I
This story is three years old. It grabs your attention for the sheer audacity of Raja and the deafening silence of the prime minister. On January 3, 2008, just a week before Raja went ahead and collected cheques from these operators on a first come, first served basis, the prime minister gave his virtual assent to this loot. By acknowledging Raja's letter of December 26, 2007 he gave his stamp of approval, saying: "I have received your letter of December 26, 2007 regarding developments in the telecom sector."
Former Telecom Minister A. Raja
Singh had turned a blind eye to Raja's carefully orchestrated hijack through 7, Race Course Road. What Raja managed to do in that week beginning January 3 and ending January 10, 2008 continues to reverberate in the corridors of power in Delhi. In his letter to the prime minister dated December 26, 2007, Raja pretty much laid down the action plan. It was a brilliant stratagem. He wrote, "My efforts in this sector are intended to give lower tariffs to the consumer and to bring higher teledensity... more specifically in rural areas.
In these circumstances, the discussions with the external affairs minister and solicitor general have further enlightened me to take pre-emptive and pro-active decisions on these issues as per the guidelines and the rules framed thereunder to avoid any further confusion and delay." Strong-arm tactics that the prime minister was unable to resist.
Forget that the Cabinet was never brought into this loop, and the Government of India's Business Rules were contravened. For instance, when you disinvest in a public sector company which is government property, you first seek Cabinet approval. Similarly, spectrum is a scarce national resource and thus government property.
Raja's genius is that he conjured billions out of thin air. After all, what is spectrum? It is a section of the electromagnetic frequency scale, a lode of natural channels used by cellphones.
Raja nearly got away till he was singed due to the Government's 3G auction conducted through a price discovery mechanism which queered the pitch for him. As the CAG report says, "The Honourable Minister of Communications and IT for no apparent logical or valid reasons ignored the advice of Ministry of Law, Ministry of Finance, avoided the deliberations of the Telecom Commission to allocate 2G spectrum, a scarce finite national asset, at less than its true value on flexible criteria and procedures adopted to benefit a few operators. TRAI, the regulator, also stood by as a helpless spectator when its recommendations were being either ignored or misused."
The prime minister has much to answer for. Why hasn't he ever asked for the file on 2G and shown his displeasure? How did he allow this unfortunate decision to go through? Why didn't the terms of reference (TOR) for the GOM on spectrum availability not include spectrum pricing? It is learnt that 22 in the original TOR, this was very much there, but was dropped under DMK pressure at the last moment. Why were the companies which won licences allowed to sell significant equity shortly after being given Letters of Intent (LoI) resulting in trading of spectrum, an illegal act? If on November 2, 2007 Singh told Raja to use the transparent mechanism of auction to ensure discovery of the correct price of spectrum, why is it that on January 3, he looked the other way? What happened between November 2, 2007 and January 3, 2008? Was the DMK pressure too much? It's a question the Supreme Court is vexed by. As Justices G.S. Singhvi and A.K. Ganguly said: "The sanctioning authority can say I am not inclined to give sanction. But we find the alleged inaction and silence troubling." Says senior Supreme Court advocate Dushyant Dave: "The Supreme Court will see through this and take action."
Why is it that key members of the executive failed to take any action whatsoever on a loss that is eight times India's total health budget and three times the education budget? Equivalent to 3 per cent of our GDP, equal to our defence budget and a third of our annual tax revenues? Former BPL Mobile chairman and Rajya Sabha MP Rajeev Chandrasekhar says, "Almost 16 years after telecom was liberalised in India, we haven't managed to evolve a policy on how to licence spectrum." Then law minister H.R. Bhardwaj and his secretary T.K. Viswanathan passed the buck, asking for the setting up of an EGoM and obtaining legal opinion from the Attorney General (see box). Raja blocked; he complained to Singh about the law minister, calling his suggestion out of context. TRAI wrote three letters on October 15, 2007, October 19, 2007 and January 14, 2008, all before the licences were given and the first two before the LOIS were issued, requesting Raja not to cherry-pick their recommendations and ensure that legal implementation of statutory recommendations was kept intact. Raja brazened it out yet again. He snubbed TRAI and went ahead to issue LOIS and subsequently issued licences without referring the matter back to TRAI. DOT secretary D.S. Mathur and Member (finance) Manju Madhavan wrote a four-page note, strongly recommending auction. Raja once again ignored the note.
Mathur refused to sign the LoIs but ultimately retired on December 31, 2007. LoIs were issued within 10 days after getting signatures of new DoT Secretary Siddhartha Behura on January 10, 2008. Behura was brought in from Raja's erstwhile Ministry of Environment and Forests. Finally, the then finance secretary D. Subba Rao wrote to secretary DOT questioning the pricing for licensing. He instructed an immediate halt of processing of LoIs, but again Raja went ahead and issued the LoIs and collected the cheques on January 10, 2008.
The scam started coming together in May 2007 with a palace coup: communications minister Dayanidhi Maran was ousted and environment minister Raja, a Karunanidhi family loyalist, was crowned. Along with him came his personal secretary R.K. Chandolia. Assisted by DDG (Access Services) A.K. Srivastava within DoT, they crafted a scam to make Harshad Mehta look amateurish. Raja announced closure on the applications for spectrum even though TRAI had recommended 'no cap' in the number of licences. Even though 575 applications were received, the Government had spectrum for 150-odd licences. Anybody else would have resorted to a market-based auction process knowing that companies would give an arm and leg for precious spectrum.
But Raja did the opposite. He carefully designed a public relations campaign and sent out multiple press releases, posturing to implement TRAI recommendations on 'no cap'. Instead, he surreptitiously imposed a definitive cap by issuing only 122 licences on a first come, first served basis to companies using an arbitrary cut-off date, leaving over 300 entities in the lurch and benefiting nine (see box). Telecom analyst Mahesh Uppal says, "Of course it was a loot, but it can be easily reversed. You just need to take back the spectrum from these operators and reverse the process. Agreed there will be litigation and consequential losses, but you need to be prepared." Uppal gave the analogy of getting a DDA flat in the Capital through a public auction. He said, "If it is proved that I got this by misrepresenting facts and the allocation was mala fide, then the flat may be taken away from me."
As Raja's ouster hung in the air, an SMS campaign rode spectrum across the nation: A narco test is in order for Raja… He would sing: "One for my master, one for my dame and one for the Singh boy whose government is now lame." Raja, who may yet cost it an arm, is exultant, an embattled Singh is struggling to retain an image of integrity, and the Opposition senses a kill. Will there be blood?
About Me
Monday, November 22, 2010
Tuesday, May 4, 2010
The Unitech puzzle
SUNDAY GUARDIAN
Even as the Nira Radia phone tapping expose continues to dominate thepolitical and media mindspace, disturbing news concerning one ofIndia's top realtors forms one of the key components of the DG ITInvestigation Milap Jain's findings. In his report to Sudhir ChandraMember - Investigation, CBDT dated August 25, 2009, Jain cites thetapping on lobbyist Nira Radia's phone and lays bare the collusionbetween the realty firm Unitech and lobbyist Nira Radia. Thisconfluence of big business and a high profile lobbyist in salvagingthe group's image and financial health during a full blown corporatecrisis is shocking.
Interestingly these findings pulled out from raw conversations betweenvarious Radia associates come against the backdrop of the LehmanBrothers collapse in the US. Apparently, Unitech had sold shares inits Mumbai joint venture to Lehman Brothers before the dramaticcollapse of the iconic investment bank for Rs 750 crore.The firsttranche of Rs 740 crore was paid towards 50 per cent of Unitech'sholdings in Shivalik Ventures. The report suggests that a short termcapital gains of Rs 240 crore was realised on this sale which havebeen reported as a Capital Account adjustment rather than atransaction as income.
There is a suspicion on the part of DIT that the Group has taken bogusloan entries through entry operators. The entry operator, worried bythe then recession wanted to reverse the loan entries. Theconversations show the paranoia on the part of Unitech on the collapseof Lehman in the US. The concern is magnified due to the likelihood oftwo further tranches of investment which were to come from Lehmanthrough third party investors. Even more damaging are conversationspertaining to damage control measures including the bogus claim thatTelecom Italia is all set to invest in the Group's telecom venture.
In this hour of crisis, intercepted conversations show that Radia wasusing her influence to bail out Unitech by roping in Tata Realty withan advance, of which an outstanding of Rs 650 crore is spoken of. Evenmore damaging is the information that cheques given by Unitech have'bounced.' Radia is also shown as mediating on behalf of Unitech for atelecom license with Radia advising Unitech on bringing the Telenorinvestment into telecom venture in calibrated tranches in order togive a general impression to all and sundry that there is no windfallgain for Unitech's promoters, but that the investment is coming intothe body corporate. Incidentally Unitech which was in the throes of adeep rooted financial crisis turned itself around on the back of this22 circle license for which it forked out Rs 1651 crore. Subsequentlyit brought in Telenor as an investor with a corpus of Rs 6200 crorewhich helped retire some of the mountain of debt.
ISIS Equity Partners is suitor for Kings XI
Sunday Guardian
Yes, the first IPL franchise is ready to bite the dust. A top of theline Delhi based legal firm has been mandated by the Kings XI Punjabpromoters KPH Dream Cricket Pvt Ltd to find a buyer for the embattledIPL Mohali franchise which is facing queries on the tax and routing ofinvestments front. While it is cooperating with BCCI and Department ofIncome Tax to resolve all issues, it is parallely driving its saleprocess forward. Sources close to developments have revealed to SundayGuardian that the deal price has been finalised at approximately $300million, which is four times the price at which the franchise waspruchased in 2008 by Dabur's Mohit Burman, Bombay Dyeing's Ness Wadia,Apeejay Surendra's Karan Paul and actress Preity Zinta. A duediligence process is underway and the sale is likely to be concludedshortly.
It is believed that ISIS Equity Partners which is one of the UK’sleading mid-market private equity investors is the suitor for thefranchise. ISIS is reportedly partnering a corporate in thisacquisition. Typically, ISIS invests in transactions of between £5mand £75m in value in companies with profits in excess of £1m. Fundsare investedon behalf of both retail (Baronsmead VCTs) and institutional clients.Mohit Burman who is the majority shareholder in Kings XI confirmedthat ISIS Equity is someone with whom Kings is in anadvanced stage of dialogue. He refused to confirm the other entity dueto a confidentiality agreement.
Co owner Mohit Burman categorically told Sunday Guardian that thebuyer is neither Hero Honda's Pawan Munjal or Videocon's VenugopalDhoot who to his chargin found that his bid was trumped by Rendezvousand Sahara in the two teamauction held recently. While the modalities of the sale are still notknown, it iscertain that the price may be a consideration now that the fur isflying after the investigation being conducted by ED and IT sleuths.Earlier it was reported that Pawan Munjal was paying $260 million forthe city based franchise but this was vehemently denied by bothparties.
The exact shareholding of KPH Dream Cricket Pvt Ltd is:
MB Finmart (new name of Dabur Investment Corp) 2,23,850 sharesNess Wadia JMD Bombay Dyeing 4,47,700 sharesPreity Zinta4,47,700 sharesKaran Paul Chm Apeejay Surendra Group 77,861 sharesWindy Investment2,23,850 sharesRoot Investment 79,600 sharesColway Investments4,47,700 shares
Since both Windy and Colway share office space with MB Finmart andother Dabur group promoter owned entities. It is clear from theshareholding pattern that Mohit Burman is the majority shareholder inthe franchise. At a purchase price of $76 million, the selling priceof $300 million offers a huge premium, the valuation being 4x. Eachone of the four promoters is expected to make handsome returns ontheiroriginal investment. Burman is known as an investor who flips hisinvestments for a good profit - he did this with some like PunjabTractors and reportedly Vishal Mega Mart while in others like Aviva,Centurion Bank, Bongrain, Amforge Industries he remains invested.Earlier this year, he was part of a Burman family initiative to launcha $200 million healthcare and life sciences fund. Asia Healthcare Fundhas the Burmans as anchor investors. Some of Mohit Burman'sinvestments have been through vehicles like Elephant Capital listed onLSE AIM and in the past have been wide and varied:
*Aviva India, one of the leading life insurance players in India withits products available at over 370 locations and a sales force of over9,500 individuals. Following the liberalisation of the insurancesector in 2000, Mohit and his team gained one of a limited number oflicences and entered into a joint venture in 2002 with the AvivaGroup, one of the world’s largest insurance groups. The Burman familyhave invested over $75 million in the venture and own approximately 74per cent. of the business.• Vishal Retail, one of India’s leading retailers with a chain of 26stores and strategically positioned as a “value for money” destinationtargeting the fast growing middle class consumer.• Fidelity Fund Management India Private Limited (“Fidelity India”).Fidelity established its direct presence in the Indian market bysetting up Fidelity India in 2004 as a joint venture with the Burmanfamily. Fidelity India now has multiple funds. India is now the secondlargest country for Fidelity in terms of numbers of employees. Thecompany has offices in Mumbai and Delhi, with investment professionalsbased in each. The Burman family holds 25 per cent. of FidelityIndia. This investment was brought to the Burman family through theircontacts in Fidelity UK.• The Lord Krishna Bank (“LKB”) was started in 1940 in Kerala by agroup of entrepreneurs. Today it has grown rapidly in size and scope,from a local to a national bank and a network of 111 branches across11 states. TheBurman family has invested Rs.48.3 million in LKB, resulting in a 6.6per cent. holding.• ABN AMRO Securities (India) Private Limited, a joint venture betweenthe Burman family and ABN AMRO Bank, providing equity and debtsecurities services.
There is likely to be some debt on the books as well, but since thefinancials of IPL teams are not very transparent, this figure cannotbe quantified. As per the IPL conditionalities, none of the eightoriginal franchise owners could exit from their clubs - effectively 51per cent - till the end of season 3. While Kings XI reached the semifinals in season 1 losing to Chennai Super Kings, season two saw themwinning seven and losing seven. However, season 3 was anunmitigated disaster with the club losing six of its first seven games.
Mired in controversy from the beginning, Kings XI has been more famousfor its off field news flow - a racism row over two of thecheerleaders, followed by an unsavoury dispute between Ness Wadia andPunjab Police, then the infamous slapgate involving Sreesanth andfinally this year the use of the Bhagat Singh's name in anadvertisement created a huge controversy. With Bhagat Singh's kinthreatening to sue Kings XI for use of the freedom struggle martyr'sname in an advertisement, it created a furore in Punjab.
Yes, the first IPL franchise is ready to bite the dust. A top of theline Delhi based legal firm has been mandated by the Kings XI Punjabpromoters KPH Dream Cricket Pvt Ltd to find a buyer for the embattledIPL Mohali franchise which is facing queries on the tax and routing ofinvestments front. While it is cooperating with BCCI and Department ofIncome Tax to resolve all issues, it is parallely driving its saleprocess forward. Sources close to developments have revealed to SundayGuardian that the deal price has been finalised at approximately $300million, which is four times the price at which the franchise waspruchased in 2008 by Dabur's Mohit Burman, Bombay Dyeing's Ness Wadia,Apeejay Surendra's Karan Paul and actress Preity Zinta. A duediligence process is underway and the sale is likely to be concludedshortly.
It is believed that ISIS Equity Partners which is one of the UK’sleading mid-market private equity investors is the suitor for thefranchise. ISIS is reportedly partnering a corporate in thisacquisition. Typically, ISIS invests in transactions of between £5mand £75m in value in companies with profits in excess of £1m. Fundsare investedon behalf of both retail (Baronsmead VCTs) and institutional clients.Mohit Burman who is the majority shareholder in Kings XI confirmedthat ISIS Equity is someone with whom Kings is in anadvanced stage of dialogue. He refused to confirm the other entity dueto a confidentiality agreement.
Co owner Mohit Burman categorically told Sunday Guardian that thebuyer is neither Hero Honda's Pawan Munjal or Videocon's VenugopalDhoot who to his chargin found that his bid was trumped by Rendezvousand Sahara in the two teamauction held recently. While the modalities of the sale are still notknown, it iscertain that the price may be a consideration now that the fur isflying after the investigation being conducted by ED and IT sleuths.Earlier it was reported that Pawan Munjal was paying $260 million forthe city based franchise but this was vehemently denied by bothparties.
The exact shareholding of KPH Dream Cricket Pvt Ltd is:
MB Finmart (new name of Dabur Investment Corp) 2,23,850 sharesNess Wadia JMD Bombay Dyeing 4,47,700 sharesPreity Zinta4,47,700 sharesKaran Paul Chm Apeejay Surendra Group 77,861 sharesWindy Investment2,23,850 sharesRoot Investment 79,600 sharesColway Investments4,47,700 shares
Since both Windy and Colway share office space with MB Finmart andother Dabur group promoter owned entities. It is clear from theshareholding pattern that Mohit Burman is the majority shareholder inthe franchise. At a purchase price of $76 million, the selling priceof $300 million offers a huge premium, the valuation being 4x. Eachone of the four promoters is expected to make handsome returns ontheiroriginal investment. Burman is known as an investor who flips hisinvestments for a good profit - he did this with some like PunjabTractors and reportedly Vishal Mega Mart while in others like Aviva,Centurion Bank, Bongrain, Amforge Industries he remains invested.Earlier this year, he was part of a Burman family initiative to launcha $200 million healthcare and life sciences fund. Asia Healthcare Fundhas the Burmans as anchor investors. Some of Mohit Burman'sinvestments have been through vehicles like Elephant Capital listed onLSE AIM and in the past have been wide and varied:
*Aviva India, one of the leading life insurance players in India withits products available at over 370 locations and a sales force of over9,500 individuals. Following the liberalisation of the insurancesector in 2000, Mohit and his team gained one of a limited number oflicences and entered into a joint venture in 2002 with the AvivaGroup, one of the world’s largest insurance groups. The Burman familyhave invested over $75 million in the venture and own approximately 74per cent. of the business.• Vishal Retail, one of India’s leading retailers with a chain of 26stores and strategically positioned as a “value for money” destinationtargeting the fast growing middle class consumer.• Fidelity Fund Management India Private Limited (“Fidelity India”).Fidelity established its direct presence in the Indian market bysetting up Fidelity India in 2004 as a joint venture with the Burmanfamily. Fidelity India now has multiple funds. India is now the secondlargest country for Fidelity in terms of numbers of employees. Thecompany has offices in Mumbai and Delhi, with investment professionalsbased in each. The Burman family holds 25 per cent. of FidelityIndia. This investment was brought to the Burman family through theircontacts in Fidelity UK.• The Lord Krishna Bank (“LKB”) was started in 1940 in Kerala by agroup of entrepreneurs. Today it has grown rapidly in size and scope,from a local to a national bank and a network of 111 branches across11 states. TheBurman family has invested Rs.48.3 million in LKB, resulting in a 6.6per cent. holding.• ABN AMRO Securities (India) Private Limited, a joint venture betweenthe Burman family and ABN AMRO Bank, providing equity and debtsecurities services.
There is likely to be some debt on the books as well, but since thefinancials of IPL teams are not very transparent, this figure cannotbe quantified. As per the IPL conditionalities, none of the eightoriginal franchise owners could exit from their clubs - effectively 51per cent - till the end of season 3. While Kings XI reached the semifinals in season 1 losing to Chennai Super Kings, season two saw themwinning seven and losing seven. However, season 3 was anunmitigated disaster with the club losing six of its first seven games.
Mired in controversy from the beginning, Kings XI has been more famousfor its off field news flow - a racism row over two of thecheerleaders, followed by an unsavoury dispute between Ness Wadia andPunjab Police, then the infamous slapgate involving Sreesanth andfinally this year the use of the Bhagat Singh's name in anadvertisement created a huge controversy. With Bhagat Singh's kinthreatening to sue Kings XI for use of the freedom struggle martyr'sname in an advertisement, it created a furore in Punjab.
Modi's fattened friends and family circle
Sunday Guardian
If suspended IPL Commissioner Lalit Modi is keeping quiet,it is not without reason. Apparently when he came to Delhi to mount alegal challenge, he was told by city based senior counsels that it isbest at this juncture to prepare an adequate defence to the showcauseissued by the BCCI instead of going directly to court. In any caseformer president A C Muthiah's petition against N Srinivasan hasalready been admitted in the apex court. Moreover, it is Modi'sfriends and family enterprises which was a wide and varied networkwhere his tentacles were omnipresent. By slicing and dicing the rightspie, Modi made money hand over fist for the BCCI and doubled thecentral revenue pool for the franchisees, butbeneficiaries of his largesse were also his tightly knit circle offriends and family. Now when the BCCI wonders where the concludedcontracts are, some of these murky relationships are beinginvestigated. Sportzpower tried to track down some of these deals toexamine the extent of crony capitalism that Modi and Co indulged in.When Modi sold the theatrical rights of IPL to Entertainment andSports Direct (ESD) for Rs 330 crore for ten years, these samedistribution rights were transferred to Crown Infotainment and UFOMoviez. ESD is a wholly owned subsidiary of Dubai based investmentadvisory and private equity firm Dar Capital Group, headed by ArunRangachary.
Now guess who owned Crown Infotainment? Yes, Kunal Dasgupta, theformer CEO of MSM/Sony Entertainment Television. The technologypartner remained UFO Moviez and in another coincidence both UFO Moviezand Crown are owned in turn by Valuable Media. And who was the CEO ofUFO Moviez? Rendezvous investor Sanjay Gaikwad. This complicated webgets even more complex when it is discovered that ESD has another Modiloyalist - Chris McDonald as partner along with Dasgupta and one KapilAgarwal. Agarwal, Joint MD of UFO Moviez is reported to be related toModi from his mother's (Bina) side, but this remains unsubstantiated.
Chris McDonald incidentally was the CEO of Ten Sports. Ten Sports wasfirst brought into India by Lalit Modi owned Modi EntertainmentNetwork. McDonald now wears many hats, he also doubles up as the CEOof Red Partners. Which has an ominous linkage with the IPL. It wasnamed the one year on ground food concessionaire for the IPL thisyear. Red Partners was centrally responsible for the entire food andbeverage experience of IPL. On getting the contract earlier this yearMcDonald said, "We will work towards ensuring that IPL fans attendingthe 45 day cricketing carnival across India will now be privy to atruly world-class food and beverage experience akin to what sportingfans around the world have become accustomed to. Our standardizedmenus will cater to the unique fan base of each region enhancing theinstadia experience for IPL fans.”
Last year McDonald had stepped down as CEO of Taj TV's Ten Sports, acompany which he founded in late 2000. McDonald and Modi have knownone another for years. Modi's earlier venture Modi EntertainmentNetwork specialised in handholding foreign channels and broadcastersin their quest to grab a slice of the still closely controlled Indianmarket. Modi got Walt Disney, ESPN, Ten Sports and FTV in to Indiathis way. But most of these relationships soured very quickly, withsome ending up in arbitration proceedings. Pioneer Diagsys, anotherfirm floated by the same Kunal Dasgupta who architected the multipleyear multi million IPL broadcast deal with Lalit Modi, has the rightsto hawking the advertising in between the 20:20 matches. The mid over150 second advertising rights deal was sealed by Dasgupta and Modijust days before season 3 kicked off. It is believed that Pioneerwould have made Rs 54 crore from this deal itself. These 150 secondswere retained by Modi and IPL despite protests from Sony formonetising through this process at a subsequent date.
Similarly, another allegedly dubious and quickly concluded deal wasthe one with Yog Sports, a marketing and distribution company whichIPL and Modi tied up with for merchandising of IPL products for aperiod of 10 years. Yog's job was to set up IPL match stores atvarious IPL venues, malls, high street destinations, multiplexes,airports et al and a total of 200 stores across 12 cities. Theyappeared virtually out of the blue with one Saumitra Srivastava namedas director of the company.
Wednesday, April 28, 2010
What is Modi's plan of action?
NAKED EYE
Why is Modi quiet?
It is one of the defining developments in recent times. Why isdiscredited IPL commissioner Lalit Modi keeping quiet? This, despitemaking pronouncements that he will unmask BCCI office bearers fortheir collusive intent. He even hired a top Delhi based publicrelations agency to strike back at his detractors. But that operationtoo has been maintaining a stoic silence lately. I have spoken twice to Modiin the last couple of days - immediately after his suspension late onSunday night and yesterday as well - both times his response has been acryptic - wait and watch. He is not willing to say anything else. Hisclose associates have been telling me that Modi is planning to mount alegal challenge. Talk has also been doing the rounds that he is jawjawing with senior counsels. But I checked with one of the seniorcounsels as well and he clearly articulated that Modi has notapproached him yet. So, why is Modi not revealing his hand? Is it primarilybecause Modi is waiting for the Supreme Court's direction on A CMuthiah's petition in the apex court filed on Friday?
People who understand BCCI politics which is essentially based on theedifice of a vote bank reckon that Muthiah's plea is significant tothe fortunes of Modi. How? Muthiah's challenge is based on questionspertaining to board secretary N Srinivasan's 'conflict of interest'.Remember that not only is he an office bearer of the BCCI but one ofits beneficiaries too as Chennai Super Kings owner. The Times of Indiareported, "Muthiah, a known Jagmohan Dalmiya camp member and rival ofthe present dispensation, has alleged that the rule was suspended inthe 2008 AGM of the BCCI ostensibly to benefit present Board secretaryN Srinivasan, who is also the managing director of India Cements thatowns Chennai Super Kings team. Muthiah's petition filed throughadvocate Vikas Mehta alleged that suspension of clause 6.2 rule 4 inthe 2008 AGM of BCCI was illegal as it allowed its administrators totake business interest in the most commercial events organised by theBoard -- IPL and Champions League T20.
"Clause 6.2 rule 4 of BCCI applying to players, team officials,managers, umpires and administrators, says: "No administrator shallhave, directly or indirectly, any commercial interest in the matchesor events conducted by the Board." Though Muthiah had cited thisconflict of interest pertaining to Srinivasan in a letter to SharadPawar on September 5, 2008, a two-member committee of Shashank Manoharand Niranjan Shah had recommended a change in the clause during theAGM, which suspended the rule "for events like IPL or Champions LeagueT20". Coincidentally, it was the erudite lawyer in Manohar, who haddrafted clause 6.2.4 when Muthiah was the BCCI president, the petitionsaid.
"The petition challenged a March 24 verdict of the Madras High Court,which had refused to entertain Muthiah's plea. At that time, IPL wasgoing great guns. On the other hand, Srinivasan was expecting Muthiahto move theSupreme Court and has already filed a caveat in the SC through counselHari Shankar to prevent the former BCCI president from pressing forany ex-parte order against him on the issue."
The plank of Modi's legal challenge working in conjunction with theoutcome of the Muthiah petition will form the bulwark of the futurecourse of battle. Under the ambit of conflict of interest, Modihimself can be trapped by his rivals in the BCCI. For his linkageswith RR, Kings XI Punjab and even KKR leave room for doubt. Contractsgiven to Global Cricket Ventures's Gaurav Burman who is related to himthrough marriage are also under the microscope. So, Modi too can getembroiled in the 'conflict of interest' loop. Modi clearly hassomething up his sleeve,he will need to establish that the IPL Governing Council is culpableand it cannot shy away from the responsibility of collective decisionmaking. Will he then file a petition against BCCI for unlawfulsuspension? What kind of data is he likely to share with his legalcounsels?
Lots of questions, but no answers forthcoming. Is Modi worried thatthe Muthiah challenge can impact him adversely as well? Or does hebelieve that the moment he opens his mouth, skeletons peratining tohis political masters in and outside the BCCI will come tumbling out.His proximity to Sharad Pawar is well known. We suffer from temporaryamnesia for one of the best stories in the Modi saga has clearly beenthe one written by Business Standard which implicated two Unionministers, both from the same regional party, who pressurised theRendezvous management into giving up the franchise. Somehow that is atthe kernel of this dispute which has dragged a lot of people includingModi and Tharoor down. Conflict of interest can pull some more holycows down, including top former cricketers. Will operation cover upsucceed with the sacrifice of Modi or will it ensure that dominoescontinue to collapse in a heap. Too many people have too much to loseand too much at stake in the BCCI whirligig. Everyone is compromisedand they would want to step out of the turkish bath exposed andunclothed.
All eyes on Modi. Can't believe for a moment that this combativecharacter will walk away into the sunset without a murmur. It is notin his DNA. Also a final input - two other top BCCI office bearers,presidents at that - Jagmohan Dalmiya and I S Bindra have beensuspended and humiliated in the past. But after serving their threeyear suspensions bounced back and are once again part of the cricketboard.
Culpability of the collective
RETROFIT
BCCI cannot wash its hands of present crisis
Individual versus collective? That is the question I am asking today.Whose responsibility is it when the fur starts flying in anyenterprise engaged in commerce. Who takes the rap? Who carries the canfor financial defalcation or other misdemeanours? For the BCCI'scurrent travails, onedoesn't need to rewind too far back into the past. Take the Satyamcase. It is the best analogous refrence point for the BCCI set ofproblems. One man and those in cahoots with him - B Ramalinga Raju -brought shame upon the company and in the process India's tech sector.Yes, the individual was guilty, but so was the collective which inthis case was the board of directors comprising many eminents. Theywere guilty because there was collusive intent. They turned a blindeye to Raju's misdeeds and brazen appropriation of shareholder wealth.Prof. M Rammohan Rao, dean of Indian School of Business, managementprofessor from the Harvard Business School (HBS), Prof. KrishnaPalepu; a former Director of two IITs, Prof. V.S. Raju; a former UnionCabinet Secretary, T.R. Prasad, and the father of Pentium chip, VinodDham were on the board of Satyam and they failed to protectshareholder wealth from being destroyed. They enjoyed the benefits andperks of independent directorship, but they failed to oversee thecompany going on skid row. Ergo, they were equally responsiblefor Satyam's demolition. The government however, stepped in and proactively tried its best to salvage the beleaguered company. Acommittee consisting of Deepak Parekh, Kiran Karnik and C Achutan madeup the transition team till such time as Tech Mahindra bought itoutright. It was an efficiently managed operation without jeopardisingthe careers of its many thousands of employees or its businessinterests. The fact that a squeaky clean Anand Mahindra stepped in toarrest the decline worked in its favour. The faith in the tenets of corporategovernance had been restored and a company virtually on life supporthad been saved. And now turned around.
Cut to Indian Premier League, a sub committee of the Board of Controlfor Cricket in India, for long a commercial enterprise masquerading asa not for profit and non transparent organisation. The Governing Councilhad several members of the BCCI, all ex officio office bearers andhence above suspicion like Casear's wife. The GC also had three topIndian cricketers - Sunil Gavaskar, Ravi Shastri and Mansur Ali KhanPataudi. All of them reportedly did not have a clue as to what brothchairman and commssioner Lalit Modi was cooking. BCCI presidentShashank Manohar is an honourable man, completely clean, but hisexplanation that Modi did pretty much as he pleased does not wash.All 13 GC members are equally culpable. If you know that there was afiddle in the Rajasthan Royals and Kings XI Punjab shareholding andthat Jai Mehta surfaced as an investor in KKR in 2009, then what wereyou doing when IPL was being architected? Were you deep in the arms ofMorpheus or did you choose to ignore Modi's unilateralism because hewas making money in spades for the BCCI? This shocking apathy tofollow transparency and corporate governance norms has been doggingBCCI for years. Now it has blwon up in their faces.
From the time that the IPL came into being, the BCCI's character andhue has undergone a radical metamorphosis. It is now being viewed asan association of persons by the finance ministry's revenue departmentand not a non profit organisation registered under the Tamil NaduSocieties Act. As a BCCI sub committee, it is nothing more than awholly owned subsidiary of the body corporate called BCCI. IPL haschanged the underlying credo with which BCCI was formed and functionedtill 2008. It is now a purely commercial enterprise engaged inbusiness and commerce. It has dealings with broadcasters, advertisers,sponsors and can be hauled over hot coals for non payment of tax deductedat source for players, referees, coaches and support staff; servicetax and entertainment tax.
ET reported on April 27: "Sportspersons, umpires, referees, coaches,trainers, team physicians and physiotherapists, event managers,commentators, anchors, and sports columnists have been categorised as“professionals” and their services have been brought under the TDS netin 2008 by the Central Board of Direct Taxes (CBDT). BCCI iscontesting a contention by the income-tax authorities that the boardnot be categorised a not for profit organisation tag that allows it toavail a tax exemption. The Budget 2009-10 had also made changes in thedefinition of “charitable purpose” to ensure that entities operatingon commercial lines do not claim income-tax exemption. The Section2(15) of the Income Tax Act defines “charitable purpose” to includerelief for poor, education, medical relief, and the advancement of anyother object of general public utility. The board has appealed to theIncome-Tax Appellate Tribunal against the decision of Mumbai taxauthorities and is yet to make a fresh application to the local taxauthority for the tax exemption."
BCCI has been trying to hide behind the fig leaf of a non profit,charitable organisation. But this status is definitely a page inhistory now. The individual Modi is taking the rap. Yes, he wasarrogant. Yes, he rode roughshod over everyone and conducted businessin an extremely secretive manner. Equally important is the fact that acabal consisting Manohar, secretary N Srinivasan, IPL GC vice chairmanNiranjan Shahand GC member Rajiv Shukla had been trying to oust Modi from the IPLor at least reduce his clout, but Modi had smartly ringfenced himselfby keeping his benefactor Sharad Pawar in his corner. But when theheat got to Pawar and his 2-i-c Praful Patel, it got uncomfortable. Thesecret society called IPL functioned like an old boy's club. Everymember of the family was taken care of. N Srinivasan who was boardtreasurer in 2008 actually got a franchise, Sunny Gavaskar and RaviShastri who were employed by ESPN Star Sports got hefty $one millioncontracts from the BCCI, Rajiv Shukla is a beneficiary of equity fromKKR franchise owners Shahrukh Khan in his company Bag Films and so itcarried on. You scratch my back, I will scratch yours as cronycapitalism or in this case crony sportism took a garrotte like grip onthe enterprise.
The opacity in IPL was even more severe than Satyam. Nothing andnobody was allowed in. Now when Manohar says contracts were signed andthen presented to the GC in a fait accompli sort of manner, why didn'tanyone blow the whistle? Well, you can guess why? Comfort level. Yes,everyone was sanguine. Now that the can of worms has been thrown openfro the world to see and examine, the BCCI chooses to distance itselffrom the mess. Sorry, the hoi polloi are not willing to buy thisargument. Even if they were to accept that Modi was a flamboyantcrook, they reckon that the BCCI is equally guilty. In the dock is theBCCI and its so called autnomous nature. But the nature of the beasthas change and the government has got its toe in the door. As the doorlies ajar and the Government's roving inquiry opens it that much moreeasily, everyone of us is looking for some sort of accountability fromthe body that runs cricket. My fear is that now that Modi has beensacrifced as part of the eye for eye pact with the Government, thewolves should not be called off and the BCCI should not be allowed tocarry on as it wishes. The BCCI needs to be accountable and Modishould be made a victim. All eyes are on fornmer BCCI president A CMuthiah's challenge in the Supreme Court on 'conflict of interest'which essentially targets Srinivasan. The apex court should also lookat the larger issue of governance within the BCCI.
THREE FAUX PAS
*ET's screaming lead that home minister P Chidambaram has been askedby the PM to head the roving investigation into IPL. Response camefrom the venerable finance minister Pranab Mukherjee in his parliamenthouse office where he shouted at journos to get out of his room - allyou need is a pen and paper to carry out your scurrilous writings, didanyone check with the PM, HM or me before writing this nonsense? Thatis as conclusive a denial as any.
*ToI's big bang exclusive on page 1 saying that WSG MD Venu Nair hadbroken down during interrogation and accepted that a facilitation fee,sorry a bribe of $80 million had been paid at the time ofrenegotiating the IPL broadcast contract. The story had three bylines.Meanwhile, ET the same day had a diametrically different story on thesame WSG-Venu Nair affair. The following day WSG sent in a very strongdenial saying that the ToI story was hogwash.
*Finally, a bellicose Times Now went to town saying that as many as 27players had been indicted for match fixing by IT authorities in the2009 season. This was a bombshell and everyone covering the IPLimbroglio including this writer was in a state of shock. Minutes latercame a strong government denial that there was no truth in this.
Muddied waters of IPL
GROUND ZERO
A VIRTUOUS CYCLE CALLED IPL
Empty stands greeted CSK and DC players on Thursday at the D Y Patilstadium. It was a rude shock for the organisers of the marquee semifinal contest between premier sides. Was it also symptomatic of themuddied waters around brand IPL, built so painstakingly andassiduously over the last couple of years? Has the sheen and lustrearound brand IPL worn off due to issues relating to crony sportism?Yes, chairman and commissioner Lalit Modi was a unilateralist and didpretty much as he pleased, without so much as a by your leave from theIPL GoverningCouncil. The moot point here is that the IPL Governing Council and theBCCI allowed him to do so. There were no checks and balances at all.And though a cabal consisting of BCCI president Shashank Manohar andsecretary N Srinivasan tried their best to destabilise him and evencut him to size, Modi's powerful backers amongst whom were formerpresidents Sharad Pawar and I S Bindra and franchise owners MukeshAmbani, Vijay Mallya and Shahrukh Khan who have access to the top ofthe political pyramid in the capital, ensured that he got away scotfree each time he was pinned down on something. Be it the move to SAor the IMG dispute or the broadcast deal renegotiation, Modi was thecat with nine lives.
For a long time, many have suspected and even spelt out the fall ofthis card house called IPL. The sheer size and scale of power vestedin the IPL Commissioner pointed to this fact. He was known to bearrogant and had reportedly appropriated complete and absolute poweras far as IPL decision making was concerned. The question is - shouldhe have been allowed so much power? Why was there no system of checksand balances to curtail this power seeking rush that seemed to haveenveloped Modi? Or was it that they turned a blind eye to Modi'smisdemeanours given that he was making money hand over fist for theBCCI? The culpability of BCCI and the IPL Governing Council in themain is astonishing. Yet, they all chose to keep quiet. Even when Modidecided to declare the ownership patterns of the teams on April 14,the majority kept silent and only a handful refused outright to agreewith his proposal.
These are a series of acts of omission and commission and nobody has aclue about it. The source of funding, the tender process for highvalue contracts, the sheer ad hocism associated with the enterprise.Modi's writ ran large in the IPL. he was akin to a one man executivearm of the BCCI.It has taken a simple tweet to bring down this house. And in theprocess it has shaken the foundation of the IPL economy and itscollaborative eco system. A large extended family enterprisedovetailed with relationships and business associates. There arebroadcasters, sponsors, advertisers, corporates who are involved inthis billion dollar enterprise. Which has now proved to be an empty shellmaking a lot of noise. MSM or Sony Entertainment Television forked outan astronomical $1.63 billion for 9 years as part of a renegotiatedcontract with BCCI. To secure this, it has paid a facilitation fee of$80 million. Advertisers like Vodafone and Videocon have paid Rs 55crore each for this season as presenting sponsors on SET Max. Thisvirtuous circle has big names like Reliance Industries, UB Group,India Cements, Shahrukh Khan involved personally. Their brands arepart of the mothership called IPL. A brand that had till the other dayall the attributes of a mega brand with salience and luminescence.Companies like DLF, Hero Honda, Airtel, Nokia, Idea, Ultratech, Citibank andmany more have pledged big bucks to be associated with this failingenterprise. These are all brands, subsets to a larger brand.
Marketing analysts will tell you that there will be a huge impact onbrand IPL and all the sub brands associated with it. Researchindicates that while people memory is extremely short, probablylasting say a fortnight or so, it is the adverse impact on the motherbrand which is considerable. So, even as people memory will forget,impact on the mother brand will be affected by a contagion. Acontagion that acts as a corroder. This has been proved over time, forinstance in the Tiger Woods case where an individual was involvedunlike a collective like the IPL, Accenture walked away from the brandbecause it saw an erosion on its own brand recall on the dimension oftrust. Accenture spells trust, it works on faith and trust with itsclients. Once that is bunged, then the mother brand's image is ruinedby its association with someone like Tiger who broke his wife's trustby sleeping around. However, Nike which works on the recall of awinning mindset continues with Tiger because the dimension isdifferent. In Nike's case, it is about winning. When it comes to Modiand IPL, a conglomeration of dimensions is at work. And at the momentall of them are negative. Dirty deals, sleaze, misuse of office, cronycapitalism is all very well, but if the needle of betting and matchfixing gets to work, then it attacks the brand in an overtly negativemanner. Fortunately there is no evidence of match fixing yet inIPLgate. Thankfully, this is a relief. The format does not allow amatch to be fixed easily. One man can take the game away in one over.Collusion between a handful of players on both sides would be requiredand hence IPL remains untouched till date from the quagmire of fixingand tanking games.
The fortunes of Modi and IPL are in a way inextricably linked in theshort term. Media's glory boy has come crashing down to earth. Thosein his corner have turned against him, leaving him with very littlemanoeuvrability. Five years ago nobody had heard of him, his risebegan when he became the super chief minister of Rajasthan. Some of usin media had heard of him obliquely as the managing director of ModiEntertainment Network, but that was just about it. His entry into BCCIas the Rajasthan Cricket Association president changed the equations,courtesy his benefactor chief minister Vasundhra was the firsttentpole. The second and more important building block came when hehandled Sharad Pawar's high voltage campaign to become BCCI boss afterJagmohan Dalmiya had vanquished him a year earlier. Mon won hisbrownie points by getting Pawar the top job. He also earned hisunflinching trust at the same time.His proximity to chief ministerVasundhra Raje pitchforked him into the limelight. As BCCI veep hebegan to do some business deals which realised more value for theboard. But the breakthrough benefit came after Subhash Chandra cockinga snook at the BCCI architected Indian Cricket League. Despite itsunofficial status and rebel tag, Chandra managed to rig up teams andbrought fairly decent international players to India. He even broughtsome big former Indian cricketers on board, none bigger than KapilDev. And by poaching entire Ranji teams, the likes of Ambatti Rayadufirst made a name of themselves in ICL, he had thrown down thegauntlet at the BCCI. It acted as a wake up call for the somnolentboard. That is when Modi found his true calling. His metier. Armedwith a NBA, NFL, EPL, MLB template from the US, the Dukes Universityeducated scion to the Godfrey Philips empire began to widen hishorizons. Modi found an able partner in Andrew Wildblood of IMG andtogether they retrofitted ICL to rig up IPL with many fashionabletwists. In the end came Indian Premier League, a league ofextradordinary gentlemen and a few ladies.
By bringing innovations and wearing a marketer's hat with greataplomb, Modi created an enterprise of substance. Though hollow frominside. The smartest move of course was roping in Mukesh Ambani, VijayMalllya, Shahrukh Khan, Preity Zinta et al, a true blue confluence ofglam quotient and cricket. Auctions of teams and players, a hithertounprecedented concept made it larger than life. Nowhere in the worldin any sport for that matter is a player auctioned, it happened in theIPL. Cassandras like myself thought that the whole enterprise wasdoomed for failure from the start. Why should sub tribal loyaltieswork in a nation high on jingosim was my thinking? But I was provedwrong, Brendon McCullum played the innings of his life and kickstarteda craze which became the new opiate of the masses. An opiate whichshook the foundation of Indian cricket and how it functioned. Revenuesand ratings began to flow from the barrell of this gun. Modi was thedarling of the media and the masses. All the warts and allegationsreceded. All of us knew that his brother in law Suresh Chellaram wasthe majority shareholder in RR, his step son in law Gaurav Burman'sbrother Mohit was similarly co promoter of Kings XI Punjab, that BCCItreasurer then N Srinivasan was owner of a franchise - CSK. Yes, cronycapitalism was rampant, but everyone chose to ignore it as IPL becamebiggger by the day.
Now the same media has turned against its own creation. How has mediadone with IPLgate? The best stories have appeared without a doubt inToI which is strange and I suspect that someone is feeding them. ForModi made many enemies in his time. His arrogance threw a lot ofpeople off, his brash demeanour offending many. There arebroadcasters, sponsors and advertisers in that long list. All of themmaybe feeding media for it is a virtual free for all out there. Of thetelevision channels, Headlines Today is front running everyone withincisive news breaks and opportune analysis. ToI and ET are going forbroke, but the substantive stories are all apearing in ToI. Three ofmy favourites - Poorna Patel commandeering an Air India jet for IPL,Videocon and Adani bid files evaporating into thin air and of coursethe juiciest - facilitation fee paid by WSG - allegedly to Lalit Modion the renegotiated broadcast deal.
Monday, April 26, 2010
Push has come to shove
CAPITAL VIEW
Push has come to shove on the lack of transaparency and level ofdisclosure by IPL franchise owners. With the tax and Enforcementdragnet widening daily and more dirt surfacing, everyone is keen onseeing this investigation taken to its logical culmination. Ministerstheir kith and kin, big business houses, opacity regardingshareholding and tendering processes, routing of payments and fundsthrough offshore tax havens. And above all the sleaze and grime taintof betting. Money is the overriding theme of this classic but shadowyworld of crony capitalism. Nine of the ten franchise owners have beenraided, the only exception being Mukesh Ambani's Mumbai Indians.Actually a wholly owned subsidiary of Reliance Industries - RelianceIndustrial Investment Holdings - is the owner of IndiaWin Sports PvtLtd which controls Mumbai Indians.
Incidentally, RIIHL is the company in which the 12.04 crore PetroleumTrust shares amounting to 3.68 per cent of RIL's equity is vested. Theacquisition costs and initial losses were all borne by RIL in IndiaWinSports as RIIHL advanced a Rs 78 crore loan to it. RIL's Annual Reportfor 2008-09 clearly shows RIIHL as a 100 per cent subsidiary on page130. Recently we heard that Deutsche bank's Anshu Jain has exited fromMI and his 15,000 shares have been acquired by Teesta Retail. Overtime, the shareholding of this enterprise has changed completely andIndiaWin spokesperson has confirmed this.
Sometime in 2009-10, two Mukesh Ambani companies - Claris Trading andSharanya Trading acquired 32 per cent equity in Shinano Retail Pvt Ltdfrom RIIHL which owned 50 per cent in Shinano Retail. This means that18 per cent is now held in Shinano by RIIHL, while the balance 32 percent is held by Claris and Sharanya. The remaining 50 per cent is heldin Teesta Retail, the company that bought back shares from Anshu Jain.Most interestingly, the 50 per cent equity is now held inter sebetween Teesta and Shinano in IndiaWin Sports through a waterfallstructure that ends up looking like this - Shinano owns 20 per centwhile Teesta owns 30 per cent of the 50 that they jointly hold in MIvehicle IndiaWin Sports, the balance being held by RIIHL. EffectivelyMukesh Ambani companies now own 100 per cent of MI.
It is only after the ownership structure controversy broke thatdisclosure was made on Anshu Jain's exit at par, but even now completedisclosure has not been made of Claris and Sharanya's holding in thecompany. Valuation is clearly playing a big role in the plans of thowners. But for the unseemly controversy, many of the franchises wouldhave listed their teams on the stock exchanges next year. But the bestlaid plans of mice and men often go awry and this time a simple tweetbrought the house of cards down.
Pre crisis, most analysts reckon that a valuation of anything between 3x to5x had crept into the system after the entry of two new teams atexorbitant numbers - between $333.33 million and $370 million. MukeshAmbani might have paid $111.9 million for the franchise, but histeam's valuation at present enhanced levels is closer to $400 million,or a multiple of 4x. As I write this MI is enjoined in a scrimmagewith CSK. If MI wins season 3 and operation clean up is fashionedwithin the cricket board and IPL, then MI's valuation goes through theroof. And Mukesh Ambani is richer for it. Not that he needs the money.After all he is the third wealthiest man in the world.
Push has come to shove on the lack of transaparency and level ofdisclosure by IPL franchise owners. With the tax and Enforcementdragnet widening daily and more dirt surfacing, everyone is keen onseeing this investigation taken to its logical culmination. Ministerstheir kith and kin, big business houses, opacity regardingshareholding and tendering processes, routing of payments and fundsthrough offshore tax havens. And above all the sleaze and grime taintof betting. Money is the overriding theme of this classic but shadowyworld of crony capitalism. Nine of the ten franchise owners have beenraided, the only exception being Mukesh Ambani's Mumbai Indians.Actually a wholly owned subsidiary of Reliance Industries - RelianceIndustrial Investment Holdings - is the owner of IndiaWin Sports PvtLtd which controls Mumbai Indians.
Incidentally, RIIHL is the company in which the 12.04 crore PetroleumTrust shares amounting to 3.68 per cent of RIL's equity is vested. Theacquisition costs and initial losses were all borne by RIL in IndiaWinSports as RIIHL advanced a Rs 78 crore loan to it. RIL's Annual Reportfor 2008-09 clearly shows RIIHL as a 100 per cent subsidiary on page130. Recently we heard that Deutsche bank's Anshu Jain has exited fromMI and his 15,000 shares have been acquired by Teesta Retail. Overtime, the shareholding of this enterprise has changed completely andIndiaWin spokesperson has confirmed this.
Sometime in 2009-10, two Mukesh Ambani companies - Claris Trading andSharanya Trading acquired 32 per cent equity in Shinano Retail Pvt Ltdfrom RIIHL which owned 50 per cent in Shinano Retail. This means that18 per cent is now held in Shinano by RIIHL, while the balance 32 percent is held by Claris and Sharanya. The remaining 50 per cent is heldin Teesta Retail, the company that bought back shares from Anshu Jain.Most interestingly, the 50 per cent equity is now held inter sebetween Teesta and Shinano in IndiaWin Sports through a waterfallstructure that ends up looking like this - Shinano owns 20 per centwhile Teesta owns 30 per cent of the 50 that they jointly hold in MIvehicle IndiaWin Sports, the balance being held by RIIHL. EffectivelyMukesh Ambani companies now own 100 per cent of MI.
It is only after the ownership structure controversy broke thatdisclosure was made on Anshu Jain's exit at par, but even now completedisclosure has not been made of Claris and Sharanya's holding in thecompany. Valuation is clearly playing a big role in the plans of thowners. But for the unseemly controversy, many of the franchises wouldhave listed their teams on the stock exchanges next year. But the bestlaid plans of mice and men often go awry and this time a simple tweetbrought the house of cards down.
Pre crisis, most analysts reckon that a valuation of anything between 3x to5x had crept into the system after the entry of two new teams atexorbitant numbers - between $333.33 million and $370 million. MukeshAmbani might have paid $111.9 million for the franchise, but histeam's valuation at present enhanced levels is closer to $400 million,or a multiple of 4x. As I write this MI is enjoined in a scrimmagewith CSK. If MI wins season 3 and operation clean up is fashionedwithin the cricket board and IPL, then MI's valuation goes through theroof. And Mukesh Ambani is richer for it. Not that he needs the money.After all he is the third wealthiest man in the world.
Sunday, April 25, 2010
Media circus turns against its own creation
RETROFIT
Media musings on MODIGATE
Jin mein ho jate hain andaz e khuddai paida, humne dekha hai woh buththod diye jaate - this line from Iqbal sums up the demolition derbyunderway in the IPL circus. Casualty number one was Shashi Tharoor whohad to be taken out kicking and screaming after telling NDTV's BarkhaDutt unequivocally - I will not resign. In the Puff Daddy, sorry bigdaddy of puff jobs, replete with an emotional scowl, Tharoor wasn'table to convince anyone watching of his innocence. Surprisingly,Barkha Dutt's line of questioning was so tepid and innocuous that theinterview appeared to be a farce. And farce it was for as soon as thePM returned, it was game, set, match and championship to Lalit Modi.Since then Tharoor has spoken again in parliament and nowhere has headdressed the issue of his relationship or the level of hisinvolvement with the Kochi enterprise. And pray, why was his OSD JacobJoseph present at the bidding, if he was only giving his blessings tothe venture as a mentor? Anyway, Tharoor has walked into the sunsetand since then targeted in the media's crosshairs is Lalit Modi,everyone's favourite whipping boy at the moment. I was telling thehead of a network only the other day over a cuppa of tea that themedia has forgotten Shoaib and Sania in a jiffy, obsessed as they havebecome with the more juicy Su, alias Pinky affair. He agreed. Butmedia has a short memory. Let me tell you why I am saying this.
In 2008 when the first lot of eight bids were architected, all of usin the know were aware of Suresh Chellaram's connection with Modi,just as we were aware of Mohit/Gaurav Burman's connection with thesame Modi. Or Amar Bindra's (son of Punjab Cricket Associationstrongman I S Bindra) presence in the Kings XI Punjab management ecosystem. Or the fact that the treasurer of the BCCI, a leading southernindustrialist N Srinivasan acquiring the Chennai franchise. Over time,civil aviation minister Praful Patel's daughter Poorna was made headof hospitality and marketing in the IPL. And so it carried on. It wasone big happy family. A high table, strictly by invitation. Media wasfirmly in Modi's corner and the smooth talking, linen suit attired IPLcommissioner rode out one storm after another. This included manyscrimmages within the BCCI where cabals tried their level best to takedown the unilateralist Modi. But he survived it all with great aplomb,realising at one level that he had Sharad Pawar minding his fortunesand at another he was making more moolah for the cricket board thanthey had ever seen in their lives. The ongoing Income Tax survey ofthe IPL estimates that total income from season 3 alone will be anastonishing Rs 1170 crore, a net profit closer to Rs 573 and a taxliability of Rs 172.5 crore. How is that for big bucks?
Probity and propriety are at the core of the issue. There is also thequestion of shareholder and investor compliance. After all as many asfive of the eight existing franchises are public limited companies.Every day now is a new day, with new dirt emerging. But a lot of itsadly is well known and well documented. Unfortunately, elephants andcamels have been brushed under the carpet and Modi till recentlymedia's darling has become the target of their collective ire. TakeET's lead story on Tuesday morning: Rajasthan's land deals at thecentre of IT probe on Modi. Good? No lousy actually for Outlook wrotea brilliant cover story last year on Modi where they nailed him to thewall. The story which appeared in the February 2009 issue dealt withModi's high handedness, his operating out of the Prince's suite ofRambagh Palace hotel, his proximity to Rajasthan chief ministerVasundhra Raje and in the main dealt with the fact that Modifunctioned as a super chief minister in the state. It was a hit job,hatchet job, call it what you will, but Modi survived that too. ET'sstory had no meat of consequence, it was nothing but a pale imitationof the real McCoy - the Outlook cover story. Let me give you a flavourof that Outlook story:
*He operated as a ‘Super Chief Minister’ from the opulent Rambagh Palace Hotel*Used his proximity to then CM Vasundhararaje to control key civilservants who would take files to his hotel suite*Facilitated entry of big builders in the state. Every big land dealhad to have his clearance.*Influenced change in the liquor policy which led to the proliferationof liquor outlets. Became an election issue.*Had a finger in every pie, including mines*Personally acquired havelis in Amer by bending the law*Has an extravagant lifestyle, owns a private jet. Would stay for daysin the luxury suite of the Rambagh Palace Hotel.*Influenced the enactment of the Rajasthan Sports Act to gain controlover the Rajasthan Cricket Association (RCA)*Accused of forging signature to become a member of the RCA*Rode roughshod over anyone who crossed his path, whether it was aconstable or an IPS officer. A slapping incident sparked a near-revoltin the Jaipur police.*Was named in an FIR for misappropriation of RCA funds. The money hassubsequently been deposited with the RCA.*Convicted in the United States for possession of drugs and kidnapping in 1985
Now tell me what additional information did ET write a year later asthe lead story on the morning of Tuesday? Other than the fact that itquoted Ashok Ghelot, chief minister of Rajasthan. But as I said publicmemory is short and media memory suffers from selective amnesia offand on. Then there was a fascinating ToI story on Tuesday itself whichdealt with the facilitation fee - $80 million - paid by WSG inMauritius while renegotiating the IPL broadcast rights contract. Therecipient being Modi. That story was a dead ringer and a sure shot forpole position, but I guess the fact that both bid documents ofVideocon and Adani were missing was equally important. HT as alwayshas been a washout with the only story of consequence being theallusion to a senior cabinet minister's son in law being given sweatequity in the Videocon bid. But the display was pathetic. Logic saysthat Modi has to go, just as Tharoor had to go. But will he? Or willhe drag the entire edifice of the BCCI, its apparatus and aImost allthe big players connected with it down with him? Pawar was Modi'sbenefactor, he got him out of many a scrap. I am sure Modi has enoughdirt on his fellow travelers in the board and IPL. After all he isalso a veep in the board and heads its tours and fixtures committee aswell. This time the Congress wants revenge, it is seething atsacrificing Tharoor. Will it be quid pro quo? Modi for Tharoor toretain the code of silence or omerta over the BCCI's functioning andfinances? Both Modi and Tharoor at one level are flamboyant andarrogant. They believe in speaking their minds, both have a foot inthe mouth disease. Both are unilateralists. Both use Twitter. Tharoorsurvived many an attempt to destabilise him, just as Modi has survivedmany a palace putsch. Modi's body language and lingua franca at theairport on his arrival from Dubai was combative, not one of someonecowed down or wounded in battle.
Does Modi have something left in the tank? Modi's benefactor Pawar mayhave turned against him because he reckons he too might be singed bythis IPL heat, but KK Modi's scion has many powerful backers. Hisbackers include franchise owners like Mukesh Ambani, Vijay Mallya,Shahrukh Khan et al who have clout and influence right to the top ofthe political pyramid in the capital. Will Modi take the fall or willhe be able to pull off another Houdini act? Monday will tell us.
Bombardier Challenger in the crosshairs
The mysterious Modi jet
Sunday Guardian
IT and ED sleuths are trying to draw a bead on IPLCommissioner's Lalit Modi's Bombardier Challenger 300 series luxuryjet which he seems to have 'acquired' sometime in 2008. Modi wasreportedly using Cyprus and Mauritius bank accounts to funnel hismoney abroad.The Challenger 300 charter jet, considered asuper-mid-sized aircraft, is produced byBombardier Aerospace Company. Developed in 1999 and previously brandedthe 'Bombardier Continental', this executive business jet was renamedChallenger 300 in 2002. The Challenger 300 is a twin engine businessjet, capable of traversing trans-continental distances. It has animpressive range of over 3,000 nautical miles and can hit speeds of upto 528 mph. The Challenger 300 has one of the widest cabins of anyprivate jet in its class stretching over seven feet. This spaciouscabin is typically configured for eight passengers and two crew,making this luxury jet sophisticated and extremely comfortable.Premier League boss Modi has been using this jet to fly around thecountry and abroad. The plane was acquired in Ireland. Golden Wings, aMumbai-based private charter firm that operates the aircraft in Indiaacquired it on lease from Peel Aviation, a Shell company in Ireland.According to industry sources the aircraft, a 2007 Bombardier modelwith a registration number VT-RAK is worth $19.21 million.Considered a best of breed jet, it is chartered at approximately asteep Rs 2.75 lakh per hour.In addition to a standup cabin, a luxurious toilet and a satellitephone the luxury jet also has a gallery to store food, a microwave, acoffee maker and tea maker. It is not known whether Modi owns theaircraft or leases it from Golden Wings, but speculation has been rifethat he owns it and this is what IT and ED are investigating. For theaircraft costs close to Rs 90 crore.
Sunday Guardian
IT and ED sleuths are trying to draw a bead on IPLCommissioner's Lalit Modi's Bombardier Challenger 300 series luxuryjet which he seems to have 'acquired' sometime in 2008. Modi wasreportedly using Cyprus and Mauritius bank accounts to funnel hismoney abroad.The Challenger 300 charter jet, considered asuper-mid-sized aircraft, is produced byBombardier Aerospace Company. Developed in 1999 and previously brandedthe 'Bombardier Continental', this executive business jet was renamedChallenger 300 in 2002. The Challenger 300 is a twin engine businessjet, capable of traversing trans-continental distances. It has animpressive range of over 3,000 nautical miles and can hit speeds of upto 528 mph. The Challenger 300 has one of the widest cabins of anyprivate jet in its class stretching over seven feet. This spaciouscabin is typically configured for eight passengers and two crew,making this luxury jet sophisticated and extremely comfortable.Premier League boss Modi has been using this jet to fly around thecountry and abroad. The plane was acquired in Ireland. Golden Wings, aMumbai-based private charter firm that operates the aircraft in Indiaacquired it on lease from Peel Aviation, a Shell company in Ireland.According to industry sources the aircraft, a 2007 Bombardier modelwith a registration number VT-RAK is worth $19.21 million.Considered a best of breed jet, it is chartered at approximately asteep Rs 2.75 lakh per hour.In addition to a standup cabin, a luxurious toilet and a satellitephone the luxury jet also has a gallery to store food, a microwave, acoffee maker and tea maker. It is not known whether Modi owns theaircraft or leases it from Golden Wings, but speculation has been rifethat he owns it and this is what IT and ED are investigating. For theaircraft costs close to Rs 90 crore.
Hattangadi speaks out against secret society called IPL
"You would end up with SRK as BCCI president" - Shishir Hattangadi
Sunday Guardian
Former Mumbai cricket captain Shishir Hattangadi is unique in manyways that he served as director-cricket operations and head of cricketoperations for two different franchises - Mumbai Indians and DeccanChargers - in the first two seasons. He saw the innards of thefunctioning of the secret society called IPL at extremely closequarters. In an extensive conversation with Sandeep Bamzai, he nowblows the lid on the lack of transparency and disclosure which doggedIPL and its franchises leading to the current imbroglio. Excerpts:
*What was the problem within the IPL, how did it function say at thefranchise level?
Let us understand the nature of the beast, it was a franchise led IPL.For without the franchisees, there was no IPL. So, the interfacebetween the franchise owners and IPL Commissioner lalit Modi was oneon one and hence secretive without information percolating down atall. The owners had been roped in on a certain premise, based oncomplete confidentiality and lack of disclosure. What did come out inpublic domain was profit share from central pool, revenue model; butthat is just about it. Decisions were made without so much as a byyour leave. For instance retention of players, payments to players;the legal department handled contracts and it was a tripartite axisfeaturing owner, player and the legal cell. We were never toldanything.
Remember that the franchisees also were new to this business. Mythinking as an owner would be - I have this property, it is my domainand I choose to handle it my way - the way Sinatra sang: I will do itmy way. Transparency has now come through a simple tweet. Let us givelalit Modi his due, in many ways it is like KBC with Amitabh Bachchan.When the pilot was made and taken to media buyers, they actually saidno initially. But Star was convinced that they had a winner and theywent with it making history in the process. Modi too believed in theproperty and it rocked.
*Then why so much secrecy...
Lalit Modi was a nobody 10 years ago, he has been created by the BCCIand media. If Subhash Chandra failed, then it is because the BCCI didnot give him official sanction. My fear is that with IPL being drilledinto our heads, the younger players will be convinced to foregoeverything for the IPL. For them IPL colours will become moreimportant than even state and national colours. It is successful, butit has sleaze. Modi ran a secret society aided and abetted by thefranchise owners.There was never any clarity on any of the contracts or tenders. It wasall shrouded in secrecy.
*Do you then fear the complete corporatisation of the game in theyears to come, that the administrators would be replaced by teamowners who would run the game and the board?
That is most worrying. You have hit the nail on the head. A corporatetakeover was on the cards. From the standpoint of vaulting ambition,viewership, popularity, sponsorships and advertising, this was clearlythe design. Corporatising the game and taking over it completely. Butthis is sacrilege, you cannot run sport or cricket on the basis ofreturn on investment (ROI). If thsat becomes the underpiining ethos,then sport as a concept dies.
There would come a time when state associations would have beendissolved and Mumbai Indians would take over MCA, Chennai Super Kingswould take over TNCA and KKR would run CAB. If this had been allowedto happen, there would be a lot of compromises. The edifice of theBCCI functions on the back of its vote bank. Thirty odd associationscontrol the board and the game. Five years down the line IPL wouldbecome the crowning glory of the domestic season. Already we saw thisenvelope being pushed - Deodhar Trophy was discarded for somethingcalled Corporate Trophy. The nexus between board satraps, marketersand broadcasters is the biggest bugbear. You would probably end upwith Shahrukh Khan as BCCI president. I am okay with that as long ashe can run cricket in India ethically and with accountability, butdoes he have the time to do that or the necessary bandwidth.
*So, what do you reckon has suddenly gone wrong with the script?
The all izz well phenomenon has been punctured. It lloked well at thesurface, underneath there was a festering sore. Yes, there wasvisibility, money, glamour; so no questions were asked. Media too keptmum, some big media even supporting the Modi cult aggressively. It wasthe great Indian cash cow. Nobody was willing to take a sneak peakbehind the dark, black curtain. The Governing Council kept quiet, theBCCI too.
Lalit has put his foot in his mouth and unleashed dominoes which haveborught the whole card house down. As a cricketer who put a value onthe cap that I wore, I am pained at the taint and shame, there is somuch mud and grime tumbling out. The world must be laughing at us.Cricket had become a vehicle for commerce, somewhere one needs to drawthe line between commerce and cricket. The boy's club has been thrownwide open and I am telling you this is not the end of it.The train ishurtling out of control to its doom.
Is SC the instrumentality?
All eyes on SC
Sunday Guradian
> A decision by the Supreme Court on a petition filed by former BCCI president> A.C. Muthiah on Friday could lead to an independent probe under the aegis of> the Court. The prospect has sent shivers down the already trembling spines> of franchise owners and their political patrons.>> Muthiah has challenged the norms that permit an office-bearer of the BCCI to> hold a franchise and demanded an independent probe into "conflict of> interest." His specific target is N. Srinivasan, BCCI secretary, who owns> Chennai Super Kings. If the court gives an adverse remark on BCCI> functionaries doubling up as IPL beneficiaries, it could become a> game-changer.>> It will be possible for BCCI to initiate proceedings against Lalit Modi only> after hearing what the Court has to say. The original salvage idea, to> replace Modi with a three-member trustee body headed by Ravi Shastri and> register IPL as a non-profit organisation, has been put on hold.>> The BCCI meeting scheduled for tomorrow has run into a further hurdle.> Monday proceedings in Parliament are expected to be volatile, with the> Opposition gearing up to challenge the government over the secret tapping of> politicians' telephones. This will require the presence of Sharad Pawar,> Farooq Abdullah and Arun Jaitley in Delhi. A high powered BCCI jaw jaw to formalise strategy took place in Mumbai on Saturday.
Sunday Guradian
> A decision by the Supreme Court on a petition filed by former BCCI president> A.C. Muthiah on Friday could lead to an independent probe under the aegis of> the Court. The prospect has sent shivers down the already trembling spines> of franchise owners and their political patrons.>> Muthiah has challenged the norms that permit an office-bearer of the BCCI to> hold a franchise and demanded an independent probe into "conflict of> interest." His specific target is N. Srinivasan, BCCI secretary, who owns> Chennai Super Kings. If the court gives an adverse remark on BCCI> functionaries doubling up as IPL beneficiaries, it could become a> game-changer.>> It will be possible for BCCI to initiate proceedings against Lalit Modi only> after hearing what the Court has to say. The original salvage idea, to> replace Modi with a three-member trustee body headed by Ravi Shastri and> register IPL as a non-profit organisation, has been put on hold.>> The BCCI meeting scheduled for tomorrow has run into a further hurdle.> Monday proceedings in Parliament are expected to be volatile, with the> Opposition gearing up to challenge the government over the secret tapping of> politicians' telephones. This will require the presence of Sharad Pawar,> Farooq Abdullah and Arun Jaitley in Delhi. A high powered BCCI jaw jaw to formalise strategy took place in Mumbai on Saturday.
Modi resurrects Pink City in RIL avatar
IMG-MODI-RIL
Sunday Guardian
IPL Commissioner Lalit Modi and Mumbai Indians franchise owner Mukesh Ambani have a common fascination for the international sports company IMG. IMG has inked a joint venture with Reliance Foundation to build sporting competencies through academies and events, other than IPL, in India. Modi had the same idea four years ago, with the same partner, but could not implement it.
Mumbai Indians, heavily backed to win IPL this evening, are owned by IndiaWin Sports, a part of the Reliance Industries empire. Modi, in a cosy deal, has made inordinately high payments to IMG for its organising role in IPL events, for which he was castigated severely by the BCCI working committee. Modi was rescued at this meeting by his mentor Sharad Pawar.
When Modi was under severe pressure this week to quit so that BCCI could cover its tracks and pretend to clean up with the help of a new committee, he called on Mukesh Ambani and asked the latter to help him survive.
Modi's relationship with IMG goes back a long way. Modi was widely reputed to be the power behind the throne in Jaipur when Ms Vasundhara Raje was chief minister. At that time he promoted Pink City Sports Complex Ltd and signed a significant deal with IMG in 2006 in which Pink City would pay $312,000 per year to IMG for the first ten years. But over 25 years, the amount would extend to Rs 4200 crores at the current exchange rate of Rs 46 to a dollar.
The plan was to garner 1500 acres in Rajasthan using influence, out of which 500 acres would be set aside for IMG academies. IMG would bring international tournaments to India, and Pink City would become the sole and authorised distributor to exclusively sell licensed IMG merchandise in India. Pink City's revenue model was to bring in prestigious academies like Nick Bollettieri and David Leadbetter. The former has produced stars like Pete Sampras, Andre Agassi, Martina Hingis and Venus Williams, which the latter has coached Greg Normal, Nick Faldo and Ernie Els, among others. But, IMG officials have confirmed, this deal was rescinded in 2007 for reasons that were not disclosed. On being contacted IMG's Jim Gallagher said, "Apparently there was a preliminary deal reached but was later rescinded."
According to documents and correspondence (copies of which are with this paper) exchanged between Ted Meekma, senior vice president of IMG, director of IMG Academies and Deepa Raizada, a close associate of Modi, IMG agreed to also set up IMG Soccer Academy, Intrnational Performance Instittue, IMG academies on polo and equestrian sports, shooting, archery and swimming.
High rollers betting on IPL
BETTING ALLEGATIONS SWIRL ABOUT
Sunday Guardian
Tax and Enforcement sleuths are believed to have recovered incriminating computer records during their raids on franchises indicating betting by individuals involved in IPL. This could be linked to match-fixing if owners and their colleagues are involved.
Police have made arrests across India, from Jalandhar to Sirsa to Surajkand to Chattisgarh to smaller towns like Bhavnagar and Rajkot in Gujarat in an effort to curb betting, which has been rampant this season.
Top bookies told the Sunday Guardian, "Is baar satte ka bazaar garam that, achche khaase paisa lagaya gaya hai." He added that interest was high because IPL had returned to India after a sojourn in South Africa last year. It is estimated that around Rs 5000 cr has changed hands in IPL3. Owners like Vijay Mallya and IPL commissioner Lalit Modi have vehemently denied that there is any serious Indian gambling on IPL.
In Britain, where gambling is legal, top online sites are giving odds of 4/5 on Mumbai Indians for an outright win, while Chennai Super Kings is fetching 6/5.
Since betting is illegal in India, bookies are creative. They operate through multiple mobile phones, from vehicles or farmhouses on the outskirts of urban conglomerates. Betting syndicates operating out of small towns in western and central India in the past had links with Dubai and Karachi-based dons.
Betting in the UK has been boosted by the fact that matches have been shown live due to the landmark deal broadcast deal between IPL and ITV. Matches are also being shown on youtube.
Tuesday, April 20, 2010
Money hai, but honey bhi hai
Sportzpower Team
New Delhi: How have the Income Tax authorities arrived at a figure ofRs 1170 estimated income for the BCCI from season 3 alone. Well, LalitModi's famed ploy of slicing and dicing the rights pie has ramped upthe revenues for the cricket board.This is what IT has discovered after its preliminary survey:
*Rs 670 crore is the revenue earned from the central broadcasting dealwith Sony-WSG in 2010
*Rs 330 crore is the revenue earned from franchisee fee
*Rs 170 crore is the revenue earned from central sponsorship.
*Rs 620 crore is the amount of revenue IPL will share with the teams in 2010
*Rs 6 crore is the amount money IPL will spend on umpire salaries in 2010
*Rs 27 crore is the amount of money IPL will spend on prize money in 2010
How are the revenues split:
Central broadcasting revenue
Year 1-3: BCCI gets 20%, teams get 80%
Year 4-5: BCCI gets 30%, teams get 70%
Year 6-10: BCCI gets 40%, teams get 60%
Central sponsorship revenue
Year 1-10: BCCI gets 40%, teams get 60
Central sponsorship revenue consists of
3 year licensing deal with GEC ColorsInternet rights deal with YouTubeTheatrical rights to UFO MoviezUK telecast rights for 2010 sold to ITVKarbonn is official mobile phone partner and MTV aired IPL Nights postmatch showMRF sponsors the blimpsStrategic Time Out sponsorship deal with mobile phone manufacturerVarious mobile and digital rights sold to different players
Tripping, but of the round tripping kind
Sportzpower Team
New Delhi: Realising that round tripping could be involved - thepractice of bringing money back into the country using off shore taxhavens - the Income Tax authorities have decided to rope in theFinancial Intelligence Unit (FIU) to pinpoint and trace specific highvalue cross-border monetary deals during 2008-09 and 2009-10. OnMonday, IT authorities briefed the FM on its preliminary findings.
Created by the finance ministry in 2004, FIU is used to monitordubious money laundering transactions. It has prepared a list ofthousands of cases of doubtful inward remittances. In 2008-09 alonethere were 4409 such transactions. Tax authorities believe that somesuch trasactions could well have found their way into the IPL.
The ambit of investigation is over arching and sources close todevelopments told sportzpower that the paper trail leads to Mauritiusand Virgin Islands. Since IPL itself is not a registered entity andfunctions as a subsidiary of the BCCI, it is the cricket board whichwill have to bear the tax liability. In any case its tax exemptionstatus due to its erstwhile avatar of a non profit organisation hasceased to exist because of the IPL which is a commercially drivenentity making money for both the BCCI and individual franchises.
* BCCI's total income from IPL 3.0 is expected to be Rs 1170 crorewith a net profit of about Rs 573 crore. The total expenses of IPL’sogranisers are pegged at Rs 653 crore this year. Their income taxliability as such is anticipatecd to be Rs 172.5 crore.
*Benaami ownership has been traced in some of the franchises. Roundtripping instances in at least three franchises.
Crackdown...
Sportzpower Team
New Delhi: On another day of high drama surrounding IPL, financeminister Pranab Mukherjee made an unequivocal statement on the floorof parliament. The Fm said that the entire ball of wax - IPL - will bescrutinised including its funding and vowed not to spare any'wrong-doer', as Commissioner Lalit Modi came under the scanner ofIncome Tax authorities. As sportzpower repoorted on Monday morning,the IT authorities have issued summons to the BCCI and both Modi andCEO Sundar raman are expected to present their case.
With the opposition focusing on IPL and asking for JPC probe and unionminister Vaylar Ravi likening it to a gambling den, the Income taxauthorities have asked the Board for Control of Cricket in India(BCCI) to respond by April 23 to 10 critical queries, including theone on income from IPL and its entire structure:.
*Why hasn’t IPL shared the ownership details of the each of the team owners?
*If there were doubts over the ownership structure of the RendezvousSports World Private Limited - Kochi team - why was their bidaccepted?
*The pre qualifying condition of bidders having a net worth of $1billion ( about Rs 4,600 crore) was removed from the new tenderdocuments during the bidding for the two new teams in March. Why?
*Even with the high minimum networth condition of $1 billion ( Rs 4600crore) three bidders qualified. Why wasn't the auction conducted amongthese three and eventually awarded to the top two among them?
*In the absence of any minimum networth conditions, how would theorganisers prevent non-serious players from bidding?
*How much revenue is being earned from the `post-match’ parties of IPL matches?
*The gate receipts are collected by the franchisees. Why is IPLorganising these parties based on tickets priced at Rs 40,000 thatshould actually constitute revenues of franchisee hosting the match?
*In the bidding for the new teams, the governing council reduced the$100 million (Rs 460 crore) refundable deposit drastically to $10million ( Rs 46 crore). Why $10 million and not more or less?
*Each team has to pay IPL the winning price of their team over periodof 10 years. At the same time, each team is entitled to its share ofrevenues from IPL’s central revenue pool. Is there any monetarytransaction between IPL and the teams or is it a mere book keepingentry as both sides have to pay each other?
*How much revenue has IPL shared with the teams in the first twoseasons? How much revenue will be shared with the teams in season 3?
The government's dragnet has become over arching as the EnforcementDirectorate said it will also investigate the alleged murkyinternational deals of the cash-awash IPL while the Company AffairsMinister Salman Khurshid made it clear" that his ministry too was inthe picture.
New Delhi: On another day of high drama surrounding IPL, financeminister Pranab Mukherjee made an unequivocal statement on the floorof parliament. The Fm said that the entire ball of wax - IPL - will bescrutinised including its funding and vowed not to spare any'wrong-doer', as Commissioner Lalit Modi came under the scanner ofIncome Tax authorities. As sportzpower repoorted on Monday morning,the IT authorities have issued summons to the BCCI and both Modi andCEO Sundar raman are expected to present their case.
With the opposition focusing on IPL and asking for JPC probe and unionminister Vaylar Ravi likening it to a gambling den, the Income taxauthorities have asked the Board for Control of Cricket in India(BCCI) to respond by April 23 to 10 critical queries, including theone on income from IPL and its entire structure:.
*Why hasn’t IPL shared the ownership details of the each of the team owners?
*If there were doubts over the ownership structure of the RendezvousSports World Private Limited - Kochi team - why was their bidaccepted?
*The pre qualifying condition of bidders having a net worth of $1billion ( about Rs 4,600 crore) was removed from the new tenderdocuments during the bidding for the two new teams in March. Why?
*Even with the high minimum networth condition of $1 billion ( Rs 4600crore) three bidders qualified. Why wasn't the auction conducted amongthese three and eventually awarded to the top two among them?
*In the absence of any minimum networth conditions, how would theorganisers prevent non-serious players from bidding?
*How much revenue is being earned from the `post-match’ parties of IPL matches?
*The gate receipts are collected by the franchisees. Why is IPLorganising these parties based on tickets priced at Rs 40,000 thatshould actually constitute revenues of franchisee hosting the match?
*In the bidding for the new teams, the governing council reduced the$100 million (Rs 460 crore) refundable deposit drastically to $10million ( Rs 46 crore). Why $10 million and not more or less?
*Each team has to pay IPL the winning price of their team over periodof 10 years. At the same time, each team is entitled to its share ofrevenues from IPL’s central revenue pool. Is there any monetarytransaction between IPL and the teams or is it a mere book keepingentry as both sides have to pay each other?
*How much revenue has IPL shared with the teams in the first twoseasons? How much revenue will be shared with the teams in season 3?
The government's dragnet has become over arching as the EnforcementDirectorate said it will also investigate the alleged murkyinternational deals of the cash-awash IPL while the Company AffairsMinister Salman Khurshid made it clear" that his ministry too was inthe picture.
Monday, April 19, 2010
Propriety, integrity, legality al tossed out of the window
RETROFIT
This one is about propriety, ethicality, legality, legitimacy and ofcourse the truth. It also has hefty doses of verbal action, emotion,romance and of course that vital ingredient factional rivalry. All inall the makings of a climactic potboiler. All ready for wear. And onethat media is lapping up excitedly. When the winning bid fromRendezvous for Kochi was confirmed, minister of state for externalaffiars Shashi Tharoor had magnanimously stated that he had given hisblessings to the consortium and, "beyond that, I had no role to play.I understand it's a business decision." But over the weekend a miniexplosion took place with the same weapon of mass destruction thatalmost brought the downfall of Tharoor - tweeting - being used withsurgical precision. Social messaging is obviously a new tool or shouldI call it weapon which has enormous potential. Tharoor or Mr Twittermanaged to survive each and every controversy using this tool, butLalit Modi's tweets may well inflict heavy punishment on him now. TheCongress party has already begun to distance itself from Tharoor,while the BJP is readying to launch an assault against the same man,asking for his resignation. Don't forget that parliament also reopensafter the recess, so expect some more hungama. The last has certainlynot been heard of this matter. What this latest controversy can do isenvelope the entire IPL team ownership structures and perhaps resultin greater transparency. Or maybe that is asking for too much for thelevels of opacity associated with IPL are nothing short of staggering.
But even as Modi versus Tharoor slugfest escalates, there is anothersubset which needs our attention. There are powerful cabals within theBCCI which have been wanting to take Modi down a notch or two. Laaffaire Rendezvous has given them a handle once again. Smooth talkingModi was given an e mail lashing by board president Shashank Manoharwhere he said, "Your making such statements isdetrimental to the interests of the board." According to Manohar theproper forum for underlining ownership structures is the IPL GoverningCouncil platform which Modi very tacitly chose to ignore. He opted fora viral messaging platform instead, throwing into stark relief theimportance of social media like Twitter, facebook, orkut, buzz et al.Manohar now wants to discuss this entire episode at the GoverningCouncil meeting in all probability on April 23.
While Tharoor's bluff has been called in this entire matter due to thecomplicity of his 'wife to be' Sunanda Pushkar who reportedly owns 18to 20 per cent of the free shares in Rendezvous Sports World, itthrows up a larger question of propriety. Sunanda Pushkar's role inthis entire episode is crucial. The fact that she works as salesmanager with Tecom Investments, a member of Dubai Holdings opens up aPandora's box. The Indian Express reported that of the 1,000 sharesallotted to the"free" equity owners, 190 have been awarded to Pushkar; 24 to Gulati,16 to Kotalwar, eight each to Aggarwal and Prasad; 377 to Kishan, 376to Pushpa and 1 to Shailendra Gaikwad. The other shareholders of theteam include: Anchor Earth (27%), Film Waves (12%), Parinee Developers(26%), Anand Shah Developers (8%) and Vivek Venugopal (1%). Modi, inhis Twitter message on April 11, said: "Who are the shareholders ofRendezvous. And why have they been given this 100s of million dollarbonanza." When contacted, Keshav T of Rosy Blue Diamond, which backsFilm Waves, said: "There is a component of sweat equity given toRendezvous as they were the ones who put together the consortium andwill be full-time working partners. " Yes, who are these people? Fromthe time that Rendezvous surfaced with the humongous bid of $333.33million, they have been the cynosure of all eyes. And questions?
The ramifications of Modi's tweets are going to resonate for sometime.Its impact will be felt not just by Tharoor in politics, but onRendezvous's continuity as a team, Modi's clout and influence in thecricket board, but generally speaking its fall out may well hurt otherfranchise owners as they might be pressurised into coming clean ontheir shareholding. Remember that lead investor in Emerging Media,owner of Rajasthan Royals is Suresh Chellaram, Modi's brother in lawor Kings XI Punjab co owner Mohit Burman's brother Gaurav is Modi'sstep son in law. Tharoor, meanwhile is caught in a maelstrom of hisown making. He might be bellicose now, saying that Modi's tweets are"an extraordinary breach of allpropriety" and designed to discredit the franchise. Modi too has beenin the line of Manohar and Srinivasan's fire for his unilateralism. Hehas often been bailed out by Sharad Pawar. Manohar's mail to Modi hasa strident sounding line to it, "The issue, if any, could have beendiscussed at the governing councilmeeting and that action on your part of raising it on Twitter isunbecoming of you as a chairman of the a sub-committee of the board.Your action is in serious breach of the confidentiality clause in theagreement. Till date, you have made public statements about a lot of issueswhich were not even discussed in the meetings of the governing councilwhen it is the governing council which has the authority to takedecisions with regard to each and every issue related to IPL."
But Modi is combative and resilient. He responded to Manohar's letterby saying hisrevelations on Twitter were "in no way a breach of confidentiality".He said the Kochi franchise "had a lot to hide" and as such have liedabout who are the actual owners of the shares. Modi seems to be rightin pulling the plug on Rendezvous, more so because Tharoor reportedlycalled him to prevent him from outing Sunanda's name. Oh yes, thewaters are muddied."I was told not to get into who owns Rendezvous, specially SunandaPushkar. Why?" said Modi. Agencies reported that, "Tharoor had allalong denied having a stake in the Kochi franchise, saying he playedmerely a facilitator's role. In a lengthy rejoinder on Tuesday,Tharoor denied calling Modi and requesting him not to disclose detailsof the RSW stakeholders.
But there is another facet to this fur flying. For instance mediapersonnel got an earful on Tuesday when they assembled outside thehome of retired army officer P.N. Dass, whose daughter Sunanda is atthe centre of the Kochi Indian Premier League (IPL) controversy forher reported share of Rs.70 crore. Dass' house in sector 5 of ChanniHimmat locality was the focus of media attention after news reportsabout Sunanda, who has business interests in Dubai, and her purportedlinks with Minister of State forExternal Affairs Shashi Tharoor hit the headlines.
Journalists who gathered for a quote or a soundbite or two weregreeted by abuse from Sunanda's father, Lt Col (retd) Dass. He firsttold camerapersons and reporters to go away. When they continued tohurl questions, he used abusive language. The family had migrated toJammu in 1990 when their house was burnt down by militants in Bommaiin Sopore in the Kashmir Valley. More than 350,000 Kashmiri Panditshad fled the Valley. They hadsought shelter in Jammu, as did Sunanda's family.
Finally, who is this lady in Tharoor's life?
Another media story went like this, "Sunanda Pushkar, who is seen withMinister of State for External Affairs Shashi Tharoor at socialgatherings and is in the thick of the Kochi IPL row, is involved witha construction business in Dubai, andhad been with her parents in Mathura recently. Following a divorce,Pushkar went to Dubai, where she married again. Her second husbanddied in an accident in Delhi. Pushkar, a graduate of GovernmentCollege for Women, Srinagar, has twobrothers, one of whom works for a bank; the other is in the Army. Herfather retired from the Army in 1983."
This one has all the juice. Expect more. And with allegations of Modicooking up this broth to trump Rendezvous's Kochi bid for Ahmedabadgaining currency, be prepared for more dirt. Rendezvous has alreadyreacted by calling Modi a drug peddler...so, watch out many blindcurves ahead.
The Modi-Tharoor spat has brought the card house tumbling down
COMMENT
MIDDAY
IPL commissioner Lalit Modi as is his wont finds himself in the warsonce again. When the Indian Premier League was being rigged up and thebidding process was completed in January, 2008; there was a whiff ofscandal in the air. Emerging Media which bagged the Jaipur franchisechristening it Rajasthan Royals had Modi's brother in law SureshChellaram as the lead investor in the consortium while the consortiumof Mohit Burman, Ness Wadia, Karan Paul and Priety Zinta which baggedthe Mohali franchise Kings XI Punjab also had a Modi connection.Mohit's brother Gaurav based in the UK is Modi's step son in law.While allegations of IPL being the Indian Parivar League surfaced andthen got subsumed in the din created by the phenomenal success ofseason one, motormouths in the grapevine business spoke about howconnections mattered in the cash awash bulge bracket IPL.
But Modi rode that one out just as he has ridden many othercontroversies over the last couple of years. But controversy and Modigo hand in hand. So, on Monday morning, media was buzzing with Modi'slatest tweets. Ironical that he had tweeted on the government's veryown Mr Twitter - minister of state for external affairs - ShashiTharoor in a manner of speaking. Tharoor's dalliances with Twitterhave got him into enough trouble already. But this time, Modi used thesame weapon to open a can of worms. Time out...Rewind...
Modi's tweets revealed the real shareholders, the shadow promoters.This after MoS Tharoor has vehemently denied any economic interest inthe Kochi winning franchise Rendezvous Sports World. He has beentelling all and sundry that he proved to be the matchmaker at thewedding, bringing various like minded people together to make thewinning bid of $333.33 million. But by Monday the 'mentor's' statedposition proved to be fallacy. Which raises questions of integrity andethicality. Why? Of the 25 per cent shadow promoters who hold freeequity in the franchise, as much as 18 to 20 per cent is owned bySunanda Pushkar. So, who is Sunanda Pushkar? On Monday, media reportedthat Tharoor is planning to divorce his second wife - Christa Giles, acandian civil servant who works with the UN on disarmament issues.
And, yes, he is planning to marry Sunanda Pushkar whose Linkedinprofile reveals that she is sales manager in Dubai with TECOMInvestments. Tecom is a subsidiary of Dubai Holdings which is engagedin the commercial real estate industry. That Modi is fuming becauseenormous pressure was exerted on him by a central minister not toreveal Sunanda Pushkar's name. Now, if that is true, then there issomething seriously amiss. For it is obvious that the central ministeris Tharoor. Rendezvous may have hit back by raising Cain over Kings XIPunjab and Rajasthan Royals etymology. But then the question is whydid Tharoor lie? Rendezvous may have done the smart thing by takingthis matter where the waters have been muddied to the BCCI and itspresident Shashank Manohar. That however, does not alter the legalityand legitimacy of Tharoor's involvement with Rendezvous, somethingwhich he has denied outright. Will the Congress close ranks againstthe interloper or will Modi's tweet be the end of Tharoor, even as hegot away with his own tweets. Rendezvous now wants to sue Modi sinceit believes that Modi is favouring Ahmedabad over Kochi.
The opacity of shareholding in IPL team ownership structures has beenan issue for sometime now. By divulging that 25 per cent free equitywas held by Kisan, Shailender & Pushpa Gaikwad, Sunanda Pushkar, PujaGulathi, Jayant Kotalwar, Vishnu Prasad and Sundip Agarwal, Modi hasensured that Banquo's ghost has come back to haunt Rendezvous.Meanwhile, all eyes on Tharoor.
Expect stake and outright sales in IPL now
NAKED EYE
New Delhi: So, King Khan, Shahrukh Khan has finally had enough of IPL.And more importantly, he cannot make promises anymore because he haslost the moral right. Enough of Kolkata Knight Riders after threeconsecutive seasons of unmitigated disastrous performances. SRK feelsawful for Kolkata and his sponsors. Remember that Nokia forked out thehighest amount as lead sponsor of KKR, in excess of Rs 45 crore forthree years. Brand SRK can sell everything and anything. After all heis known as Khan Market, a tony high street destination in southDelhi. But managing KKR has been a lesson for him. Maybe that is whyhe is acutely hassled, after all running a sporting franchise requiresmanagement bandwidth. Red Chillies can do without this headache forthe time being is his present state of mind and thinking.
As season three comes to an end, get ready for a shakeout in IPL.Notwithstanding the current controversy surrounding the Kochifranchise, several promoters of the existing franchises may be lookingto partly or wholly exit from their investment. As sportzpower hasreported in the recent past, Kings XI Punjab's sale has more or lessbeen finalised for $300 million to an undisclosed buyer.Confidentiality agreement, you know. Mohit Burman, co owner of thefranchise has clearly indicated to sportzpower that the suitor isneither Videocon or Pawan Munjal of Hero Honda.
Similarly, a big north Indian newspaper magnate may be contemplating ajump into IPL mania. with an acquisition of a north Indian basedfranchise. The newspaper magnate is believed to be part of aconsortium which may well include a two wheeler automobile major aswell. The two wheeler major is already lead sponsor for DelhiDaredevils, just as it is one of the principal sponsors for the IPlitself. Indications are that GMR Sports, owner of DD may well exit inpart or full to this consortium if the price is right. Given that thethree year lock in period ends with the culmination of season three,promoters of franchises can sell more than 51 per cent beginning April26. SRK's dalliance with cricket has been a big joke, more so inseason two when KKR was the butt of all the jokes. Between JB - coachJohn Buchanan, eleven captains, FakeIPLplayer's blogging and BrendonMcCullum's bizarre captaincy, KKR the truly the object of ridicule.Controversies have continued to dog it right through, just as theyhave shadowed Kings Xi Punjab off and one the field.
Two bidders who were beaten at the door in the fresh two team auction- Videocon and Gautam Adani - are believed to be still in the hunt fora franchise. Sources close to developments have revealed thatVenugopal Dhoot may well be in a dialogue with SRK for KKR while LalitModi is reportedly pushing for Adani and Ahmedabad instead ofRendezvous and Kochi. SRK is already brand ambassador for Videocon forsometime now. The key is the price. Kings XI Punjab for instance isseeking a 4x valuation, SRK may also get something similar for KKR.The timing is certainly right for a disconsolate SRK, though the pricemay be a consideration for Dhoot.
What the two team auction has managed to do is raise the valuation barconsiderably for all the eight existing franchise owners. Valuationrange between 3.4x for a Mumbai Indians and Royal Challengers to asmuch as 6x for Rajasthan Royals. remember that the new threshold limitis between $333.33 million paid by the mystery men and women forRendezvous and $370 million by Subroto Roy Sahara. Teams which havenot done well and are in a bit of spot due to poor performanceparameters are at the vanguard of this exit strategy. The window ofopportunity is however limited because sometime in late Septemberafter the Airtel Champions League in South Africa, the fresh playerauction is slated to take place for all ten teams. All stake oroutright sales will thus have to be completed between April 26 andmuch before late September-early October. New owners or co promoterswill have to get a hang of the business and take a call on theauctions.
First the IPL Governing Council meeting on April 23-24 will have todecide on the course of action for Rendezvous and then on how manyplayers can be retained by the franchisees before the new auction.Sahara for example is extremely concerned about this. It wants allplayers to under the hammer so that choice is not limited and the $7million cap can be used judiciously. Glam quotient and cricket maywell sell but in SRK and Priety Zinta's case, the marriage hascertainly not been made in heaven. SRK used as enormous brand equitywith sponsors to make KKR the most financially viable franchisedespite performing below par on the field. Sachin Tendulkar has singlehandedly focused on winning IPL 3.0 and his personal brand saliencehas pulled the team out of its two season morass. MI has in turnpulled in sponsors as well. KKR and SRK despite being ledinspirationally by Saurav Ganguly off and one this season have failedto deliver the kayo punch consistently.
IPL and Lalit Modi's problems have only begun. On Wednesday as I writethis, MEA has hit back at Modi saying that he tried to stop a visabeing issued to SA model Gabriella who claims she is Modi's friend.This tit for tat counter punching will continue till the PM returnsfrom the US when a call will be taken on Tharoor. Issues of proprietyhave been raised and Tharoor's personal relationship with memsahibSunanda Pushkar named as one of the beneficiaries in Rendezvous andher middle east connection are sure to trip the urbane minister whohas been under a cloud ever since UPA 2 was formed. Many have reckonedthat the IPL bubble will burst, anyway for now it seems to be comingapart at the seams. The Modi-Tharoor spat is a manifestation of theopacity that exists in IPL where no financial details have beenforthcoming. Transparency remains the single biggest issue. If theBCCI is a private cosy club, Indian Pariwar League is an even moresecretive society. Tharoor ka suroor is busy tripping it right now.
A closely guarded club now open to examination
GROUND ZERO
RAISING CAIN OVER IPL - THE SECRET SOCIETY
Two stories on two successive days. Both pertaining to IPL, but in tworival papers - first Business Standard and then in Economic Times.Both radically divergent. The BS story was a mini bombshell as itdealt with two unnamed Cabinetministers who were reportedly influencing the promoters of the Kochifranchise to get out. Of course it read more like threatening them with direconsequences if they didn't exit in double quick time. The writer wascareful not to name the two powerful ministers, but it certainly leftnothing to imagination if you follow politics in the rajdhani. Thesame evening Headlines Today had the writer of the story - AditiPhadnis - on the panel. While her answers were wishy washy, it was theGaikwads, co owners of the Kochi franchise - Rendezvous Sports World -since sacked from their respective positions as spokesperson and CEOwho appeared extremely shifty to me. During the course of theinterview, they appeared uneasy and unwilling to say anythingsubstantive, but when faced with a direct poser on whether they werethreatened by union ministers and asked to pull out of the venture,they were categorical in their answer. It appeared to be anunequivocal No. Subsequently, they made other allegations and havechanged their story repeatedly. And this is worrying, for by changinggoal posts, repeatedly, they have left their credibility wide open toquestion. Maybe that is why on Thursday night they were summarilyreplaced. Rendezvous spokesperson Satyajit Gaikwad till Thursday, aformer Congress MP and Ranji Trophy player has changed his tune somany times that nobody believed him by the end of it.
But it is the brazen rejoinder carried by ET on Thursday morning whichintrigued me. It was an outright denial of the BS story where SharadPawar, the man purportedly at the centre of the BS story, came onrecord. Which means that the paper didn't get in touch with Pawar, butPawar's media managers approached ET with the story. The carefullywritten story spelt out how the Kochi promoters visited Pawar for hisblessings and asked him whether they could switch from Kochi toAhmedabad.
The BS story was dramatic. I am surprised that BS ran a story of thissort in the first place. BS is a staid and very conventional paperwhich avoids controversy. Even if the story was true, it would beloath to run it. Unless someone extremely powerful in the Congress wastrying to cut Pawar and the NCP to size. We are aware that the battlefor supremacy between the Congress and NCP is a long standing one.This is the essence of the ET rejoinder to the BS story: UnionAgriculture Minister and ICC president-designate Sharad Pawar onThursday disclosed that key members of the Kochi consortium now wantedthe team to be based out of Ahmedabad, instead of Kochi. He said thatfour members of the team had met him with a request to help them intransferring the team to Ahmedabad. He declined to name the members ofthe Kochi team.
Now the BS story. It needs to be reproduced in toto for widerdispersal: Asked to take money and withdraw, the successful butfrightened Kochi franchise winners seek Sonia's protection. Harassedand bullied, the Kochi franchisees of cricket's Indian Premier Leaguehave sought the protection of Congress president SoniaGandhi from two Union cabinet ministers, who allegedly wanted them outof IPL.
At least two of the seven investors of Rendezvous Sports World (RSW),that won the franchise for Kochi, were last week summoned to theMumbai residence of a Union cabinet minister and told to back off frombidding for Kochi or else. "We have many ways to take care of thelikes of you," the two now-scared investors were told at the end of aconversation with the minister that began at 10 pm and went on till 4am. They were told to go to Delhi to meet another minister from thesame party, who apologised for his colleague's conduct but repeated:"Get out of IPL. Sell the team."
The two investors are not helpless individuals. One of them runs anindustry. Another owns a broking firm and deals in precious gems. Theyare millionaires. But, they say, when they decided to invest incricket, they did not think they were putting their lives in theirhands. The story begins a year ago, when a group of seven high net worthindividuals decided that in the next one year, IPL would be ready tolaunch two new teams and this could be a good investment opportunity.
The group of seven was led by a banker. As Kochi was one of thevenues, the group decided it would be helpful if an electedrepresentative from Kerala were to support the venture. Theyapproached Shashi Tharoor, who recognised the political spin-off andsupported the holding of his companion, Sunanda Pushkar. Pushkar hasfive per cent holding in the team, not 20 per cent as widely reported,a member of the consortium said.
RSW was a group of sport lovers which had been doing some charitysports events, but was not well known. The stakes for bidding werehigh – the company was required to have a net worth of $1billion (Rs 4,500 crore).The group decided it needed some financialballast and managed to rope in J P Gaur of the Gaur group. "We thoughtthat if we have to compete with groups like Hero Honda and the Jaypeegroup, we needed someone with deep pockets and an appetite for risk,"said one of the RSW members.
At that point, it was clear that there were at least two other venuesfor which bidding was on aggressively — Ahmedabad, sought by theAdani group and Pune, sought by Videocon and Sahara. Gaur decided hewanted to compete independently and walked out. The financial ballastwas gone.
Then, RSW realised they were being edged out of the game. They pulledstrings in the Board of Control for Cricket in India (BCCI) and gotthe threshold lowered to 10 per cent of the original figure: Rs 46crore. The first lot of bids was cancelled and rebidding was scheduledin Chennai two weeks later.
It was a Sunday morning. A cricket match was on in Chennai. Fivecompanies were in the fray: Adani, Videocon, RSW, Cyrus Poonawallawith builder Ajay Shirke, and the Sahara group.
RSW got the first inkling that something was not quite kosher whenthey got a message that their bid should be below $300 million. Theyconsulted among themselves and kept the bid at $333 million (Rs 1,533crore). Sahara bid $370 million (Rs 1,702 crore). Videocon's bid was$320 million, Adani bid $315 million. Theirs was the closest and theygot the franchise.
The members wanted to pop the cork. Too early, cautioned their leader.Get the letter of franchise first. They met IPL Commissioner LalitModi in Delhi. The daughter of one of the ministers was present in theroom. This was when suggestions were made that they should take $50million and walk away.
The group was first amused, then flummoxed. "Suppose we walk," askedone, "who is going to give us $50 million?"
An investment banker, was the laconic reply.
"Come on," said the leader. "I am an investment banker. I know no onewill pay this order of money."
"A client of an investment banker," they were told.
The group conferred among themselves and said prestige was involved."We won't go," they said.
That was not the end. The letter of franchise was delayed on one orother pretext: Contingent liability, declaration of shareholdingpattern, finally, a 10 per cent bank guarantee. The message at the endalways was: "Why get into this ? Sell the team."
The last straw was the meeting at the minister's bungalow.
The group has finally decided that if political power is what will getthem justice, they, too, will knock at the door of politicians.Meanwhile, although the consortium is not breaking up, the strain istelling on it. Shashi Tharoor has confided in friends that he may haveto put off wedding plans. Sunanda Pushkar is close to a breakdown. Thetwo Gujarati investors have hired additional personal protection forthemselves and their families.
"The game was to get us out and give the franchise to the nextbidder" said a member of the consortium.
This is when a franchisee has to look at 40 to 50 per cent losses inthe first two years. "We are looking at a net loss of Rs 100 crore atleast, for the first two years" one of them said.
Neutral observers say the episode is a clash between two groups of"very clever people". "The conflict of interest in Lalit Modi's caseis clear: His son-in-law has been given web advertising rights and hisbrother-in-law has a team. And, in Shashi Tharoor's case, the womanwhom he is going to marry has been given free equity worth Rs 75 croretoday but it could be worth Rs 500 crore a few years from now. And,when you look at it, the minister of state in charge of the MiddleEast also has 100 per cent of his business in the Middle East: doesthat sound like propriety?" asked a member of the BCCI governingcouncil.
Now , who should one believe? BS and its dramatic recounting of eventsor ET and its straight laced denial. The BS story noted that $50million was offered to them by Modi to exit from the franchise. TheGaikwads who have since lost their exalted positions endorsed thisview the next day on telly channels. Modi, meanwhile has threatened tosue them for making such baseless charges. What amazes me is that $50million isn't small potatoes. It works out to Rs 220 crore at thecurrent exchange rate. If Modi or the ministers did make such anabsurd claim then we are talking about Rs 220 crore of slush moneybecause it is obvious that the payment wasn't going to be made bycheque. The BS story says that a union minister's daughter was presentin the room. Scary. Was Pawar's interview to ET a damage limitationexercise? Or did the union ministers indeed act like mafiosi? Why wasoperation cover up necessary?
From day one the Kochi enterprise stinks to high heaven. Disparateindividuals coming together to form a consortium, free equitydisbursed for professional services rendered to dubious people, justone of the promoters - Vivek Venogopal of Elite Group holding 1 percent of the equity - representing Kerala and the rest with Gujaratibusinessmen and assorted Maharashtrians. A union minister giving hisblessings to a venture led by Gujarati businessmen for the upliftmentof cricket in Kerala and the Malayali diaspora in the middle east.Bizarre. A mysterious woman linked to the same union minister (readyto be married to him) given free equity. The woman works for a realtyfirm in the Gulf. Won't suspicions be raised if this was thebackground of an entity, however wealthy it is?
ET followed up with another good story on Friday. It provided thebackground about the social climbing Gaikwads. Here are excerpts fromthe story: The Gaikwads, who originally hail from Umarga in Osmanabaddistrict, own around 7 acres of farmland and their parents, who aresaid to be clueless about their sons’ business activities, still workat the farm themselves. Ravindra Gaikwad, who was serving at theAndheri RTO till his transfer to Beed in Marathwada in December 2009,has proceeded on long leave for obvious reasons. His role in a Rs100-crore imported bike scam — this has no connection with crickters —is still being probed by the state government.
This politician recalled how Tendulkar, Zaheer Khan, Vinod Kambli andformer test captain and chief selector of BCCI Dilip Vengsarkarattended the marriage of Mr Gaikwad’s sister three years back inSolapur. “I myself attended the reception and the kind of bonhomiethat was on display between the Gaikwads, especially Ravindra, and thecricketers, was quite conspicuous,” the politician told ET.
“He had made a lot of money and it all attracted a series ofinvestigations ordered by the state government wherever he was posted.He perhaps did not know where to invest the money and the IPL thingjust happened in time for him. Through his contacts in cricket, andactivities of Pushp Cricket Academy that he had founded, Ravindra knewthe world of cricket inside out,” the politician said. But he alsoexpressed surprise over the Gaikwads’ association with Kochifranchise.
Another prominent Solapur resident, who, in fact, lives close to theGaikwads’ sprawling bungalow called Pushp in Solapur’s toniest addressAntrolekar Nagar, told ET that the Gaikwads had a flashy life-stylethat always kept them in the public glare. “They have a pet foreignbreed and I am told they bought it for Rs 12 lakh. Then, there areswanky cars and SUVs,” the person said, adding, however thatRavindra’s parents have all along led a simple life.
I am in agreement with Modi when he says that backgrounds of suchpromoters needed to be authenticated by IPL. After all there is noconsistency whatsoever in their backgrounds. It appears that a hastilyput together conglomeration of individuals all glamour struck by IPLwent to bed, without being on the same page. However, when Modiattacked a union minister, it gave them an opportunity to go after theIPL, its boss and the franchisees who form a secret society. What Modihas managed to do is make media quickly forget the Shoaib-Sania-Ayeshatamasha.
Subscribe to:
Posts (Atom)