The Enforcement Directorate (ED) has recorded the second statement of Shah Rukh Khan on Tuesday in connection with the share sale of Knight Riders Sports Pvt Ltd (KRSPL), the franchise owned by his company Red Chillies Entertainment Pvt Ltd, in partnership with actor Juhi Chawla and her husband Jay Mehta.
With this, the enforcement sleuths are likely to issue a show-cause notice by mid-December to Kolkata Knight Riders (KKR) and its stakeholders for forex violations of around Rs 90-100 crore, sources told dna.
SRK was at the ED office in Mumbai's Ballard Pier for almost three hours, starting at 6 in the evening. He was questioned by a team of three senior officers. Sources said he visited the ED office with his colleague and present CEO of the IPL franchise Venky Mysore, along with his two chartered accountants (CAs) and bodyguards.
The sources said that SRK denied all allegations, in his statement to ED, and claimed that the sale of shares was done on the mutual understanding between Jay Mehta and Juhi Chawla.
He reiterated that he was unaware about the valuation amount as the transactions happened under the supervision of his CA.
Interestingly, Khan has also shown his desire to end the case. He asked officials about the options under which he can settle the long-pending case by bringing back the so-called disputed amount. However, the sleuths are not convinced with this proposal.
"His (SRK) statement was recorded for the second time under the provisions of the Foreign Exchange Management Act (FEMA)," said an ED official.
An e-mail questionnaire sent to KKR remained unanswered.
dna had, on October 27, reported that Khan had been summoned for a third time by the ED, and that he has been asked to be present at the agency's office by the first week of November.
SRK's first statement was recorded in November 2011.
The case refers to KRSPL's share transfer in 2008, subsequently audited by an external firm in 2014. It noted that shares sold to Jay Mehta-owned Sea Island Investment Ltd (SIIL) were 8-9 times undervalued by Knight Riders Sports Pvt Ltd.
The share transfer is believed to have happened in 2008-09. The ED has been probing the KRSPL deal since 2010 under FEMA.
"Shah Rukh's statement was required to conclude the investigation. We could now raise the demand order and issue a show-cause notice against the violation," said another ED source.
Investigations so far have revealed that the value of shares issued to the Mauritius-based SIIL was not in line with the pricing guidelines.
ED has also recorded the statements of Juhi Chawla and Jay Mehta in May this year.
According to a valuation report, when the equity shares of KRSPL were issued to SIIL, the fair value per equity share of KRSPL should have been between Rs 70 and Rs 86.
However, shares were sold at Rs 10 apiece. Similarly, in the case of a transfer of equity shares of KRSPL from Juhi Chawla Mehta (JCM) to SIIL, the fair value per equity share of KRSPL should have been between Rs 83 and 99. But shares were transferred at Rs 10 per scrip.
At the time of incorporation in February 2008, Red Chillies held 9,900 shares of KRSPL and SRK's wife Gauri Khan (a nominee of Red Chillies) held 100 shares. In March 2009, new shares were allotted at par value after the first season of IPL ended successfully in June 2008, taking the total number of shares to 2 crore.
Subsequently, Red Chillies sold 50 lakh shares from its kitty to SIIL, which also bought the entire lot of 40 lakh shares from Juhi Chawla. She received Rs 4 crore for the sale of 40 lakh shares on March 26, 2010.
The shareholding pattern of KKR was changed for a second time on March 10, 2010, as Juhi Chawla sold her entire stake of 40 lakh shares to SIIL, thus splitting the ownership of KRSPL between the Mauritius Company and SRK, along with his wife.
Red Chillies continues to hold 110 lakh shares, while SIIL holds 90 lakh shares of the total 2 crore.
