Former Union Minister P Chidambaram on Tuesday came under the radar of the CBI which carried out raids on homes and offices of his son Karti in a corruption case that could also embroil the senior Congress leader.
The CBI searched the homes and offices of Karti across four cities, including Chennai, for allegedly receiving money from INX Media, a firm owned by Indrani and Peter Mukerjea to allegedly manipulate a tax probe.
The CBI registered an FIR at a Special Court on Monday evening and began the raids on Tuesday morning at Chidambaram’s home in Chennai and other 16 places across the country.
The FIR charged Karti with accepting kickbacks of around Rs5 crore from murder accused Peter and Indrani for illegally approving a Foreign Investment Promotion Board (FIPB) clearance for foreign investments in 2007.
The CBI was acting on the details given by the Enforcement Directorate which found a series of FIPB violations and unearthed kickbacks during the raids in connection with the Aircel-Maxis scam.
The CBI registered the case against INX Media, its director Indrani, Peter, Karti, Chess Management Services (a company belonging to Karti), Advantage Strategic Consulting limited and its director Padma Vishwanathan. It has levelled the charges of criminal conspiracy, cheating, taking gratification by corrupt or illegal means to influence a public servant and criminal misconduct.
As per the 12-page FIR, INX Media got FIPB approval for only Rs4.6 crore of foreign investment but it illegally brought foreign investment of Rs305 crore through Mauritius in 2007. In 2008, the Income-Tax Department found this fraud and issued a notice to INX Media. Indrani and Peter contacted Karti and allegedly paid him a bribe of around
Rs5 crore to escape the I-T probe and get FIPB clearance illegally for extra investments.
“Such a deceitful and fallacious proposal was favourably considered by the officials of the Finance Ministry and approved by the then Finance Minister,” said the FIR, pointing at P Chidambaram, which has not yet named him in the accused list.
The ED has given CBI about four such cases of FIPB violation during Chidambaram’s tenure as FM, where kickbacks were received by the Karti-linked company Advantage Strategic.
During the raid, Karti and Nalini Chidambaram were at their home in Pycrofts Garden in Chennai, while Chidambaram was in Bengaluru in relation to a case in the High Court. He did not speak to the media and only issued a statement.
CBI officials from New Delhi raided the residences and business establishment of the father-son duo in Chennai and Karaikudi. CBI team also raided Karti’s offices in Delhi and Gurugram. The raids were conducted at Peter’s home in Mumbai too.
A team of CBI officials entered the palatial residence of Chidambaram in Nungambakkam, a high-end residential area in Chennai at 7 am. The office of Karti in the nearby El Dorado office complex too was raided by the team. Karti was summoned to his office for some clarification by the CBI officials. The offices of Advantage Strategic Consultants and Chess Management Board, are operating from the El Dorado complex.
“The CBI or for that matter any other agencies can never put us in the dock. They could not seize any document from either our houses or office. These raids are part of a political vendetta and victimisation launched by the NDA Government against me and my father,” Karti told reporters waiting outside the residence of the Chidambarams.
The CBI has alleged that Karti used his influence in the Finance Ministry to help the company scuttle the probe against it. INX Media had sought the FIPB clearance on March 13, 2007 for permission to issue, by way of preferential allotment up to 14.98 equity shares to three non-resident entities--Dunearn, NSR PE and New Veron Pvt Equity ltd.
The company sought this approval for engaging in the business of creating, operating managing, and broadcasting bouquet of TV channels. The FIPB unit, while sending the brief of the proposal which was to be put to the FIPB for its meeting scheduled on May 18, 2007 had clearly mentioned that Foreign Direct Investment of Rs 4.62 crore proposed issue at the face value could be allowed and for investment in INX News a separate FIPB approval would be required. The Board recommended the proposal of INX Media for consideration of the Finance Minister but not that of INX News. The recommendations were cleared by the then Finance Minister, the FIR alleged.
The company in violation of the recommendations made investment to the tune of 26 per cent in the capital of INX News which included foreign investment and generated more than Rs 305 crore of FDI in INX Media against the approved inflow of Rs 4.62 crore by issuing shares to foreign investors at a premium of more than Rs 800 per share, it alleged.
The Investigation wing of the I-T Department sought clarification from the company in 2008. The company in its response said the investment was in accordance of the recommendation.
The company “in order to wriggle out of the situation without any punitive action entered into criminal conspiracy with Karti Chidambaram, son of P Chidambaram, the then Finance Minister or India and Promoter Director of Chess Management Services, Chennai so as to get the issues resolved and addressed amicably by influencing the public servants of the FIPB Unit of Finance Ministry by virtue of his relationship with the then Finance Minister,” the FIR alleged.
It alleged that the officials by virtue of influence exercised over them by Karti, not only ignored the serious illegality on the part of INX Media on both the counts but also deliberately showed undue favours to INX Group by abusing their official position and advised the company to file for fresh clearance.
The officials of the FIPB unit ignored the request of Revenue Department to investigate the matter as to how investment was made by the company without FIPB approval. The company, on the advise of FIPB officials, filed fresh request which was cleared by the Finance Ministry and the Finance Minister.
“By such partisan and malafide acts done pursuant to the criminal conspiracy with the beneficiary company and the intermediaries, the senior officials of the Finance Ministry not only granted the illegal approval but also misinformed the investigation...By Income-Tax Department,” it alleged,
The CBI has alleged that for the services rendered by Karti through his company Chess Management Services consideration in the form of payment were received against invoice raised on INX Media by Advantage Strategic Consulting (P) limited (ASCPl), the FIR alleged,
Invoices for approximately Rs 3.5 crore were also raised in favour of INX group in the name of other companies in which Karti was having “substantial interests” directly or indirectly, the agency alleged in the FIR.
“Such invoices were falsely raised for creation, acquisition of media content, consultancy, in respect of market research. However INX group in its record has clearly mentioned the purpose of payment of Rs 10 lakh to ASCPl as towards management consultancy charged towards FIP notification and clarification,” the FIR alleged.