Click to play videoNoida: Jaypee Sports International (JPSI), the organiser of India's first Formula One race, to be held in Greater Noida on October 30, has come under the lens of the Enforcement Directorate (ED), which wants to know the source of funds for the sports event.
The ED has issued JPSI several notices, the last on September 27 which has been accessed by CNN-IBN. The notice seeks details of the FEMA and Income Tax violations.
The ED wants to know the source of Rs 200 crore raised by JPSI through its Cyprus associate Indesign Enterprises.
Moreover, a bank guarantee of Rs 180 crore was given to Formula One Administration by Indesign Enterprises. This was done without Reserve Bank of India permission and later JPSI approached the apex bank, offering to pay a penalty.
But despite JPSI settling the issue, the ED has gone a step further and wants a copy of the compounding application filed by Jaiprakash Associates to RBI for the contravention committed in issuing a guarantee to Formula One Administration.
The ED has also asked for the copy of specific approvals from the Department of Sports as suggested by the RBI.
However, JPSI officials insisted that their paperwork is in order and said, "The payments have been made only after RBI's clearance to LCs opened through Axis Bank. Indesign, a subsidiary of Jaypee Group, based out of Cyprus, issued the LC, and this had been clarified to RBI. We have carried out whatever instructions RBI had issued to us. We have been carrying out our transactions as per Government guidelines."
Formula One is a big stakes game and India is an untapped market.
Jailed IOA chief Suresh Kalmadi signed the deal in 2007 that got F1 into India. Interestingly, Kalmadi's son and other members of the family are also stakeholders in JP's Formula One arm.
Clearly there are many unanswered questions. The F1 race will go on as scheduled later month, but so does the ED probe into the source of the money that is fuelling the festival of speed in India.
(For updates you can share with your friends, follow IBNLive on Facebook, Twitter, Google+ and Pinterest)
More on IBNLive Right Now
TOP NEWS
MOST SHARED
PHOTOGALLERY
