Messi’s Kerala visit row: ED to probe FEMA violations into ₹126 cr overseas transfer

Kochi: The Enforcement Directorate (ED) has registered a case under the Foreign Exchange Management Act (FEMA) against Reporter Broadcasting Company (RBC) in connection with offshore financial remittances made in the name of bringing Argentine football superstar Lionel Messi and the Argentina national team to Kerala.

According to ED sources, the agency conducted a preliminary inquiry into the remittance around two years ago when the payment was allegedly made by RBC, which was the sponsor. However, the latest move to register a case has been initiated after the probe based on a report submitted by the Kerala Sports Department, which had reportedly found that substantial amounts were transferred overseas without obtaining mandatory clearances from the Union Ministry of Youth Affairs and Sports and the required regulatory approvals from the Reserve Bank of India (RBI).

The inquiry report, prepared by Sports Department Special Secretary N Prasanth and submitted to Sports Minister O J Janeesh, has reportedly recommended Vigilance and central agency probes into possible violations of foreign exchange regulations and money laundering laws

The sponsor had previously claimed that it had obtained RBI permission and other statutory clearances. However, ED sources said the explanations and documents they have scrutinised so far did not substantiate those claims. ED is likely to summon the management officials of RBC soon for questioning.

Sources said that the agency is examining the transactions under FEMA, which allows the ED to independently investigate suspected violations involving unauthorised foreign exchange transactions. This differs from proceedings under the Prevention of Money Laundering Act (PMLA), where the ED’s action generally follows the registration of a scheduled predicate offence by a law enforcement agency.

ED sources said the foreign exchange probe is centred on discrepancies between the sponsor’s public claims and the financial trail emerging from its bank accounts.

RBC Managing Director Anto Augustine had maintained that the ₹126 cr (around $15 million) remitted abroad was RBC’s own private money and had publicly stated, “It is my money; the loss is mine and no one else’s.”

However, investigators have found that ₹206 cr was deposited into the sponsor’s account by two separate external corporate entities.

Of this amount, ₹126 cr was subsequently remitted overseas to alleged intermediaries and/or the Argentine Football Association (AFA), leaving a difference of ₹80 cr whose source and utilisation are being examined.

ED sources said investigators have so far not found loan agreements, contracts or other valid financial instruments establishing the nature of the ₹206 cr transactions or explaining the capacity in which the two companies transferred the money to the sponsor.

The agency is also examining whether the sponsor’s account was used as a pass-through conduit, particularly since the funds were allegedly routed overseas soon after being credited to the account.

The investigation is likely to focus on establishing the original domestic source and economic purpose of the ₹206 cr received from the two companies, ED sources said.

The ED is also tracing the banking channels through which the ₹126 cr was transferred overseas and examining whether any legitimate consideration or services were received in return for the payments.

Another aspect being examined is whether the sponsor initiated genuine recovery proceedings to reclaim the money transferred abroad after the proposed Messi and Argentina team visit failed to materialise.

The ED has already collected initial records relating to the transfers, agreements submitted by the sponsor and clearance documents obtained at the state level, sources said.

The agency is expected to examine the complete money trail before determining the nature and extent of any FEMA violations.