Without a court-monitored CBI investigation, Jaitley will never be held responsible for the state of the DDCA

By KAUSHAL SHROFF | 25 June 2016

On 22 January 2015, the Supreme Court appointed a committee comprising Justice RM Lodha, the former chief justice of India, and two other former judges of the Supreme Court. The court tasked the committee with looking into the Board of Control for Cricket in India (BCCI), and making recommendations on ways to reform the manner in which the latter conducts business. Among a number of reforms suggested was the emphasis on increasing accountability of state cricketing associations operating under the BCCI and an audit of their accounts. A few days before the court is set to deliver its final order on the Lodha reforms, the finances and management of the Delhi and District Cricket Association (DDCA)—a state cricketing body under the BCCI—continue to be in shambles.

The DDCA’s management has not filed balance sheets for the past three years with the ministry of corporate affairs, and thus not many are entirely aware of the association’s actual financial state. The financial indiscipline on the part of the DDCA has continued despite the number of times it has been taken to task by several bodies. The Serious Fraud Investigation Office (SFIO), as well as an internal fact finding committee, a panel comprising of two former district court judges, a committee constituted by the Delhi government and a committee headed by Justice Mukul Mudgal have all commented on the state of mismanagement within the association.

This sort of scrutiny would be enough for any body to sort itself out, but the DDCA has done little in the way of course correction. In June, the association’s joint secretary Dinesh Saini told The Indian Express that the DDCA’s balance sheets of are not accessible even to the directors of the company, who in turn are left with little choice but to approach the courts with a plea to inspect accounts.

The state of the DDCA can be partly credited to the BCCI’s inaction against the indiscriminate and unaccounted splurging of funds.

The second source of the DDCA’s resistance is Arun Jaitley, the current finance minister and the minister for corporate affairs. Jaitley joined the DDCA in 1997 and by 1999 was its president. The SFIO report, the internal fact-finding committee and the Delhi government report have unearthed numerous instances of fiscal and procedural discrepancies during the 14 years Jaitley was as the helm of DDCA. While the reports contain little or no mention of his active involvement, allegations of him protecting corrupt DDCA officials have only grown louder over the years. The former cricketers Bishan Singh Bedi and Kirti Azad have been at the forefront of the campaign demanding probity and transparency in the manner in which the DDCA conducts business. Azad is a BJP MP, and was suspended from the party on 23 December for “anti-party activities.”

A few months earlier, on 19 September, the Delhi government released a report by a two-member committee—headed by an Indian Administrative Services officer, Chetan Sanghi—on the irregularities taking place within the DDCA. The Delhi chief minister Arvind Kejriwal accused Jaitley of corruption, claiming that, during Jaitley’s tenure, a large amount of funds were drained out of the association via fake companies. Jaitley filed civil and criminal defamation suits against the CM and five other AAP leaders, seeking damages of Rs 10 crore. The suit is sub-judice.

Jaitley’s role as the president of the body has come under the scanner often. For instance, the reconstruction of the Ferozshah Kotla stadium in Delhi, carried out between 2002 to 2007, was initially estimated to cost Rs 24 crore, but ended up with a bill of Rs 114 crore. The DDCA further commissioned and constructed 20 “corporate boxes” without prior approvals from the Delhi municipal authorities and without permission from the lessor of the stadium, the urban development ministry. It then went on to sub-lease these boxes for another Rs 36 crore.

As Outlook magazine reported in May last year, the DDCA has spent over Rs 500 crore on the reconstruction of the stadium, but it has neither a completion certificate nor a safety certificate to show for its work—both essential for conducting matches attended by thousands of spectators. Further, in the 14 years of Jaitley’s presidency, the DDCA failed to acquire requisite permissions from the Delhi Urban Arts Commission, the Archeological Survey of India, the fire department and the Municipal Corporation of Delhi. Consequently, every time a match is to be played at the Kotla, DDCA officials are left with no options than to prod the MCD to issue temporary no-objection certificates.

Through all of this, Jaitley has come out mostly untouched. Despite Kejriwal, Azad and Bedi’s repeated allegations against him, no substantial evidence incriminating him has been unearthed. The only body that was capable of doing so was the SFIO, but, in its investigation, it seems to have sidestepped Jaitley’s role in the management of the DDCA.

The SFIO report, which was released in March 2013, states that Jaitley was presiding over the meetings of DDCA’s executive committee—the board of directors—“like a non-executive chairman without involvement in the day to day affairs of the company.”

Interestingly, there is no mention of the post of a non-executive chairman in the Articles of Association—which defines the purpose and responsibilities of the organisation—of the DDCA or in the records submitted by the association to the corporate affairs ministry. As per the DDCA’s AoA, there can only be a president, who shall be deemed to be a chairman—not a non-executive chairman—every time he presides over a meeting.

According to the MCA records of the DDCA, which I accessed this week, the directors in the cricketing body are categorised into three types: chairman, executive director and non-executive director. The positions of a chairman and an executive director are active managerial positions, whereas the non-executive director does not manage the daily affairs of the association.

Nowhere in the MCA records or in the AoA has Jaitley been identified as a non-executive chairman. Nor has he been identified as a non-executive president. By virtue of being a president who actively presided over DDCA meetings, Jaitley was involved in the management of the association.

The SFIO has posited that Jaitley was a non-executive chairman who was not managing the everyday affairs of the association and hence cannot be held responsible. By arriving at such a conclusion, the SFIO has let him off the hook for any financial mismanagement of the DDCA during his presidency. While Jaitley is not a non-executive chairman (as no such position exists), he is a non-executive director (as per the MCA records). A non-executive director is simply a company official who does not carry out the daily affairs of the company.

The SFIO’s reasoning is specious at best. In its report, the SFIO states that the functional management of the association was carried out by four other people—SP Bansal, then the general secretary of the association; CK Khanna, the then-vice-president; NK Batra, the then-treasurer and Sunil Dev, the sports secretary at the time. All of these people have been held responsible for the functional management of DDCA and their offenses were compounded (a fairly lenient punishment—a fine—given the charge).

But what the SFIO conveniently ignored is that, in the MCA records, all of these people have been listed as non-executive directors. MCA records from June 2007 declared Jaitley was a non-executive director. In October 2007, SP Bansal and Sunil Dev were also declared non-executive directors, whereas NK Batra and CK Khanna were declared the same in November 2007 and July 2010 respectively.

There is a clear conflict in the designation of a non-executive director and the SFIO’s conclusion claiming that only Bansal, Khanna, Batra and Dev managed the affairs of the association.

By this logic, if Jaitley cannot be held responsible for the state of the DDCA, neither can the other four. Conversely, if the four can be held accountable despite being non-executive directors—a designation that Jaitley shares—then so should Jaitley.

Additionally, according to the 2013 MCA records, Jaitley, Khanna, Suresh Chopra, Chetan Chauhan, Bansal, Batra, Dev and Anil Khanna are all designated as “Key Managerial Personnel” of the DDCA from the financial year 2009 to 2012. As per the Companies Act of 2013, a KMP includes “the Chief Executive Officer or the managing director or the manager; the company secretary; the whole-time director; the Chief Financial Officer; and such other officer as may be prescribed.” Going even by the company’s records and the ambit of the key managerial personnel, it is obvious that Jaitley was involved in the management of the DDCA.

However, the SFIO investigated only as high as the vice-president of the DDCA, and no further. By accepting the title of a non-executive chairman, it has given a clean chit to Jaitley.

In January, DNA‘s Chander Shekhar Luthra reported on how Jaitley had conducted a number of DDCA meetings at various places including his office premises in UDyog Bhavan during his stint as the minister of commerce & industry and law & justice in 2003. The story, further claims that Jaitley was also privy to a number of decisions including selections to building of stadium.

In October last year, the Central Bureau of Investigation registered a preliminary inquiry in the DDCA scam. The agency had merely examined 18 witnesses by February of this year. Displeased with the slow pace of investigation, on 1 February, Azad moved the Delhi High Court, seeking a court-monitored investigation into the CBI probe. The Delhi High Court dismissed the plea on the grounds that it was premature, and expressed confidence that the CBI will investigate all the aspects of the case.

Besides the fact that Azad and Bedi have been intimating Jaitley of the corruption within the DDCA’s ranks since 2005, Jaitley has often signed off on a number of balance sheets of the company and reports of its executive meeting. If the CBI does indeed investigate this matter, Jaitley would have to answer a number of questions. For instance, he might be asked why he did not act on any of the 200 or more letters sent by Azad, or why did he not initiate an inquiry into the affairs of the company, let alone alert the authorities to any irregularities?

For now these questions are moot, lest the CBI actively pursue this line of investigation. Or, it could simply echo the findings of the SFIO probe.

Kaushal Shroff is a former fact checker at The Caravan.

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