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Indian Formula One: Controversy kickstarts ahead of race

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Noida, Oct 15: India is eagerly awaiting the first ever Formula One race in the swanky new circuit at Noida on Oct 30, but even before the high-glam adrenaline-rushing spot has kickstarted, the event has been caught in controversies. The organizer of the high-profile event, Jaypee Sports International (JPSI), has now come under the Enforcement Directorate (ED) scanner after it sought to know the source of funds for the sporting event.

Reports in certain media channels reveal that JPSI was issued notices under FEMA and Income Tax violations. The ED intends to understand the source of the Rs 200 crore raised by JPSI through its Cyprus associate Indesign Enterprises.

The bank guarantee of Rs 180 crore provided by Indesign Enterprises towards the Formula One Administration is also under the ED radar. It has been found that the guarantee was given without the RBI"s permission. It has also emerged that the JPSI later approached the RBI expressing the willingness to pay a penalty.

In spite of the issue dying down, the ED has mounted trouble for the organizers and sought the copy of the compounding application filed by Jaiprakash Associates to RBI in regards to the flaw committed during the issuance of guarantee to the Formula One Administration. ED also wants a copy of the specific approvals from the Department of Sports that is an essential requirement of the RBI.

An official with the JPSI commented, “The payments have been made only after RBI's clearance to LCs opened through Axis Bank. Indesign, a subsidiary of Jaypee Group, based out of Cyprus, issued the LC, and this had been clarified to RBI. We have carried out whatever instructions RBI had issued to us. We have been carrying out our transactions as per Government guidelines."

Now jailed CWG Games Organizing Committee chief Suresh Kalmadi was responsible for bringing the F1 to India. The fact that Kalmadi"s son and other members of the family are stakeholders in JP"s Formula One arm has already raised eyebrows with the authorities.

OneIndia News

Story first published: Saturday, October 15, 2011, 9:57 [IST]
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