Despite A Damning External Audit Report, The Reform of the DDCA Is A Long Way Away

By Sagar | 26 October 2017

This is the final part of a series on an external audit report that examines the books of the Delhi & District Cricket Association, between the years 2012 and 2015. The first part, on the report’s failure to mention Finance Minister Arun Jaitley, formerly the president of the DDCA, is here. The second story, which details the findings of the audit report—these include embezzlement, fraud and gross mismanagement—is here.

On 10 October, the Delhi & District Cricket Association (DDCA) submitted a special audit report of its accounts before the Delhi High Court. In January, the high court appointed the retired Supreme Court justice Vikramjit Sen as the administrator of the state-level cricketing body, and directed him to appoint an external auditor to examine association’s accounts. Sen engaged the firm GS Mathur & Company to audit the DDCA’s books for the financial years between 2012 and 2015.

The firm found numerous instances of financial and procedural malfeasance in the cricketing body’s functioning, including alleged embezzlement, fraud and financial irregularities to the tune of Rs 14 crore. In my second report on the audit, I detailed these findings, which include embezzlement of nearly Rs 283 lakh in the purchase of tickets for cricket matches, as well as seemingly unscrupulous ex-gratia payments of over Rs 45 lakh to select employees.

In its findings, the audit report noted that the DDCA’s operations had violated the Companies Act of 1956, as well as its own memorandum of association. The report explicitly names various DDCA officials, such as SP Bansal and Anil Khanna, a former president and former general secretary respectively, as having been involved in the financial malfeasance. Various irregularities listed in the report appear to have taken place during the tenure of Arun Jaitley—the finance minister, who headed the cricketing body between 1999 and 2013, but was not named in the audit report.

The audit adds to a growing list of reports that have pointed out staggering corruption and mismanagement within the state-level cricketing body. Earlier reports included an examination by the Serious Fraud Investigation Office (SFIO), under the Ministry of Corporate Affairs, which was completed in 2013; an internal fact-finding mission, the report of which was released in December 2014; an enquiry conducted by a committee constituted by the Delhi government, which submitted its report in November 2015; and an investigation conducted by a court-appointed observer, the retired justice Mukul Mudgal, who submitted his report in October 2015. Each of these enquiries found instances of gross mismanagement in the DDCA’s functioning, and revealed scores of financial and procedural discrepancies. “This sort of scrutiny would be enough for any body to sort itself out,” Kaushal Shroff wrote in a June 2016 piece for this publication, “but the DDCA has done little in the way of course correction.”

The audit report alludes to unsuccessful efforts at reform. According to the DDCA’s application to the Delhi High Court seeking to submit the special audit report before the court, the administrator, Justice Sen, noted that the executive members of the DDCA appeared to be resisting the reforms ordered by it.

In the order through which it appointed Sen and directed that he appoint an external auditor, the court had also told the administrator to convene a general body meeting of the members of the DDCA. At this meeting, the court stated, the administrator must ensure that amendments to the articles of association (AoA)—which define the purpose and responsibilities of the organisation—are adopted. The amendments directed by the high court were in accordance with the reforms suggested to it by Justice Mudgal, and those submitted to the Supreme Court by the Lodha Committee—which the apex court appointed in 2015 to examine the workings of the Board of Control for Cricket in India, and whose recommendations were adopted. These included changes to the DDCA’s constitution regarding the tenures of its members and its election process, and abolishing the organisation’s proxy system of voting. The court also directed Sen to conduct elections for executives and office bearers in accordance with the amended articles of association, after these reforms had been enacted.

In the DDCA application, Sen submitted that he called meetings in March, June, July and September, but that a majority of the members voted against the 70-plus amendments. According to Sen, “it is clear from the pattern of voting” that the mandate of the Supreme Court as well as that of the high court “was deliberately not acceded by the members … as an attempt to subvert and bypass the directions.” Sen further stated that “the option not to adopt the said directions” was not with the DDCA, and requested that the court allow the proposed amendments to be taken as having passed.

Other hurdles abound. In September 2016, the cricketing association expressed its objection to the appointment of any person or committee to oversee its affairs—ostensibly referring to the Mudgal, who was supervising the DDCA’s functioning at the time. (Mudgal faced resistance from the DDCA during his tenure—in September 2016, the association held a meeting to discuss whether he was “overstepping his brief,” and Bansal sought a legal opinion, which recommended the initiation of contempt proceedings against the retired justice. Mudgal told the court in January this year that he did not wish to continue in his post.) In a submission to the court, the DDCA noted that it was a company and such administrators are appointed only for “sick” firms. The court, however, dismissed the cricket body’s argument.

In May this year, Dinesh Kumar Sharma, a former member of DDCA filed a plea in the high court alleging a conflict of interest on the part of Justice Vikramjit Sen. Sharma argued that Sen’s daughter, Mrinalini, served as a lawyer for the Delhi government, and that she had represented him at an event hosted by the Board of Control for Cricket in India and the Indian Premier League’s organising committee. Sen told the Indian Express that his daughter had attended only two such meetings on his behalf, since he was not able to travel on short notice. “The allegation that I have put my daughter in charge is scurrilous and may even amount to contempt of court … These allegations are being levelled by vested interests,” Sen told the paper.

On their part, the DDCA officials have often been dismissive of the gravity of the alleged impropriety. In 2013, when the SFIO report revealed financial irregularities, the DDCA officials submitted requests for their offenses to be compounded—effectively, instead of prosecuting these as a criminal offence, the disputes were resolved by a settlement. Chetan Chauhan, a former vice-president of the DDCA, told the media in 2015 that “no embezzlement took place during Jaitley’s tenure.” “You can check SFIO report. There were only procedural lapses and we have compounded for those lapses. There are no criminal cases during his period as president. Had there been anything SFIO would have taken action,” he said.

For the past several years, many—including the DDCA members Kirti Azad, Bishan Singh Bedi, and Sameer Bahadur—have publicly demanded that executives of the cricketing body be held responsible for their misconduct, but to little avail. Neither the government nor any law-enforcement agency has yet initiated criminal prosecution against any DDCA officials allegedly responsible for the financial irregularities.

In August 2014, Azad asked the Ministry of Corporate Affairs in the Lok Sabha whether the government had ordered an inspection of the accounts of the DDCA under Section 209A of the Companies Act, which outlines the books that a company must keep. He also asked whether the central government had directed the registrar of companies to initiate legal action against the cricketing body “for non compliance of the various provisions of the Companies Act.” Nirmala Sitharaman, then the minister of state in the corporate affairs ministry, responded that the inspection had revealed offences under various sections of the act. The corporate-affairs ministry, Sitharaman said, had asked the RoC to “provide opportunity to file compounding applications.” She added that the RoC had also been directed to refer the matter the Institute of Chartered Accountant of India, the regulatory body for chartered accountancy in India. “In respect of the violations for which compounding applications have not been submitted till date, the Ministry has directed the Registrar of Companies, Delhi to provide 15 days time, failing which to launch prosecution,” Sitharaman said. (It is unclear whether this direction was followed.)

Azad repeated his questions regarding an inquiry into the irregularities in the DDCA in May 2015 and August 2016 in the Lok Sabha, but the government’s response stayed largely the same. Ministers such as Jayant Sinha stated that the matter had been referred to the Company Law Board or ICAI, and that the income-tax department had been informed. The government noted that it had ordered an inspection of three companies that received seemingly unauthorised loans from the DDCA. No other action, it appears, was taken.

In late 2015, Azad had approached the Central Bureau of Investigation. The CBI registered his complaint, but a year later, it had not presented a report—its inquiry is still ongoing. Azad followed up with the organisation—he wrote several emails to its heads (I saw copies of these), urging them to expedite the process. “Very muted action” was being taken by the corporate-affairs ministry, Azad wrote in the emails, and “that too in the form of measly compounding charges.” He added: “Seeing the serious proof of wrongdoing and malfeasance that I have given, I have no doubt that there are enough reasons to register an FIR against the office bearers of DDCA immediately.”

Azad also moved the Delhi High Court, seeking a court-monitored inquiry by a special investigative team or the CBI. In February 2016, the court dismissed Azad’s plea. The court noted that the petition was “premature,” as the CBI had already begun its investigation.

In its recommendations, the Lodha Committee had suggested an increased accountability for state-level organisations operating under the BCCI. In August this year, Azad asked in Lok Sabha “whether it is a fact that many posts in various sports units in States and BCCI are headed by influential politicians in contravention of the Supreme Court verdicts.” If so, Azad asked, what steps was the government taking in this regard? Vijay Goel, the minister of state (independent charge) for youth affairs and sports, responded: “Since it is a Supreme Court monitored reform process the government has no direct involvement in this matter.”

I asked Bahadur, the DDCA member, whether he thought that the audit report would result in any action. “Yaar, kaun karega?”—who will do it? “These are such powerful people,” he continued. “Kirti Azad has sent several letters and he has met the police commissioner. They are not prepared to take any action.”

According to Azad, the corporate-affairs ministry is unlikely to take action against the DDCA. He suggested why: “Mr Jaitley is the minister of corporate affairs. So unfortunately fingers point at him,” he said. The police and the CBI, Azad said, “are not working.” “I believe they are working on instructions of others with conflict of interest,” he said.

This is the final part of a series on an external audit report that examines the books of the Delhi & District Cricket Association, between the years 2012 and 2015. The first part, on the report’s failure to mention Finance Minister Arun Jaitley, formerly the president of the DDCA, is here. The second story, which details the findings of the audit report—these include embezzlement, fraud and gross mismanagement—is here.

Sagar is a web reporter at The Caravan.

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