Deloitte Audit Report Exposes Financial Mess In BCCI Affiliates

Exposes large scale irregularities in accounts books of the state associations
Deloitte Audit Report Exposes Financial Mess In BCCI Affiliates
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.

Being experts at number crunching, Rai, who during his tenure as CAG had disclosed both the Coalgate and 2G Scams a few years ago, and Limaye naturally looked beyond the black-and-white text and tried reading between the lines in the Deloitte reports. They as well as their two other committee colleagues -- noted historian and never-say-die cricket fan Ramchandra Guha and former India women’s captain Diana Edulji -- felt there was still more to it that had found its way into the report.

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.

For example, the auditors point out the bizarre act of overruling duly audited accounts by the Gujarat Cricket Association. “The audited financial statements duly signed by office-bearers was superseded subsequently with a correct version due to an inadvertent error in the balance sheet resulting in certain differences in the older version.”

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.

One of the root causes of the state associations’ ‘I-don’t-give-a-damn’ attitude towards financial matters, including maintenance of account books, is that the BCCI never tried to make them accountable for the huge grants/funds they have been doling out year after year (see the graphic alongside), particularly since the advent of the lucrative IPL in 2008. All this is due to the Board’s vote politics and a majority of former office-bearers’ keenness to perpetuate their reins. This, despite giving huge amounts to its affiliates over the years.

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. 

Below are some of highlights of the Deloitte Audit Report (the figures against the state associations’ names, in parenthesis, are the amounts they received from BCCI between 2010-11 and 2014-15, as per a BCCI affidavit submitted in Supreme Court):

Baroda (Rs.154.92 crore)
  • Land at Kotambi purchased for Rs.13.95 crore from seller who himself purchased the property just a month before for Rs.10.95 crore.
  • Advance of Rs.4.17 crore paid for buying land at Sarkarda at risk; litigation is on.
  • Memorabilia worth Rs.96 lakhs in silver coins issued to all 2,300 members.

Uttar Pradesh (Rs.123.52 crore)

  • Rs. 21.52 crore, including Rs.3 crore for proposed building, spent in acquiring land in Unnao, near Kanpur, for a stadium. Now, UPCA plans to sell it.
  • UPCA took Green Park Stadium on a 30-year lease at a yearly rent of Rs.1 crore, but the state government too is using it.
  • No practice of inviting open tenders awarding purchase/service contracts.

 Haryana (Rs.120.65 crore)

  • Close to its Lahli stadium, 21.06 acres land bought for Rs.10.74 crore (@ Rs.51.01 lakh/acre while in 2013-14 the collector rate was Rs.25 lakh/acre) between 2010-2014 for another stadium.
  • Land in Sultanpur, Yakubpur, Sondhi and Beed in Haryana purchased at a premium of 50%-230% over collector rates and exchanged with Reliance Haryana SEZ’s 9.84-acre land in Lohat.

Jharkhand (Rs.196.23 crore)

  • Non-refundable Rs.15.85 crore premium paid for leasehold land in Ranchi not being amortized over the lease period.
  • Heavy Engineering Corporation Limited sub-leased 31.70 acres land in Ranchi to JSCA for a stadium for a Rs.15.85 crore premium. HECL now wants to evict JSCA as it wants to build a star hotel inside the stadium; litigation on.

 Kerala (Rs.176.16 crore)

  • Rs.27.08 crore spent on purchasing 23.65-acre marshy mangrove land in Edakochi in 2009-10 for building a stadium. Case is in the High Court.
  • Rs.3.36 crore spent on purchasing land in Thodupuzha. It’s under litigation.
  • Rs.85 lakh paid to United Kingdom’s architectural firm Hopkins without formal agreement.

Orissa (Rs.186.64 crore)

  • Rs.2.38 crore loss to OCA Club since its inception in 2013-14.
  • Rs.3.5 lakh worth of 70 tonnes organic manure purchased every month from Indian Plant Seeds for Barabati Stadium/gardens, no utilisation records maintained.
  • Rs.5.41 crore deficit in organising men’s and women’s tournaments, despite reimbursements by the BCCI.

Hyderabad (Rs.156.67 crore)

  • At least Rs.114.95 crore worth of financial irregularities from 2000-2012 alleged by Anti Corrpution Bureau.
  • Rs.2.03 crore demand from the electricity department for electricity theft.
  • Land in Mehboobnagar and Nizamabad purchased for Rs.1.51 crore for constructing stadiums, but IT Dept attached them in 2015-16 for not paying tax.

Goa (Rs.141.30 crore)

  • Fixed assets, including a ground at Sanguem, capitalised at Rs 6.2 crore, mired in controversy.
  • Alleged misappropriation of Rs.2.87 crore received from BCCI between 2006-2008.
  • Rs.4.47 crore paid to Uday Joshi & Asso on design & consultancy; work not shown to auditors.
  • Officials spent Rs.43 lakh on watching IPL games in 2014-15 under ‘Cricket Promotion Expenses’.

Gujarat (Rs.157.23 crore)

  • GCA purchased cricket balls (Rs.42.45 lakh) and staff uniform (Rs.1.73 lakh) from two firms in which officials were “interested” in (2012-13 to 2015-16).
  • Audited financial statements for 2010-11, 2011-12, 2012-13 not provided and AGMs not held. Office-bearers’ term had expired in 2011-12.
  • Significant IT demand of Rs.37 crore from 2006-07 to 2012-13.

Himachal Pradesh (Rs.134.28 crore)

  • HPCA, a society, changed to a company on Oct 1, 2012, but it had registered a company with exactly same acronym (Himalayan Players Cricket Asso) was incorporated in 2005. After becoming a company, HPCA became Himachal Pradesh Cricket Association.
  • Total tax demand of Rs.18 crore pending, but no provision or entry is made in the books.

Saurashtra (Rs.158.89 crore)

  • Transactions with association members and their family: Rs.84,000 ex-gratia, Rs.66,000 for mobile phone, Rs.85,000 for mobile bill for 2014-15 and car along with petrol expenses amounting to Rs.14 lakh given to secretary Niranjan Shah.
Assam (Rs.216.15 crore)
  • Contract for Barsapara Stadium floodlights given for Rs.9.87 crore; actual cost was Rs.12 crore. It got a Rs.6.50 crore loan @ 9.25% against two fixed deposits (maturity value Rs.8.47 crore) for paying Service Tax (Rs.3.30 crore) and contractors (Rs.3.20 crore).

 Bengal (Rs.224.18 crore)

  • Non-payment of Eden Gardens lease rentals for four years is Rs.3.24 crore while Rs.66 lakh was spent on celebration of 199th Test of Sachin Tendulkar in 2013-14 and Rs.58 lakh on 150th anniversary of the stadium.

Tamil Nadu (Rs.193.42 crore)

  • Lease of Chennai’s Chepauk Stadium pending renewal, after the 20-year lease expired on April 19, 2015. Additional lease rental demand of Rs.28.99 crore received by the TNCA for Chepauk. Three stands (12,000 seats) of Chepauk sealed for being constructed without CMDA’s permission.

Mumbai (Rs.191.57 crore)

  • 19 Corporate Boxes at Wankhede Stadium, Mumbai, allotted without tender process. MCA offers subsidised tickets to Garware Club House, which can charge their members extra. Rs.1 crore donated to Mahrashtra CM’s drought relief fund, though there’s no such provision in its bye-laws.

Maharashtra (Rs.183.89 crore)

  • Rs.64 lakh spent on guard dog services and Rs.26 lakh to contractors for house-keeping services without tenders/evaluation. No written contracts defining roles for 30 contractors/consultants and 12 employees.

Karnataka (Rs.183.57 crore)

  • Rs.2.03 crore incurred on software not in use. It includes the ERP/cricketing software/cognitive e-play software. Association spent Rs.1.21 crore for telecasting Platinum Jubilee celebrations.

Punjab (Rs.178.14 crore)

  • Fixed deposits of Rs.15 crore in the name of president and treasurer. Punjab and Chandigarh police’s bill of Rs.31.64 crore is being contested. Post facto approval of Rs.1 crore paid to Punjab State Cancer and Drug Addiction Treatment Infra Fund.

Delhi (Rs.163.60 crore)

  • DDCA’s most controversial project is Ferozeshah Kotla Stadium’s renovation. The initial contract was of Rs.24 crore in 2004, but cost has escalated to approx. Rs.141 crore without the stadium being complete, still.

Madhya Pradesh (Rs.158.08 crore)

  • Purchase of 12.43 hectares of land at various rates, ranging from Rs.30 lakh to Rs.2 crore per hectare.
  • Income Tax has imposed Rs.490 lakh penalty. Rs.18.44 lakh spent on 100th birthday celebrations of late cricketers CS Nayudu, MM Jagdale and Syed Mushtaq Ali.

Vidarbha (Rs.150.25 crore)

  • VCA Club House has made a loss of Rs.5.82 crore in the last three years. Significant amount of off balance-sheet exposures (service tax and police bandobast): Rs. 21.48 crore on March 31, 2015.

Tripura (Rs.106.01 crore)

  • Contrary to its bye-laws, Rs.148.37 crore kept in fixed deposits with state co-operative and gramin banks. The association paid, under protest, only Rs.2.61 crore out of Rs.7.11 crore Income Tax demand in 2012-13.

Rajasthan (Rs.118.67 crore)

  • An ad-hoc body is managing the RCA affairs after suspending the body for electing suspended Lalit Modi its president on May 6, 2014. Since then cricketers have been most hit while BCCI has stopped funds.

Andhra (Rs.139.83 crore)

  • Spent Rs.3.06 crore on its Diamond Jubilee Celebrations in 2014 while 100 silver mementos worth Rs.27 lakh distributed without receipt information. NGT imposed Rs.96.40 lakh fine for cutting trees.

Jammu and Kashmir (Rs.36.83 crore) 

  • Some former J&KCA office-bearers facing inquiry for alleged misappropriation of Rs.24.64 crore (A PIL filed in the state has put the figure at around Rs.40 crore). A case is on in the High Court. Currently, the state sports minister heads J&KCA, defying Lodha panel’s recommendations. 
Chhatisgarh (Rs.10.01 crore)

 Railways (Rs.5.52 crore)

 Services (Rs.4.92 crore)
 Meghalaya (Rs.2.52 crore)

 Cricket Club of India (Rs.2.11 crore)

 Sikkim (Rs.0.62 crore)

 Nagaland (Rs.0.04 crore)

 Manipur (Rs.0.02 crore)

Sources: Deloitte Audit Report and a BCCI affidavit in Supreme Court. Bihar, National Cricket Club, and Arunachal Pradesh did not receive funds from 2010-11 to 2014-15, as per the BCCI affidavit.

Qaiser Mohammad Ali in Bengaluru

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