The Sound of Silence: External Special Audit of DDCA Reveals Gross Irregularities Of Over Rs 14 Crore; Jaitley Left Unnamed

Conspicuous by its absence in the audit report is the name of the finance minister and former president of the DDCA, Arun Jaitley, who directly headed the DDCA for over half the time period covered by the audit. Parveen Negi/India Today Group/Getty Images

24 October, 2017

This is the first part of a series on an external audit report that examines the books of the Delhi & District Cricket Association, between the years 2012 and 2015. The second part, which details the findings of the audit report—these include embezzlement, fraud and gross mismanagement—is here. The final part of the series, which discusses why, despite the audit's findings and court orders, reform within the DDCA is a long way away, is here.

On 10 October, the Delhi & District Cricket Association (DDCA) submitted a special audit report of its accounts before the Delhi High Court. In January, the high court appointed the retired Supreme Court justice Vikramjit Sen as the administrator of the state-level cricketing body, and directed him to appoint an external auditor to examine association’s accounts. Sen engaged the firm GS Mathur & Company, in May, to audit the DDCA’s books for the financial years between 2012 and 2015.

The auditors found numerous instances of financial and procedural malfeasance in the cricketing body’s functioning. The firm’s audit report explicitly names members of the DDCA’s executive body as being involved in unscrupulous practices over the years 2012–2015. Prominent among these are SP Bansal and Anil Khanna—a former president and a former general secretary respectively, Bansal and Khanna were suspended in January 2015 on allegations of financial misconduct. Conspicuous by its absence in the report, however, is the name of the finance minister, Arun Jaitley—who directly headed the DDCA for over half the time period covered by the audit.

In its report, the firm noted that the appointment letter defined the scope of the audit: “to examine malafide decisions, wilful negligence, conflict of interest, losses suffered, post contract damages etc., misuse of authority, overstepping of authority, violation of prescribed rules, procedures, laws, acts etc.” It also included an “audit of procurement, capital works … likely frauds, embezzlements, irregularities, mismanagement of affairs, decisions or transactions, prejudicial to the interest of DDCA, quantification of financial loss … weaknesses in systems, procedures and internal control in DDCA.”

According to the report, the DDCA was liable on nearly all accounts. Among others, the report indicts the DDCA for: embezzlement in purchase of cricket-match tickets to the tune of Rs 231.82 lakh; withdrawing nearly Rs 18 lakh in the name of meetings for the Board of Control for Cricket in India (BCCI), which was subsequently used for “fictitious payments”; granting unauthorised loans of over Rs 155 lakh in January 2014 to three private companies, at least one of which was linked to the then DDCA president SP Bansal; and the payments of Rs 7.70 lakh that “seems to be bogus” and “appears to be embezzled.”

The report also found that although the DDCA did not have any policy on ex-gratia payments to its employees, the association showed “undue favor” to five select employees by granting them ex-gratia payments and bonuses of nearly Rs 45.25 lakh. It also stated that the association violated the Companies Act by making payments to DDCA members and their relatives for professional services rendered without their legal appointment. According to the report, the DDCA also conducted other financial improprieties, including issuing large sums in cash as advance payments without any written request for them, and hiring vendors and contractors without calling for tenders. The sum of financial irregularities listed in the report adds up to over Rs 14 crore.

The firm indicated in its report that the audit process had “inherent limitations.” “In the course of this exercise, we have relied upon the information / clarification given and record / documents provided to us by the management of the DDCA,” the report noted. It further stated that the auditors had not received access to various documents and records such as the details of tenders and work orders for construction, repairs and maintenance, despite several requests to the DDCA. It also noted that various cash, bank and journal vouchers had been missing from the files.

Further, the auditors said that the accuracy and authenticity of minutes of various meetings presented to them was “disputed.” It argued that these had been stored for a long time at the residence of Bansal, the former president of the DDCA. “The allegation of members, internal auditors and keeping the minutes book at residence for such a long time leads [to a] doubt of authenticity,” the report said.

The DDCA has been the subject of scrutiny for several years—members and veteran cricketers such as Kirti Azad and Bishan Singh Bedi have long alleged corruption and financial mismanagement in the association. The court-ordered special audit is one in a series of various other examinations of the DDCA’s accounts. Earlier investigations have included an examination by the Serious Fraud Investigation Office (SFIO), under the Ministry of Corporate Affairs, which began in 2012 and was completed in 2013; an internal fact-finding mission, the report of which was released in December 2014; an enquiry conducted by a committee constituted by the Delhi government, which submitted its report in November 2015; and an investigation conducted by a court-appointed observer, the retired justice Mukul Mudgal, who submitted his report in October 2015. Each of these enquiries found instances of gross mismanagement in the DDCA’s functioning, and revealed scores of financial and procedural discrepancies, including those dating back at least as far as 2000, when the renovation of the Ferozshah Kotla stadium began. In its 2015 report, the Delhi government-constituted committee recommended that the BCCI suspend the DDCA.

Before he was appointed a cabinet minister in the Modi government, Arun Jaitley helmed the affairs of the state cricketing board for nearly 14 years. He joined the DDCA in 1997, and became the president of the organisation only two years later—he held the post for close to 13 years.

Jaitley’s exact role during this time remains unclear—the opacity of the organisation’s functioning has been a sticking point for its critics. Though the SFIO report indicted the DDCA on over 60 counts, it noted that Jaitley presided over the association “like a non-executive chairman without involvement in the day to day affairs of the company.” In a June 2016 piece for this publication, Kaushal Shroff noted that no such post existed in the DDCA’s Articles of Association—which defines the purpose and responsibilities of the organisation—nor in the records that it submitted 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,” Shroff wrote. This president, it is clear, was Jaitley.

Jaitley did not contest the 2013 elections for the body’s executive positions, and was succeeded by SP Bansal. He then spent several months as patron-in-chief of the body—an honourary yet influential position. In mid 2014, Jaitley took over the reins of the finance ministry, and the ministry of corporate affairs. According to a Press Trust of India report from May 2015, the DDCA clarified at the time that Jaitley resigned from the post of the organisation’s patron-in-chief on 6 December the previous year.

One meeting in particular sheds light on Jaitley’s knowledge of the affairs of the DDCA. On 30 December 2013, the DDCA held its annual general meeting, at which, among other things, it held elections to constitute the executive body for the subsequent year and adopted its balance sheet and a statement of profit and loss. According to the minutes of the meeting, a copy of which is in my possession, Jaitley chaired the AGM in his capacity as president. The minutes—which bear the initials of the chairman—note that the balance sheet and statement of the association’s profit and loss for the financial year was taken “as read.” Sameer Bahadur, another member of the DDCA, along with Azad, stated in the meeting that they had raised queries against the accounts of the organisation, but they did not receive a response. Bahadur, Bedi, and Azad voted against the adoption of the sheet, but it was accepted nonetheless. The minutes note that, after voting, Bansal was voted president for the forthcoming year.

The audit report points to two specific instances of financial irregularities that ostensibly took place during Jaitley’s tenure. Firstly, “a sum of Rs 44 lakh in cash … was used for purchase of IPL tickets between 30.4.2012 to 8.6.2012 of financial year 2012-13,” it states. “There is nothing on record to justify necessity of purchasing tickets in cash.” The report notes that in the year 2012, the last match played in Delhi that year was on 17 May 2012—the cash withdrawals, however, took place on 31 May and 6 June. The “purchase” of tickets, it notes, “does not coincide with the dates” of the matches played in Delhi. The report lists these under the heading “Cash fraud / embezzlement.”

The second instance, according to the audit, is that of ex-gratia payments to its executives, of more than Rs 45 lakh. “DDCA has no policy on payment of Ex-Gratia to its employees,” the report said. “During audit it was noticed that DDCA paid Ex-Gratia of Rs.20 lakh on 30.03.2013 for the period 2012-13 to five executives.” The audit notes that SP Bansal sanctioned the payment—though it confusingly refers to him as the “then president.” (According to the minutes I saw, however, Jaitley was still president of the association in December 2013.) The audit notes that these payments were made “without deducting any TDS,” and that such payments were sanctioned only on the basis of a request from the beneficiaries, without any official recommendations from any authority. “From the above it is clear that the Executive Members were misusing their powers and favoured the chosen employees which was prejudicial to the interest of DDCA and its other employees,” the report said.

Azad, who was one of the first members of the DDCA to speak publicly against the alleged mismanagement within the organisation, remains unconvinced by the absence of Jaitley’s name from the audit. Azad told me that he had brought up the subject of financial rot in the DDCA with Jaitley as early as 2008—the former cricketer has previously written to the ministry of corporate affairs and, lodged a complaint with the Central Bureau of Investigation asking for an inquiry into the matter. Azad said that, over the subsequent years, he continued to point out irregularities, but that Jaitley ignored his complaints. (Azad appears to have suffered the consequences of his continuing crusade—in December 2015, he was suspended from the BJP allegedly for “anti-party activities.” In January 2016, the DDCA sued Azad for defamation, seeking Rs 2.5 crore in damages.)

“You may or may not have anything to do with it, still you are considered responsible because you didn’t stop the loot,” he said, referring to Jaitley. I asked Azad if he felt that the unauthorised financial transactions such as the bills mentioned in the special audit could have taken place without Jaitley’s knowledge. He appeared to think it was unlikely. “After all, you are signing the balance sheets,” he said. “And you always say that I know it to the best of my knowledge and I’m signing it.”

Jaitley has been keen to distance himself from the allegations of corruption within the body, even seeking legal recourse—in December 2015, he filed a Rs 10-crore civil defamation lawsuit against Kejriwal and five other Aam Aadmi Party leaders for alleging that he was involved in corruption during his tenure as the DDCA’s president. “I left cricket administration in 2013. By referring to some facts of 2014 and 2015, I cannot be dragged,” Jaitley told the news publication Firstpost. In a piece for this publication on Jaitley’s cross-examination during the hearing of the civil-defamation suit against Kejriwal, Praveen Donthi noted that Jaitley “repeatedly reminded the room” of the same fact.

On 21 October, I sent a detailed questionnaire to the finance minister’s office, in which I asked for his view of the audit’s findings, and whether he was aware of any of the irregularities mentioned in the report. At the time this story was published, I had not received a response.

According to Sanjay Singh, one of the AAP leaders against whom the finance minister has filed a defamation suit, the audit report “belongs to the 21 months of [Jaitley’s] term, when corruption took place.” “Toh uss 21 mahine ke karyakal ke dauran zimmedari kiski banti hai?”—So who was responsible for what occurred during that 21-month tenure?

Singh continued: “Ya toh bit mantri ji kahen ki main mahamurkh vyakti hun, mujhe kuch pata nahi, main kuch nahi janta, main anpad hun; mujhe nahi pata hamare niche kya ho gaya”—Otherwise the finance minister should admit that “I am a foolish man, I don’t know anything, I am illiterate, and I have no idea what happened under my command.” Singh added: “Tickets are being bought with DDCA cheques but without his knowledge. Tell me, is it possible?”

I asked if there was a chance that the cabinet minister was just unaware of any irregularities. “This is not a question of ignorance, this is a question of involvement,” Singh said. “Jaitley was involved in all these corruption activities.”