ED summons Shah Rukh Khan for alleged undervaluation of IPL shares
What’s the story?
Bollywood superstar and owner of the Kolkata Knight Riders, Shah Rukh Khan has been asked to appear in person before the Enforcement Directorate (ED) in relation to the alleged undervaluation of IPL shares.
The ED had sent out a show cause notice to the Indian actor, his wife Gauri Khan and actress and co-owner Juhi Chawla earlier this year.
In case you didn’t know…
The Shah Rukh Khan owned Red Chillies Enterprises formed Knight Riders Sports Pvt. Ltd. to own the rights for the Kolkata franchise before the inaugural edition of the IPL in 2008.
He initially owned the shares along with Gauri Khan, but subsequently issued an additional two crore shares, 50 lakh of which were issued to The Sea Island Investment Ltd, Mauritius, and 40 lakh to Juhi Chawla.
The heart of the matter
Juhi Chawla sold her shares to The Sea Island Investment at the par value of 10, although the actual cost was between Rs. 86 and Rs. 99 per share. The Investment company is allegedly owned by Jay Mehta, Juhi Chawla’s spouse.
It resulted in a loss of foreign exchange worth Rs. 73.6 crore, violating the Reserve Bank of India’s FEMA (Foreign Exchange Management Act).
The Enforcement Directorate has now sent out a legal notice to the 51-year-old star to appear before them and explain ‘his side of the story’.
What’s next?
The actor might appear before the ED himself, or send a representative, the latter being the more likelier option. The Directorate wants to ascertain the beneficiaries from the alleged scam, before passing their final order and slapping a penalty on the actor.
With open auctions expected for IPL 2018, the Kolkata Knight Riders, like other teams, could see a major re-jig of their current line-up, in their chase for a third title.
Author’s take
While the amount in question might seem trivial, the franchise has breached the FEMA 2000 provisions, and deserves to be investigated. The case involves big names and has been gathering dust for more than two years now, highlighting yet another alleged unfair play in the IPL.
Despite getting embroiled in controversies on the way, most notably the Wankhede scuffle with a security guard in 2012, Shah Rukh Khan has managed to make KKR one of the most profitable franchises of the tournament. The alleged discrepancies, however, will leave a bad taste in the mouth of his fans.