given the maelstrom surrounding the Indian Premier League, a wildly successful marriage of India's obsession for cricket and Bollywood glamour, with some teams owned by top stars like Shah Rukh Khan.

As part of an ongoing financial probe of the IPL, the Income Tax Department on Wednesday raided the Mumbai offices of Sony TV India holding company Multiscreen Media and sports marketing and management agency World Sports Group.

In 2008, MSM and Singapore headquartered WSG paid a record breaking amount of about $1.03 billion to bag exclusive 10-year IPL broadcast rights. The contract was revised last March for a fees of about $1.6 billion after IPL won a court case to renegotiate the earlier terms.

With average team salaries estimated to be second to the NBA, IPL galvanized ratings for Sony Entertainment TV's hybrid cricket-movies channel Set Max and in just three years, IPL has become one of the most lucrative sporting properties in the world, valued at $4.13 billion by U.K.-based brand consultancy, Brand Finance.

The tax department's IPL financial probe was triggered off after a much-publicized row last week between IPL commissioner Lalit Modi and minister of state for external affairs Shashi Tharoor. Modi leaked details on the Twitter microblogging site about the owners of a new franchise team, which he alleged also favored Tharoor's rumored girlfriend, who was given a stake reportedly worth about $15 million. Tharoor's alleged IPL involvement erupted into a political storm, which led to his resignation Sunday.

“My conscience is clear and I know I have done nothing improper or unethical, leave alone illegal," Tharoor said, claiming innocence and wanting his name to be cleared in a statement in Parliament on Tuesday. 

But the controversy opened a Pandora's box on the way IPL was being run by Modi and his alleged involvement in team auctions and ownership issues (especially related to foreign funding), gambling and match fixing allegations and other financial matters including the sale of TV rights.

The intense media coverage of the IPL's suspicious mega deals and alleged political patronage snowballed into demands for Modi's resignation, which was hinted at Tuesday with reports suggesting that the BCCI may take a decision by 26 April, a day after the finals of the ongoing season. Modi has refuted all charges and has even declined to offer his resignation.

The tax raid on MSM and WSG was reportedly in connection with an $80 million “facilitation fee” allegedly paid by MSM to WSG in which Modi is suspected to have been involved with. Income tax officers had also raided the Board for Control of Cricket in India and Modi's IPL offices last week.

Meanwhile WSG has denied any wrongdoing and refuted allegations that it paid any facilitation fees to MSM. In an earlier statement WSG said, “Any allegation that WSG has used any funds received in connection with its sub-license of these rights for inappropriate or unlawful activities is completely unfounded and without substance. Far from any of its dealings being "secret", all relevant and necessary parties are fully aware of each transaction related to these rights. WGS will take whatever action is necessary to uphold its reputation.”
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