Messi Kerala event fraud: Legal opinion says ED and SFIO can investigate

KOCHI: The Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO) can also investigate the alleged fraud carried out in the name of football star Lionel Messi, according to a legal opinion given by Director General of Prosecution T. Asafali.

The legal opinion states that several laws, including the Prevention of Corruption Act and the Companies Act, may have been violated in the deal.

If the investigation finds that the agreement was structured to benefit a private company, the probe could extend to former Sports Minister V. Abdurahiman and others. The argument that the government did not suffer any financial loss may not hold, according to the legal opinion.

Since the sponsor company is registered under the Companies Act, the SFIO can examine whether there were irregularities in its financial transactions. The selection of Reporter Broadcasting Company (RBC) and the circumstances surrounding its reported agreement with the Argentina Football Association should be investigated in detail. Furthermore, an inquiry under the Prevention of Corruption Act is required to ascertain whether anyone, including the Minister, gained any illegal benefit through this.

ED can probe if shell companies are involved

If the sponsor had transferred money to foreign entities, including the Argentina Football Association, authorities will have to check whether there were violations of the Foreign Exchange Management Act (FEMA). The transfer of money to foreign entities is subject to Reserve Bank of India regulations.

The investigation may also examine whether the money was transferred through hawala networks or shell companies. The source of the funds will also be verified. If the money is found to be linked to a criminal offence, the Enforcement Directorate can investigate the matter under the Prevention of Money Laundering Act (PMLA).

SIT collects records related to suspicious deal

The Special Investigation Team (SIT), led by ADGP P. Vijayan, has collected documents from the Sports Department office at the Secretariat as part of its probe into the alleged fraud carried out in the name of bringing Messi and the Argentina football team to Kerala.

The SIT has also started examining the records. It has asked the Sports Department Secretary to provide documents related to the selection of the private sponsor, government orders, permissions, concessions, exemptions and the use of public assets. The team has also sought related email communications.

The probe will focus on whether any private company was given undue benefits or financial advantages. Investigators will also examine whether the government or public institutions suffered any loss.

Some documents were already attached to the inquiry report prepared by Sports Department Special Secretary N. Prasanth. The SIT has collected the original copies. It has asked for the complete set of records related to the deal.

Deal allegedly moved ahead without consulting key departments

The SIT has found that the deal was allegedly taken forward without seeking the views of several departments, including Finance, Law, Home, Revenue, Local Self-Government, Police, Fire and Rescue Services and Health.

The team considers it suspicious that the Finance Department's approval was not sought despite the deal involving foreign financial transactions, match fees, advertising revenue, the sponsor's financial dealings, tax liabilities and stadium renovation. The SIT is expected to examine these aspects in detail.

Rs 14 crore stamp duty fraud alleged

The Messi controversy has also brought an alleged Rs 14 crore stamp duty fraud to light. The finding is reportedly part of a report prepared by a special GST team appointed by the government to investigate the controversy.

Authorities had earlier found that around Rs 22 crore in tax had not been paid to the state. The sponsors had reportedly raised Rs 126 crore through loans. The transaction involved in raising the funds allegedly resulted in an evasion of around Rs 14 crore in stamp duty.

The Registration Department will have to provide the final clarification on the stamp duty issue. The government is expected to be informed about the matter through a second report.