New Delhi, Nov 9: Bollywood badshah Shah Rukh Khan spent his entire Saturday answering questions from the Enforcement Directorate at the agency's zonal office in Nariman Point in Mumbai.
He is understood to have been questioned for almost seven hours on November 5, Indian Express reported..
Officials said the actor was accompanied by his accountant and was “very helpful” with information.
The marathon questioning session was in connection with Khan's majority shareholding in his IPL team, Kolkata Knight Riders, and the franchise agreement signed between Knight Riders Sports Pvt Ltd (KRSPL) and the Board of Cricket Control of India (BCCI) in 2008.
The allegation being investigated by the ED is that of “proxy shareholding” in the franchise as well as a bid to ascertain the valuation — and basis of subsequent transfer — of shares of KRSPL.
When asked about the ED questioning, KRSPL CEO Venky Mysore declined to comment. Team director Joy Bhattacharya said: “I am not aware of any such development.''
The Express report said, while at the time of incorporation in February 2008, Red Chillies Entertainment Pvt Ltd — the entertainment company run by Khan — held 9,900 shares of KRSPL and his wife (the nominee of Red Chillies Entertainment) held 100 shares, during the financial year 2008-09, the shareholding in the franchise changed.
On March 31, 2009, a Mauritius-based company, The Sea Island Investment Ltd, was listed as having 50 lakh shares and film star Juhi Chawla Mehta as getting 40 lakh shares of the total 2 crore shares. The remaining 1.1 crore shares remained with Red Chillies Entertainment.
Financial transactions details gathered by the ED—which is robing several other IPL teams as well—show that KRSPL received an amount of $13.18 lakh (Rs 6.06 crore) from Sea Island Investments, which is owned by Juhi's husband, Jay Mehta, in its Citibank Mumbai account.
Of this, Rs 1.06 crore was remitted back to the company on March 14, 2009. The allotment of shares to Sea Island Investments was made on March 7, 2009 at the rate of Rs 10 per share.
The ED has evidence to show that the shareholding of the franchise changed yet again on March 10, 2010, as Juhi Chawla Mehta sold her entire stake of 40 lakh shares to Sea Island Investments thus splitting the ownership of KRSPL between the Mauritius company and Khan along with his wife, Gauri Khan.
Chawla herself is said to have received Rs 4 crore for the sale of the 40 lakh shares on March 26, 2010.
It is understood that Khan's personal examination was requested in the case for him to explain the following transactions/ aspects of the KRSPL deal:
• While it was Red Chilies Entertainment which had submitted the bid for the IPL team, why was the agreement signed by the BCCI with KRSPL?
• Was there any due diligence conducted on Sea Island Investment before allotment of shares to them? Was any shareholder agreement executed between the two companies?
• On March 7, 2009, why did KRSPL allot 50 lakh shares to Sea Island Investments at a value which appears to be understated?
The ED's case is that under the Foreign Exchange Managment Regulation Act, the price of shares issued to persons residing outside India should not be lower than the price worked out under SEBI guidelines in case of a listed company or on the basis of fair valuatation of shares by a chartered accountant as per guidelines of the erstwhile Controller of Capital Issues (CCI).
The agency has surmised that the value of shares issued/ sold to the Mauritius entity (Sea Island Investment) appears to be inconsistent with the pricing guidelines.
