After more than two years of stacking up evidence against Karti Chidambaram, the CBI arrested him from Chennai Airport on February 28 in connection with a probe into alleged bribery. The case dates back to when Karti’s father P. Chidambaram was finance minister in the Congress-led UPA-1. In an FIR filed last May, the CBI claimed that INX media founder, Indrani Mukherjee, had paid Karti a bribe of Rs 3.6 crore to manage a Foreign Investment Promotion Board (FIPB) approval for 26 per cent FDI in the media company. As per the FIR, INX paid Karti-owned Chess Management Services Rs 10 lakh for “management consultancy charges toward FIPB notification and clarifications”. The remaining Rs 3.5 crore was allegedly paid to a firm named Advantage Strategic Consulting, though Karti’s legal counsel Abhishek Manu Singhvi says only four invoices reportedly recovered from the computer of Karti’s chartered accountant, Bhaskaran, were produced by the CBI and not evidence of the actual remittances.
The CBI claims Advantage Strategic is Karti’s ‘benami’ company, controlled through family retainers. These allegations were also made earlier by Thuglak editor S. Gurumurthy, relying on documents recovered by Income Tax authorities and the Enforcement Directorate, including a will by Advantage’s shareholders bequeathing their shares to Karti’s daughter.
Confronted with the evidence, Karti is said to be stonewalling the probe. Additional solicitor general Tushar Mehta told the CBI court that even when asked his name, Karti replies, “This is political vendetta.” Mehta also alleged that a witness was approached and evidence tampered with while Karti was in police custody.
The CBI, which is probing the Sheena Bora murder case, too, in which Indrani, held in a Mumbai jail, is facing trial, has also relied on Indrani’s testimony to a magistrate that she bribed Karti. The probe agency arranged a face-to-face of Karti with Indrani in Mumbai, all through which he remained silent.
In 2007, the INX Media group had initially sought approval for 46.216 per cent investment. An I-T and FIPB probe found that the foreign investment had been made without FIPB clearance. The CBI’s FIR states that when the FIPB and I-T departments pulled up INX group, Indrani conspired with Karti to bribe FIPB officials to solve the issue. As FM, Karti’s father was then heading the FIPB.
Outlook has reviewed the I-T probe report, to which are annexed letters exchanged with the FIPB. INX had raised foreign capital of Rs 305 crore, 66 times the permitted Rs 4.62 crore, treating the excess amount as premium—a whopping Rs 800 per share. In a letter dated April 30, 2008, the FIPB told the I-T department that “foreign investment includes equity investment as well as premium, which is regarded as total FDI inflow”, and clarifies whether INX group had sought approval: “The company, in their application dated March 31, 2007, had mentioned…their intention to make downstream, investment in M/s INX Media Pvt Ltd, but no approval was sought. Therefore, the Foreign Collaboration approval dated 31.5.2007 does not contain approval in this regard.”
INX group had both entertainment and news channels, with INX Media and affiliates owning a large stake in INX News. Therefore, any investment in INX Media and its affiliates was also an indirect investment in INX News. In another letter, dated May 26, 2008, the FIPB said, “As per approval letter dated 31.5.2007, the percentage of foreign equity is 46.216 per cent, which amounts to Rs 4.62 crore. However, the FDI of Rs 268 crore reportedly received by the company is being verified from the company.”
The CBI’s FIR says finance ministry officials granted the fresh approval, which was approved by the FM. Records accessed by Outlook show that the change in FDI approval to INX began in 2008, but the CBI didn’t respond to Outlook’s queries about the date, which isn’t mentioned in the FIR. P. Chidambaram had demitted office as FM on November 30, 2008 and replaced Shivraj Patil as home minister.
Singhvi argued against Karti’s custodial remand citing lack of a direct money trail leading to him, and that all documents related to the 10-year-old alleged scam were frozen in North Block. The CBI remand may get over soon, but the ED is just cracking its knuckles.
