The Chidambaram-INX Media case-Smoke without a fire?     

The matter involving P Chidambaram in the INX Media case concerns alleged irregularities in the Foreign Investment Promotion Board’s (FIPB) clearance granted to INX Media, a media venture owned by Peter Mukerjea and his wife Indrani, over a decade ago. In March 2007, INX Media had approached the chairman of FIPB, seeking permission for issuing equity shares to three non-resident investors based in Mauritius through the foreign direct investment (FDI) route. While the FIPB approved the request two months later, allowing INX Media to receive foreign funds to the tune of Rs 4.62 crore, it rejected the venture’s other request for downstream investment of foreign funds in its subsidiary, INX News Pvt Ltd.

As per the CBI FIR filed against the company, its directors and other involved parties in May 2017, “INX Media deliberately and in violations of the conditions and approval” went ahead with the downstream investment and generated FDI exceeding Rs 305 crore in the company by issuing shares to foreign investors at a premium of more than Rs 800 per share between August 2007 and May 2008. The foreign firms allegedly bought each share for Rs 862.31, a price that was more than 86 times its face value. The CBI FIR does not mention the name of P Chidambaram. The Enforcement Directorate (ED) subsequently lodged a money laundering case against INX Media and related parties in 2018.

Chidambaram was the Union Finance Minister in 2007. The investigating agencies wanted to investigate his role in connection with the above FIPB clearance. The CBI later alleged that instead of ordering investigation into the irregularities, the FIPB - under Chidambaram - suggested to INX Media to simply apply for fresh approval for downstream investment of overseas funds it had already received. However, the fact is it is P Chidambaram who actually requested the Serious Fraud Investigation Office (SFIO) to look into the allegations of financial impropriety in INX Media in 2008 when its employees lodged a complaint with the Union I&B Ministry.

According to a report filed by the SFIO in April, 2013, IM Media, the majority stake holder in INX News, was a front for Mukesh Ambani’s Reliance Industries Limited (RIL). As per SFIO, Chhajlani’s Nai Dunia which bought INX Media was also indirectly owned by Mukesh Ambani, thus making IM Media and Nai Dunia related companies. The SFIO report recommended charges be filed for causing wrongful losses to the ordinary shareholders of RIL under Indian Penal Code Sections 120B (conspiracy), 415 (cheating), 418 (cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect), and 420 (cheating and dishonestly inducing delivery of property. This was reported by Outlook magazine. Why the CBI and the ED have neglected this part is anyone’s guess.

The CBI has backed its case with a statement from Indrani Mukerjea, who recently turned approver in this matter. According to the statement, INX Media got a favourable deal after she met with Chidambaram seeking FIPB clearance in 2008.

Indrani and her husband Peter Mukerjea are not just accused of financial wrongdoings in INX Media but are also the main accused in the murder of Indrani’s own daughter Sheena Bora. They are in jail since 2015. The credibility of such approvers is definitely not beyond doubt.

The CBI said that Karti Chidambaram, P. Chidambaram’s son and Lok Sabha MP, allegedly used his influence and accepted kickbacks to settle the mess INX Media found itself in. In January 2008, the Financial Intelligence Unit of the Finance Ministry discovered the anomaly in the money flow into INX Media. As it involved foreign funds, the Income Tax department forwarded the case to the ED.

To wriggle out of the probe and settle the matter with the finance ministry, INX Media allegedly engaged Karti Chidambaram’s firm, Chess Management Service Pvt. Ltd. Karti is the founder director of Chess Management Services. The CBI FIR stated that Karti received funds to the tune of Rs 10 lakh in the case. The agency said during its searches at Karti’s homes and offices, sleuths reportedly recovered vouchers for this amount issued in favour of Advantage Strategic Consulting (P) Limited, a firm the CBI said is “indirectly” owned by Karti. Karti was arrested by the CBI in February, 2018, in connection with the INX Media case but was released on bail the following month.

In March 2018, Indrani Mukerjea told the CBI that a deal of $1 million was struck between Karti and the Mukerjeas to secure approval from the FIPB in favour of INX Media.

However, former Department of Economic Affairs secretary D Subbarao had told investigators probing the INX Media case that “violations” in the deal approving the Foreign

Direct Investment (FDI) for the company were not brought to the notice of the FIPB. Subbarao, who was the chairman of the FIPB which gave clearance to INX Media, recorded his statement under Section 161 of the CrPC, saying “the non-compliance of procedure by INX Media was not brought to the notice of the board, hence they were not aware of it.”

“The two-page note prepared by the FIPB secretariat annexed with the application of INX Media also did not have any violation or non-compliance details,” Subbarao said in his statement.

He added, “Everything was clear in papers and hence the board recommended for approval to the then Union Finance Minister.”

So, as per Subbarao, it is the FIPB who recommended for approval to the then Union Finance Minister and not vice versa.

The ED’s case against P Chidambaram is that the former Union Minister created a web of shell companies and foreign accounts to route the alleged kickbacks received for the FIPB approval. In its affidavit submitted to the court, the ED has said two individuals were acting as agents of Chidambaram in creating this web of companies which allegedly had no business but were used to route the money from one company to another allegedly to make tracing of the money trail difficult for investigative agencies. It has claimed to have details on the same.

The ED has further said that Chidambaram and Karti allegedly held 17 foreign accounts through which the alleged kickbacks were laundered and invested in multiple properties across the globe, an accusation also levelled by the CBI. The ED has said the accounts and properties lie in Argentina, Austria, British Virgin Island, France, Greece, Spain, Monaco, Philippines, Singapore, South Africa and Sri Lanka. The ED affidavit states that the welter of evidence has been corroborated by the FIU.

Now, if the ED and CBI has all the proof of wrongdoings on part of P Chidambaram and his son, Karti, this should have logically been an open and shut case. All these proofs and evidences would then have been presented to the court, leading to quick conviction.

However, in the same affidavit, the ED states, “Though the Enforcement Directorate has collected substantial material to satisfy this court about existence of the evidence of the evidence to show the facts…it is only after the custodial interrogation of the petitioner that the investigation is capable of being fully complete and the truth being unravelled.”

Solicitor General Tushar Mehta, who has been appearing for both the CBI and the ED in the INX Media case, had submitted a sealed envelope containing evidence of the ED’s case to the court. But, however, after protests by Chidambaram’s counsel, the court agreed not to take that into account. But from the above statement of the ED, it is unclear whether the ED submitted any “evidence” of the accused’s alleged crimes or the “evidence of the evidence”.

While Chidambaram denies holding any foreign bank account or being connected to any shell company, his counsels have repeatedly asked the investigative agencies to mention the number and location of one such account. Till now, the investigative agencies have not presented any.

If the investigative agencies already know the details of the accounts, the web of shell companies and the details of the money trails, why are they not submitting the same in the court? Could it be that the investigative agencies have not been able to link Chidambaram and his son to any of the accounts and shell companies and are counting on extracting a forced confession from the former Union Minister and senior Congressman? While the CBI has repeatedly told the court that Chidambaram was not cooperating in the investigation and not answering questions, the senior politician has gone on to state that the CBI’s understanding of cooperation was the answers the agency wanted to hear.

A section of the media has been feeding such reports to the people that the alleged kickbacks, amounting to Rs 54 crore, were used by Karti to purchase properties across the world in exotic locations including a tennis club in Barcelona. Some have raised fingers at Chidambaram’s posh house in the tony Jor Bagh locality of the national capital. The right-wing social media warriors has added their dose of spice and numbers liberally. Karti has categorically denied it, saying, “What I have, that is in my declaration. What I don’t have, I can’t declare. What is this fable which is being branded about that we have overseas properties in all kinds of exotic locations. I would like to see that at least at some point of time.”

However, Chidambaram’s detractors hide the fact that he hails from a family of wealthy businessmen. His father Palaniappa Chettiar was into trading, plantations and textiles. His grandfather was a prominent businessman.

The family had cloth mills and tea gardens even before Independence. Annamalai Chettiar, Chidambaram’s maternal grandfather, was a prominent banker who held the title of ‘King’. He founded the United India Insurance Company and Annamalai University. His brother Ramaswamy Chettiar is the founder of Indian Bank and Indian Overseas Bank. These banks were their family properties before nationalisation.

His two brothers are leading industrialists. Chidambaram’s wife Nalini Chidambaram, a successful lawyer, is the daughter of PS Kalyasam who was a Supreme Court judge. Her mother Saundra is a writer and a famous Tamil poetess. Chindambaram and his son Karti are lawyers by profession. Chidambaram has an MBA from Harvard, while Karthi is a BBA student from Austin, Texas, and LLM from Cambridge. Karthi’s wife Srinidhi is a famous Bharatanatyam dancer and a doctor of repute.

So, the scions of such a wealthy family need not risk using ill-gotten wealth to own properties.

The political grapevine has it that this is retribution for Amit Shah’s arrest by the CBI in connection with the Sohrabuddin fake encounter case in 2010 when Chidambaram happened to be the Union Home Minister. The move also allows the BJP to carry on its continuous campaign to constantly label the Congress and its leaders as ‘corrupt’. The question remains that if the CBI and the ED are so sure of the involvement of Chidambaram and his son in the alleged wrongdoing, why the agencies are dithering from submitting all the evidence and get it over and done with. Karti Chidambaram has openly challenged the CBI and the ED to file chargesheets against the accused. Will the agencies accept the challenge?