Deloitte Audit Report Exposes Financial Mess In BCCI Affiliates

The damning Deloitte audit report, which has exposed widespread financial irregularities inside the BCCI’s affiliate associations, seems to be having its desired effect.

The Supreme Court-appointed Committee of Administrators (CoA) has taken a note of the scathing report, accessed by Outlook, and is said to be mulling action after getting to know the scale of the financial irregularities mentioned in the tell-all individual reports of each state association.

A team of auditors from Deloitte Touche Tohmatsu gave the CoA, headed by former CAG Vinod Rai and comprising finance expert Vikram Limaye, MD and CEO of IDFC Ltd., a presentation a couple of weeks ago in Delhi.

Sources close to the CoA say what made them take the report with a pinch of salt was the auditors’ negative remarks against almost all the associations who did not cooperate with the special team constituted to undertake the first-of-its-kind, pan-India exercise. These associations essentially stonewalled their bid to dig out the truth about their financial dealings. Prominent among the units that refused to cooperate fully include Jharkhand, Orissa, Assam, Gujarat, and Goa.

In their multiple reports, the auditors have mentioned that associations either refused to show them the relevant contracts, fixed deposit receipts, documents, MoUs, bills, vouchers, receipts etc. or they were not available. They also emphasise that many associations are not maintaining the fixed assets register – mandatory for every big organisation – or wrote accounts books with a pencil or accepted bills presented on plain paper or favoured their known ones in tender process. In several instances, the auditors noted the differences in the amounts of money that the BCCI has given associations and what they claim to have received.

It is learned that even as the CoA studies the report, it is not entirely happy with what it has in its hands. Considering the associations’ instances of defiance mentioned above, there is thinking among some members of the committee, that it would be prudent to conduct a fresh audit of the state associations.

While the other CoA members are not speaking to the media, Guha made an exception to make a general comment on the Deloitte report. “We have seen the report. A presentation has been made to us by Deloitte. There are multiple reports. We are aware of the situation and we will try and do the best we can,” Guha tells Outlook, stressing that he too has taken a decision to not to speak on his committee’s decisions.

If the CoA members, who are in no hurry to implement the reforms as they would like to do a good job of the responsibility given, eventually decide to order a fresh audit of the associations, they would have a solid, valid reason. In this context, it is crucial to note that former BCCI president Shashank Manohar’s order of the audit in October 2015 was his own initiative – and that is what the CoA may also point out.

There was no order from any court to do so, though at the time the BCCI was under the Supreme Court hammer and had coping with the public wrath for its mismanagement, particularly in financial matters. Manohar wanted to cleanse the opaque system. Under the circumstances, it was perhaps the best step that he could take in his bid to make the state officials transparent and accountable, and restore the BCCI’s image somewhat.

But Manohar then left the BCCI and became ICC chairman. The circumstances changed quickly, and soon the Supreme Court debarred president Anurag Thakur, who had since replaced Manohar, and secretary Ajay Shirke in January. While the BCCI’s entire focus was now on saving its own skin in the Supreme Court, there was no one to take action on the Deloitte report.

Therefore, it is only natural for the CoA to study the report and probably take action. It is important to note that his committee has the mandate of the Supreme Court to govern until the Lodha Committee recommendations are implemented in the BCCI and its affiliates, followed by elections. Thus, it has enough powers and it has taken complete command of the Board, as seen in its several directives to the state associations, including seeking information on their qualified/disqualified administrators.

Since the committee derives its strength from the highest court of the country, it thus has the power to order a fresh audit. Its present priority, however, will obviously be to ensure that the ongoing Test series with Australia is conducted smoothly – and there’s no repeat of the Pune pitch fiasco – and the high-stake IPL in April-May.

 During all this, the committee is taking a hard look at Deloitte report and may take a decision on whether it should go for a re-audit, say sources. After all, the reforms will start from the state associations, which are members as well as the electorate of the BCCI. If the administration in states is not in order, transparent, and implement the Lodha Committee-drafted constitution reforms can’t take place in true sense.

“It [contents of the audit report] may be just the tip of the iceberg. Maybe a lot of the material that’s really relevant was not divulged to the Deloitte audit team. There may a good chance that re-audit may be ordered. That it would be in order. A lot of people have been asking for it,” said the source aware of the developments. “After all, Vinod Rai is an expert in this field – auditing. If he feels there are loopholes somewhere or some other things need to be probed he may ask for it.” And, as seen by Outlook, there are indeed many grey areas stressed in the Deloitte reports.

It was only after the Supreme Court took a tough stand over this issue and asked the BCCI to furnish details of the money it had distributed to the states and how the states have spent it that the Board asked the associations to get the audit done on their own (the Deloitte audit was ordered separately). Earlier, a majority of officials in the associations had been splurging the money the way they wanted, many times on themselves, as is enumerated by the Deloitte report.

While trying to impress upon the Supreme Court that the BCCI had been taking a tough stand against its affiliates vis-à-vis financial accountability, former BCCI secretary Anurag Thakur in a sworn affidavit, submitted in May 2016, actually ended up admitting that some states had not been getting their accounts audited. In his affidavit, he cited the Gujarat Cricket Association (GCA), headed by BJP president Amit Shah, as an example.

“If not submitted, the disbursement is withheld until such submission. For example, disbursements to the GCA were withheld in FY 2011-12 and FY 2012-13 due to non-submission of audited accounts. However, once it submitted is (sic) audited accounts, Rs.86.66 crore (being its aggregate entitlement for FY 2011-12, FY 2012-13 and FY 2013-14) was disbursed to it in FY 2013-14,” said Thakur. However, Gujarat alone is not guilty; there are many of its ilk that get away with murder, so to say.

Despite the Supreme Court and the CoA wielding the stick, some officials and associations are still trying their best to impede the impending reforms by taking legal recourse. Many of them have moved applications in the Supreme Court, basically on two issues: the supposed confusion over administrators’ tenure (whether it is nine years each at the BCCI and the states, or nine years altogether), and the fear that ICC chairman Manohar’s bid to treat all member countries at par would significantly reduce BCCI’s share from the ICC. The next hearing in the Supreme Court is on March 27.

Those in favour of reforms charge that certain officials’ worry over likely reduced share from ICC is a “put on” act and is actually a bid to prolong their rule by taking attention away from the main issue – reforms in Indian cricket.

“BCCI officials keep saying that if the ICC pays India less, players would suffer. But most people don’t know – not even the players, perhaps – that not even a penny that comes from the ICC is shared with players. So whether or not BCCI gets more money or less from the ICC, it would make no difference to players,” said an official.

“For example, when the Champions League Twenty20 tournament was discontinued in 2015 the BCCI received a compensation of Rs.1,607.58 crore from the broadcasters STAR Sports. Not a penny of this money was shared with players. Both the public and players have to understand all these things,” he pointed out. “Why doesn’t the BCCI include the income from the IPL and ICC’s distribution as part of the 26 per cent of the gross revenue that it shares with players?”

Currently, the 26 per cent players’ share only includes income from media/TV rights and jersey logo deal.

This ICC issue is closely linked with the reforms in the BCCI and its affiliates. The ICC is expected to take a final decision in April, but the implementation of reforms in India may take many more months, going by the pace at which this Supreme Court case has been progressing and the state associations trying to take legal recourse to, as many experts allege, delay implementing the Lodha Committee’s recommendations. Until these cases get disposed off quickly, uncertainty will continue to affect Indian cricket.