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Why IPL fiasco reminds one of Satyam
The Indian Premier League is mired in controversy. With camouflaged shareholding patterns, money laundering allegations and undercover operations, the IPL which was supposed to be a money-spinner and a thriller for cricket fans and owners, now draws attention for all the wrong reasons.
However, there are some similarities here with India's biggest corporate fraud, the Satyam scandal. Like, what were the authorities supposed to monitor the transparency in financial dealings doing, etc.
1. The main players
In the eye of the storm in both the cases were the respective chieftains -- Lalit Modi heading IPL and B Ramalinga Raju lording over Satyam. Raju scripted a rosy picture of soaring profits, brand value, revenues and much more. Modi too created a tremendous brand seemingly out of nothing, but it now transpires that there is a whole lot more to it than meets the eye.
In both the cases, it was a simple error that led to their fall.
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Why IPL fiasco reminds one of Satyam
Modi is at the centre of a storm after he attacked former minister for external affairs Shashi Tharoor over the issue of stakeholders in the Kochi franchise, which is one of the two new teams that will make IPL debut next year.
Modi said Tharoor's close friend Sunanda Pushkar had a free equity worth Rs 70 crore (Rs 700 million) in it. Tharoor was forced to quit after being accused of helping Pushkar get free equity.
However, little did Modi realise that his allegations would backfire and snowball into a major crisis. Allegations started to haunt Modi about his shareholding patterns and ownership pattern of other teams, rigging, betting, money laundering, bribery, etc in the much-hyped IPL circus.
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Why IPL fiasco reminds one of Satyam
Ramalinga Raju admitted to orchestrating a whopping Rs 7,800 crore (Rs 78 billion) scandal by cooking up the account books. Satyam was a brilliant IT success story killed by greed.
Modi is accused of indulging in betting and money laundering, not disclosing shareholding patterns, tarnishing the image of the IPL.
The Board of Control for Cricket in India is now looking at initial bids for Rajasthan Royals and King XI Punjab, the two IPL teams, the broadcasting deal issue, bid-rigging allegations of the two new IPL franchisees (from Kochi and Pune).
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Why IPL fiasco reminds one of Satyam
In many financial scandals, just like the Satyam incident, auditors are mere rubber stamps. The auditors did not raise any objection to the alarming discrepancy of numbers in the Satyam books.
In the case of IPL, the BCCI or its auditors never checked the shareholding patterns or the flow of unaccounted for money. The ICAI has now asked for financial statements from IPL franchises to study the details.
4. Rest of the team?
Why blame only one person? Could Modi alone have managed the show by himself? Are not the IPL governing council members answerable too, just like Satyam's independent directors?
How could no one get even a whiff of anything wrong happening when so many scams within the IPL were allegedly being engineered?
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Why IPL fiasco reminds one of Satyam
When the scandal broke out, everyone turned against Modi, just like Raju was blamed, though it was not his doing alone. There were many who could have opposed or brought to light the undercover operations.
In Satyam's case, Ramalinga Raju's brother B Rama Raju, former CFO V Srinivas, former Satyam vice president, G Ramakrishna and two auditors of PricewaterhouseCoopers, S. Gopalakrishnan and Talluri Srinivas, have been chargesheeted.
6. Political friends
The political connection makes all the difference. While Raju had political backing from the state, Modi too has strong political support. With many politicians and their families involved in the IPL business, Modi is -- or was -- a very lucrative friend to have. Newsreports suggest that Modi's revelations could still spell trouble for some political bigwigs.
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Why IPL fiasco reminds one of Satyam
The Securities and Exchange Board of India had said recently that unlisted companies could be brought under its purview. Perhaps IPL/BCCI should also be subjected to such a scrutiny.
Or they could be turned into public sector units with some autonomy, but they should be accountable to the Comptroller & Auditor General of India. The Right to Information Act should also be applicable to BCCI and IPL.
The government intervened in the Satyam case, appointed professionals to rescue the sinking company. Finally, it was taken over by the Mahindra Group. It was a step in the right direction. Only professionalism, along with multiple points of scrutiny, can win especially in a game like the IPL. When the focus is more on the money than the game, it is bound to sink.
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Why IPL fiasco reminds one of Satyam
While in Satyam's case Raju admitted to orchestrating the Rs 7,800 crore (Rs 78 billion) scam, the IPL scam still remains a mystery.
As far as numbers go, the brand value of the IPL is calculated to have doubled to $4.13 billion from last year. Will the IPL numbers come to light? Who lost, who won in the profit-making circus may remain a secret.
Will truth come out?
The perpetrator of India's biggest corporate scam, Raju, is now in a posh hospital treating for ailments over several months. He meets family members, friends, gets the best treatment a 'prisoner' can ever think of. He need not even come to the court as the trial will be now done through video conferencing! What is the punishment for a crime of this nature?
Will the IPL chargesheet be any different? Will the truth ever come out? These questions will keep the media, cricket fans, and observers busy over the next few months....
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