Know 14 Facts in depth Explained DDCA Scam
Finance Minister Jaitley, headed DDCA for 13 years till 2013, is being accused of corruption by Delhi’s ruling Aam Aadmi Party. AAP has demanded that Mr. Jaitley must resign or be “removed” from the union cabinet to enable an independent probe.
Today Aam Aadmi Party accused finance minister Arun Jaitley accused him of "misappropriating funds" from the Delhi District Cricket Association (DDCA) and asked Prime Minister Narendra Modi to sack him.
About DDCA Company –
DDCA is a company, limited by guarantee, formed under Section 25 of the
Companies Act, 1956. The objectives of the Association as per its Memorandum and
Articles of Association is to encourage and promote the game of cricket in Delhi and
to organize the game in Delhi. A complaint has been received from the NCT Cricket
Association (Regd.) having its offices at G-89, PreetVihar, FF, Delhi – 110092, and
which counts among its ranks prominent retired cricketers and cricket enthusiasts.
The complaint makes a number of allegations against the DDCA as a company, against its current directors and officers-in-charge as well as past directors and officers-in charge. The complaint also includes many previous complaints made by Shri Kirti Azad, former cricketer and a sitting Member of Parliament, regarding the same issues which seem to have been consistently ignored by the DDCA.
The DDCA and its office-bearers, including Directors, have been accused of defrauding its members, the Board for Control of Cricket in India, cricket players and spectators as well as governmental authorities. The allegations range from making of payments to fabricating accounts, malfeasance, conspiracy to commit forgery regarding false age certificates (which has resulted in registration of FIR No. 538/2014 PS I.P. Estate, New Delhi), tax evasion, flagrant violation of corporate laws
and norms of corporate governance and commission of serious offences under the Indian Penal Code including Sections 406, 420, 465 and 468 of the Indian Penal Code.
It is debatable whether the office-bearers of the DDCA can be considered public servants as there are conflicting decisions of the Kerala High Court on the point.However, if the officials of the DDCA are regarded as public servants, then they will also be liable under the provisions of the Prevention of Corruption Act. In light of the decision dated Kerala High Court (decision dated 26 October, 2010 in Crl. M.C. No. 2726 of 2009 in case titled K. BalajiIyengarv. State of Kerala) and considering the
role played by the DDCA and the amounts of public money being handled by its officials, they should be considered to be public servants.
It is pertinent to mention here that the CBI has already initiated a Preliminary Enquiry being CBI PE No. 4(S)/2015/SCU.V/SC-II/CBI/ New Delhi which again tends towards the understanding that the Prevention of Corruption Act is applicable to the DDCA.
Acting on the communication dated 27 July 2015 from Sports Ministry, Government of India, the Aam Aadmi Party government in Delhi initiated a probe in irregularities in the affairs of the Delhi & District Cricket Association (DDCA
A three-member committee was formed for the purpose headed by Mr. Chetan Sanghi (IAS 1989 batch). On 17, November, 2015 Sanghi Committee gave a report to the Chief Minister of Delhi highlighting glaring irregularities in the affairs of DDCA and recommendation setting up of a Commission of Enquiry to thoroughly probe the matter.
Twenty-two days after the Committee headed by Mr. Sanghi indicted the office bearers of the DDCA, which includes Union Finance Minister Mr. Arun Jaitley, On December 9, 2015 the Anti-Corruption Branch registered a case of corruption against Mr. Sanghi in connection with some of his decisions dating several years back during the previous Sheila Dikshit Government in Delhi.
When the Sanghi Committee report reached the CM’s office and it began the process of setting up a Commission of Enquiry to probe the irregularities in the affairs of the DDCA, the CBI, promptly registered a case of corruption against Mr. Rajendra Kumar (IAS 1989 batch), Principal Secretary to the CM and conducted raids in connection with some of the decision he took during Sheila Dixit’s regime.
It only exposed the fact that raid, in fact, was carried out at the Chief Minister’s office where the probe report pertaining to the DDCA was lying. In a surprise move, the CBI did not even go the departments where the files related the alleged dealings and contracts were kept. The Search and Seizure Memo issued by the CBI after the raids exposed the agency and Modi Government as the files taken in possession by the Agency included cabinet decisions of the Delhi Government and file movement register of Arvind Kejriwal’s office.
Finance Minister Arun Jaitley, who happens to be a prime suspect in the DDCA scam, lied through his teath on the floor of the Rajya Sabha and it was exposed by the Aam Aadmi Party.
DDCA Offences Explained in Details
Criminal Breach of Trust and Cheating by the DDCA and its office-bearers in making payments regarding the reconstruction of Feroze shah Kotla Stadium, Delhi
The reconstruction of the Ferozshah Kotla stadium was carried out from 2002-2007.
The initial budget was Rs. 24 crores but it eventually ended up costing Rs. 114crores as per the reply furnished dated December 1, 2012 by DDCA to the Serious Frauds Investigation Office.
It has been alleged that the construction is unauthorized without requisite permissions from the Municipal Corporation of Delhi and the Delhi Urban Arts Commission and the reconstructed stadium still lacks a completion certificate.
The stadium is, as such, in the same position as the TNCA stadium at Chennai where demolition of unauthorized stands was ordered by the Hon’ble Supreme Court. There are no approvals of building plans on record.
There is no record of tenders being issued for most of the contracts that were awarded by the DDCA for the construction of the stadium.
Reply to Inspection Notes No. 14 and 13 of the SFIO dated December 1, 2012 lists all the companies contractors to which payments were made. This same document also admits that the scope of work was expanded much beyond the original tender and the same seems to have been done without any further tender or even any formal authorization from the DDCA.
This document also reveals that the total amounts paid for construction and allied civil
works as on March 31, 2010 was Rs. 114,46,00,903 (Rupees One Hundred and Fourteen Crore Forty-Six Lakh Nine Hundred and Three Only).
Engineering Projects India Limited (EPIL) which was awarded the original tender for Rs. 24.26 crores were ultimately paid more than double the amount, that is, Rs. 57,20,01,943/- (Rupees Fifty-Seven Crore Twenty Lakh One Thousand Nine Hundred and Forty-Three Only). Not only was EPIL paid more than double of the original tender amount but the total cost, as on March 31, 2010, borne by the DDCA was Rupees 114.46 crore which was almost five times the original estimate. No tenders were issued for these ‘civil’ works which cost as much as the main project, that is reconstruction of the stadium.
Most of the works contracts have been given on a nomination basis. Further, an allegation has been made by Sh. Kirti Azad, a Hon’ble member of parliament and a reputed retired cricketer, that many of the companies who have been awarded such civil works are actually just fronts for DDCA office-bearers and that the amount spent on the stadium has been inflated for this reason, that is, to benefit DDCA office-bearers by ‘round-tripping’. This is a serious allegation and in light of the circumstantial evidence requires criminal investigation.
Another irregularity related to stadium construction is the issue of the lack of a lease
for the Ferozeshah Kotla stadium. It was claimed by the DDCA to the Investigation
Team from the SFIO that the lease renewal has been put on hold because of the
insistence of Ministry of Urban Development (L&DO) on a completion certificate for
The DDCA is operating the Ferozeshah Kotla Stadium under a license from the Ministry of Urban Development paying an annual license fee of approximately Rs. 24.64 lakh. The terms of this license allow the DDCA to utilize the Stadium for a yearly license fee of Rs. 24.64 lakh is a heavy subsidy for promoting the game of cricket.
The Central Information Commission while deciding whether the DDCA comes within the purview of the RTI Act noted that based on the submissions of the Ministry for Urban Development, the annual lease rent for the stadium works out to more than Rs. 16 crores per annum which shows that a massive subsidy is being afforded to the DDCA at the cost of the exchequer for the purpose of promotion of sport. As such, the DDCA which is receiving massive subsidies (along with other
grants-in-aid) has carried out stadium construction violating every rule of corporate
governance and fiscal prudence.
The DDCA and its office bearers have been given many opportunities to justify the stadium construction and allied expenses due to various complaints made by Sh. Kirti Azad but have consistently failed to do so. The only defense available on record is the one dated September 26, 2010 through which Shri Arun Jaitley, then president of the DDCA, summarily dismissed the allegations made by Sh. Azad. Shri Jaitley’s defense of DDCA where he defends the electoral practices of the DDCA as well as the DDCA’s financial practices and administration have been nullified by subsequent investigations which have all upheld the allegations made by Shri Kirti Azad. In fact, Shri Jaitley has stated in his letter that the EPIL was chosen for carrying out reconstruction so that payments are only made to a public sector company. This is factually incorrect as around Rs. 57 crores worth of payment were made to non-public sector companies and that too without any competitive bidding and gives rise to suspicion of complicityon the part of Shri Jaitley.
All these contracts, which amounted to the excess of Rs. 57 crores over and above what was paid to EPIL, were awarded on nomination basis without following the due procedure.
There also seems to be an effort to cover-up the malpractices and shield the guilty.
Although, by March 2010, Rs. 57 crore worth of payments had been made to private companies without any tender, none of the officials of the DDCA took any corrective or remedial action.
The above allegations would prima facie be a violation of Sections 406,420, 465, 468 as well as Section 409 of the Indian Penal Code if office-bearers of the DDCA are considered to be public servants. If they are considered to be public servants, then the provisions of the Prevention of Corruption Act will also be applicable to them.
DDCA and Crimes Offences
Illegal sub-leasing of the corporate boxes DDCA has illegally constructed 10 Corporate Boxes in the stadium and have sub -leased these boxes for 10 years to corporates for approximate amount of Rs
The fact that the Corporate Boxes are illegal is apparent from the fact that there are no building approvals or completion certificate. Further, these illegally constructed corporate boxes have been leased without the approval of the land owners, i.e. Government of India which is a clear violation of the license conditions and also amounts to an infringement of Section 406 of the Indian Penal Code being criminal breach of trust on account of misuse for unjust enrichment of public land
provided to the DDCA at a heavy subsidy. It is also grounds for immediate cancellation of license.
Forgery of age-verification certificates and abetment by DDCA officials FIR No. 538/2014 PS I.P. Estate has been registered on the basis of a complaint filed by Shri Kirti Azad. The said FIR under Sections 120,468 and 471 of the Indian Penal Code reflects the fact that forged age-verification certificates are being prepared and accepted in a systematic manner by the DDCA in collusion with one School name Vidya Jain Public School, Rohini to allow over-age players to play in younger age
groups. Investigation in the FIR is pending. The FIR names specific players who have benefited from forged date of birth and school certificates. Investigation is yet to be completed in the instant case. It is pertinent to note here that this is a case in which not only the office-bearers of the DDCA but the DDCA itself are under the purview of investigation.
Deliberate corruption of the electoral system in the DDCA
On record findings of two retired judges of the Delhi Higher Judicial Services show that the election process has been the subject of much blatant corruption. The report (at internal page 11) states that:
“We did note lack of transparency, bias and impartiality by the Sport Secretary and the Convenor of Sports Working Committee and also in recognition of club on the basis of inheritance. We have noted about the same in the orders with respect to the respective club…. During the hearing, we felt that private cricket academies are being run under the umbrella of DDCA. We noticed that from one address three clubs were affiliated. Two clubs each were also being run under the control of the administrative authorities of DDCA.”
The said report, on internal Page 21, goes on to note that the DDCA did not assist the two judges who had been appointed to oversee the electoral process. This two-judge committee, when looking at the cases of individual clubs and their representatives that sought to vote in the elections, concluded that there were massive and continuing illegalities in the affiliation of these clubs and thus concluded that they were not eligible to vote. There is a categorical finding that clubs have been granted affiliation
without following any process at all.
Regarding the case of one Shri Sanjay Bhatia of Roop Nagar Cricket Club the following has been observed, “Even though benefits are being given to Shri Sanjay Bhatia representing Roop Nagar Cricket Club we find that benefits have been given illegally, arbitrarily and without authority. “This, and other cases studied by the Committee need to be investigated into in greater detail to fix culpability on persons responsible.
The inquiry into Syndicate Club (which should be the Syndicate Bank Club) held by Sh. Chetan Chauhan into the workings of that club reveal that institutions whose employees are not participating in competitions are still shown as members of the DDCA. Unauthorized persons are acting for these clubs and running them as their own private clubs. This harms the institution as well as the DDCA which gives money to these spurious clubs who pocket it and who may also be charging money from their players for being allowed to play. There is even a prima facie finding of payments being made to the officials of the concerned institutions of accepting money to allow this situation to continue. The same is a violation of the Prevention of Corruption Act.
The DDCA has, as such, failed in its basic duty of administering cricket and has violated provisions of the Companies Act regarding appointment and termination of members which has also been one of the conclusions of the investigation done by the Serious Frauds Investigation Office (SFIO) vide their report dated 17 October, 2012.
Prima facie illegal payments made and loans and advances made by DDCA
Firstly, a company formed for a charitable purpose, like the DDCA cannot make any loans or advances to any commercial company, being contrary to the Objectives of the Company. The Executive Committee of the DDCA itself set up a fact-finding committee to look into allegations of large scale financial irregularities which did so, albeit only for the financial year 2013-2014 and records till 09 December, 2014. Even for this limited period, the Committee found that there is evidence of “huge financial irregularity”.
The Committee goes on to note that “On enquiry, it has been revealed that many spurious and illegitimate payments have been made to certain companies in 2013-2014 and till 09.12.2014. Not only this, it is an apparent fact that Association is overstaffed, still a lot of money has been spent on hiring superfluous workers. Apart from this, large scale payments have been made in the form of overtime.
The Committee’s findings include the following:
An amount of Rs. 1.55 crore was loaned by the DDCA to three different companies, Vidhan Infrastructure Pvt. Ltd., Shri Ram Tradecom Pvt. Ltd., Maple Infra Reality Pvt. Ltd. A charitable company cannot give a loan for commercial purposes but when confronted, Sh. S.P. Bansal, President of the DDCA President stated that these were an investment to earn interest. However,
when the General Secretary of the DDCA was confronted with these unauthorized loans, he diverged from the statement of the President and stated that the loans given were actually payments made on behalf of BCCI. When questions were raised, the money was returned after a few months without any
interest. There is no documentation regarding this transfer apart from account entries and this prima facie seems a case of theft and/or criminal breach of trust.
Substantial payments were made to 9 companies which, on investigation, turned out to have the same registered office, same e-mail IDs as well as common directors. Duplicate bills were issued and the reasons for payments are falsified by ledger entries including a case where one Manu Technical & Financial Consultant (P) Ltd. And Neofam Trading Co. were paid for work that had already been done by one Ritu Where Engineers and Contractors in June,2013.
A company named M/s Kaushnik Buildcast (P) Ltd. was made payments amounting to Rs. 1.99 crore against invoices for repair work, turnstile work, manpower, painting work, etc. All these payments were made in advance, that is prior to receipt of the invoice, and the Committee found that at least one of these payments was again made for work already done, that is, for turnstile work which had already been done by one Skidate (India) Pvt. Ltd.
Unauthorized and unapproved payments were made to professionals including accountants, consultants and advocates. Payments have been made without authorization and often to persons and companies who have not even provided the services claimed. These duplicate payments amount to several crores.
Corporate law consultants who have never been authorized by the Executive Committee were made payments in a haphazard manner when there is no evidence of them having provided any service. A company named Extra Value Consulting Pvt. Ltd. was paid twice for the same service, that is inspection.
Extra Value Consulting Pvt. Ltd. also turned out to have one Mr. Sanjay Bhardwaj, a partner in the statutory auditor firm of the DDCA, as one of the prominent members. One Mr. Rajesh K. Gupta who runs Extra Value Consulting also charged a fee in addition to the fee charged by M/s Extra Value
Consulting. Most shocking is the case of Manu Technical & Financial Consultant (P) Ltd. which were paid for repair work by the DDCA were again paid Rs. 7,50,000/- (Rupees Seven Lakh Fifty Thousand Only) for handling Company Law Board matters. The findings of this Committee are replete with such instances. Such irregularities and illegalities have been found in every kind of financial transaction, including payments of taxes.
Over 26 different heads there are findings by this Fact-finding Committee of defalcation, of payments made without authorization or for a fictitious purpose and non-maintenance of accounts which show the complete disarray that the DDCA functions in. This report discloses many cognizable offences but no official action has been initiated against the concerned officers although they were suspended. No attempt has been made to recover the amounts wrongly paid or to ascertain if the office-bearers of the DDCA have personally benefited from these transactions. At this stage, it would be appropriate to state that the pattern of transactions raises grave doubts as to the culpability, including
criminal culpability of DDCA’s office-bearers.
The Fact-Finding Inquiry committee bases its finding and conclusions in no small part on the Internal Audit Report for the Financial Year 2013-2014 by V.K. Bajaj & Co. Chartered Accountants who were brought in, in addition to the Statutory Auditor to audit the DDCA. The Auditor has found the accounts of the DDCA to be in total disarray and a perusal of the same will reveal that the accounts have been in disarray for a significant period, that is before 2013-2014 and as such further inquiry is required as to illegalities, including illegal payments and defalcations made in the running of DDCA prior to this period.
Evasion of Entertainment Tax
As per Assessment Order No. F.18 (5)/ETO/14-15/2815/3371 dated 21 October,2015, it has been held that although the DDCA was exempted from paying entertainment tax until the year 2008. However, since the DDCA did not declare the amount of Rs. 34.96 crore received for corporate boxes, tax exemption for such payments, although received in 2003-05, has not been extended to the
DDCA. The Entertainment Tax Officers has also concluded that an amount of Rs.5,24,40,000/- (Rupees Five Crore Twenty-Four Lakh Forty Thousand Only) was payable as tax on the amount suppressed by the DDCA. Interest on the amount due comes up to Rs. 13,97,16,000/- (Rupees Thirteen Crore Ninety-Seven Lakh Sixteen Thousand Only) and a penalty of Rs. 5,24,40,000/- (Rupees Five Crore Twenty-Four Lakh Forty Thousand Only) for tax evasion has also been imposed.
In total, the Entertainment Tax due is Rs. 24,45,96,000/- (Rupees Twenty-Four Crore Forty-Five Lakh Ninety-Six Thousand Only).
An allegation has also been made that the most expensive seats are given away for free and the price of these tickets is shown as Rs. 100/- (Rupees One Hundred Only) when the price of tickets at less coveted stands is Rs. 5,000/- (Rupees Five Thousand Only). This is an aspect which further needs investigation.
Compounding of offences by the Company Law Board in a questionable Manner
The SFIO in its inspection has found massive irregularities in the DDCA and has recommended action. However, all these offences have been compounded by the Registrar of Companies. Further, the Company Law Board has compounded the offences against officer-in-charge in a perfunctory manner imposing fines where the magnitude is too low. It is also pertinent to mention here that the some of the offences which have been compounded like those under Sections 209 and 211 of
the Companies Act, 1956 are in fact punishable by imprisonment. Further, such compounding has been stayed by the Hon’ble Delhi High Court. The bench of the Company Law Board which allowed the compounding consisted of one Mr.U.K.Chaudhary, Senior Advocate. Mr. U.K. Chaudhary, it has been alleged, had appeared for the DDCA while the offending officers were in charge of the DDCA.
As such persons who were involved in referring work from the DDCA to Mr.U.K. Chaudhary were given the benefit of compounding by Mr. U.K. Chaudhary. The same was a clear instance of conflict of interest.
The Disaster Management Authority (DDMA) has pointed out serious, and potentially fatal, fire hazards and other breaches of safety protocols.
The report of the DDMA dated 02 May, 2014 is self-explanatory. It shows flagrant disregard of fire norms and a general disregard for safety. The fact that a fire has recently broken out in the premises of the stadium has also not spurred the DDCA into taking action. If immediate action is not taken to address the DDMA, the FerozeshahKotla stadium will not be fit to hold matches. DDCA has not
clarified whether these infractions have been addressed since the date of the report.
Jurisdiction Question –
Questions are being raised on Delhi Government’s jurisdiction. Here is why these
questions have no basis:
The Union Government itself wrote to the Delhi Government requesting it to probe the irregularities and corruption in the DDCA “at the earliest”.
In Rahul Mehra Vs Union of India, 2004, the Delhi High Court decided in this case that office bearers of Cricket Associations, though a private bodies, will be treated as public servants because these bodies perform public functions akin to state functions.
In Zee Telefilms Vs Union of India 2005, the Supreme Court upheld the view expressed by the Delhi High Court in Rahul Mehra case and some other similar cases.
In BCCI vs Union of India Justice T S Thakur, who’s Chief Justice of India, upheld the view expressed by the above two judgements.
Kerala High Court in the case of Keral Cricket Association said that Office Bearers of the Cricket Associations will be treated as public servants for the purpose of Prevention of Corruption Act and can be tried under it.
In light of the facts above, the following conclusions can be drawn:
It is apparent that the DDCA and its officers-in-charge are involved in a number of acts which are criminal offences and are otherwise unethical and contrary to the principles of a charitable company, much less of a sporting body. The construction of the stadium is mired in allegations and there is at
least prima facie material to conclude that the construction of the stadium has led to huge loss to the DDCA and to the government and public in general. Many of these facts have already been substantially brought on record by different statutory bodies. Further investigation is required into
these facts to fix criminal culpability of the individuals in these continuing illegalities.
The trend of defalcations, irregularities and illegalities in the DDCA extends back many years and inquiry/investigation needs to be conducted regarding the accounts and practices, financial and administrative, of the DDCA. It is on record that the statutory auditor of the DDCA is also facing
criminal prosecution. In light of other allegations which are supported by compelling circumstantial evidence, a thorough and in-depth criminal investigation is required to identify the linkages between the parties which have led to a decade long list of infractions and also to establish culpability
as well as to recover the money which has been siphoned off in one way or the other.
As per the SFIO, most norms of corporate governance, including basics such as preservation of records, which ensures transparency, have been consistently not followed by the DDCA. The DDCA has defaulted on taxes, made payments for fictitious purposes, has abetted falsification of age
by players, has violated license conditions for the heavily subsidized stadium used by them and has broken tax and other laws.
Enquiries until now have been limited in nature and have been restricted to certain time periods. Moreover, these inquiries have not sought to trace out the ultimate beneficiaries of the many instances of malfeasance and corruption. A Commission of Inquiry may be set up to look into the affairs of the DDCA in detail.
It is evident from the report of the Disaster Management Authority that no completion certificate has been obtained (or can be obtained) for the stadium. The DDCA has, in fact, endangered the lives of members of the public by not following fire and other safety norms. Competent authorities
may be instructed to urgently look into the matters of building safety norms, fire safety norms, etc. and take expeditious action.
DDCA, beset as it is by a plethora of serious allegations and its abysmal failure to administer the sport of cricket in Delhi, should cease operation,pending an inquiry in the matter. In the interim the administration of cricket should be handed over to a committee of respected cricketers and other
persons of proven integrity to be appointed by the Government of the National Capital Territory of Delhi.
No one is guilty and criminal unless and until declared by law, courts.
Source - AAP
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Thursday, December 17, 2015
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17 December 2015
Know 14 Facts in depth Explained DDCA Scam