Firms may have used royalties for business

Mumbai: The Enforcement Directorate (ED) suspects that money in the music royalty fraud case was being diverted by music companies towards improving infrastructure and business diversification. It has come to light that one of the reasons why royalty was not paid was due to an unwritten pact between music companies and artists about a one-time royalty payment.

The ED last week raided premises of five renowned music companies for non-payment of royalties running into several crores and laundering that money into investments. The raids were carried on as part of a 2015 case, which was initiated on complaints about non-payment of royalties. The raids were part of the ED’s probe into the 2015 Prevention of Money Laundering Act (PMLA) case against the Indian Performing Right Society (IPRS) and the Phonographic Performance Ltd (PPL).

The head honchos of music companies, whose statements were recorded, allegedly told the ED that they were not in loop of any law which binds them to paying 50 per cent of the collected royalty to lyricists and music composers. This is a stark contradiction of norms laid down by section 18 of the Copyright (Amendment) Act, 2012, officials said.

“The one-time royalty formula originated due to artists’ dependency on music label for their creations (songs) to gain market popularity. It led to the age-old norm of one-time royalty payment, based entirely on the whims and fancies of the label. We are not digging into pre-2012 figures at the moment as that may lead us to a bigger mess,” said a senior ED officer.

Aditya Chopra of Yash Raj Films is likely to appear for recording his statement on Thursday. The ED meanwhile recorded statements of Shridhar Subramanium, managing director of Sony Music India, on Tuesday. The grilling session began at 10.30am in the morning and went on beyond 8 hours.

Earlier, the ED recorded the statement of Bhushan Kumar, MD of T-Series. We can get a deeper clarity only after statements of all the accused are recorded, officials said. “The line of questioning pertains to what was done with the crores of rupees that they have collected as royalty. The preliminary suspicion is that it was utilised to fine tune their infrastructure or diversifying their businesses by investing in new ventures,” added the officer.