UPA-era Finance and Home Minister Palaniappan Chidambaram and, by extension, his son Karti have long been considered to be among those “protectees” within the Lutyens Zone who are immune to legal accountability for their actions. Hence, it was with incredulity that the senior Congress party leader’s former and present associates across the world heard of Karti Chidambaram’s surprise arrest by CBI sleuths at Chennai airport. Talk spread rapidly throughout the zone that this was a “pre-arranged jumla”, and that Karti would be “out of the clutches of the CBI within a day”. The initial granting of just a day’s custody of Karti to the CBI added fuel to such rumours, which were, however, weakened by the subsequent court order granting a somewhat longer period in custody to the investigating authorities. That the senior Chidambaram has immense goodwill and access across the different branches of governance, especially Parliament, the Judiciary and the Central Secretariat, is undoubted. Although there has been much discussion about the Congress stalwart’s contacts within Parliament as well as the Judiciary, only his whispered linkages within the network of senior Central officials will be sketched out here. Of course, while claims have been made about the existence of a “Chidambaram Clique” within the leafy boundaries of the Lutyens Zone, several of those seen as being part of such a group say that their only contact with him was as civil servants to their minister, and hence that the same degree of familiarity and loyalty as they demonstrated to Chidambaram was attached to his predecessors and successors.
Several of these officials have continued their close contact with the former minister even since 26 May 2014, while he himself has, according to sources in the civil service, used his still considerable clout to ensure desirable posts for his presumed protégés. The valuable trait of effectively ensuring that the tasks given to them by their political masters get smoothly carried out is what seems to have ensured that several who are seen as being part of the “Chidambaram Clique” have retained important responsibilities during the present NDA dispensation, and indeed have been promoted to much higher posts. Doing the bidding of the minister who set the CBI against the Intelligence Bureau in the Sohrabuddin encounter case, and who sought to establish the existence of a Hindu terror network across the country, does not seem to have adversely affected the careers of Chidambaram loyalists in the BJP-ruled government.
The Congress politician’s clout and goodwill extend beyond the boundaries of India. Former RBI Governor Raghuram Rajan, as an example, is considered personally close to Chidambaram. He is said to be responsible for the RBI reversing, in 2014, its 2012 decision on the “Kumudam matter” involving Jawahar Palaniappan, who is close to Chidambaram. A Lutyens favourite, Rajan is accused by former colleagues in the RBI of having tipped off the former Finance Minister about queries made to them by the Enforcement Directorate on the Aircel-Maxis case. In New York and London, fund managers swear by Chidambaram and many have since worked with Karti. Over the past eleven years, the junior Chidambaram has built up a record of financial success that would give Warren Buffett pause, although friends of the family say that this is entirely because of the financial genius and trading instincts of the hard-driving Chettiar scion from Tamil Nadu. A senior IAS officer, whose name comes up within his circle of peers as being “very close” to P. Chidambaram is K.P. Krishnan. Because of his proximity to the then Union Finance Minister, even routine presentations by him were reverentially attended by the RBI Governor and his Deputy Governors, as also by such top bankers as HDFC founder Deepak Parekh and the heads of private banks such as ICICI and Kotak. The officer’s detractors link him to Chidambaram and the minister’s (well deserved or not) reputation for partiality towards the National Stock Exchange (NSE). It is true that neither SEBI nor the ED seems to have exhaustively examined the co-location snafu in the NSE, where some influential brokers were said to have secured access to confidential trading data of the exchange through connecting their servers via “dark fibre”, in the process making trading profits amounting to four figures in rupees crores. Certainly individuals linked to NSE, such as Ravi Narayanan, Ajay Shah, Sunita Thomas, Susan Thomas, Suprabhat Lala and Chitra Ramakrishnan knew Chidambaram and Karti well, but whether this was linked with what took place in the co-location mess at the NSE is a matter that does not appear to have been investigated (especially by SEBI) with the seriousness that multiple allegations of “dark web” insider trading merit. K.P. Krishnan and another IAS officer, Ramesh Abhishek, are regarded by their peers as having been active in taking steps that resulted in the downfall of an exchange that was competing with NSE, but this is again a charge that seems to have evoked little interest within the agencies even after the NDA came to power. Sources say that the officers had been behind the reluctance of agencies to ensure that the eight brokers who profited from the NSEL scam repaid the moneys owed. Instead, they ensured that SEBI and ED fire got concentrated on Chidambaram’s target, the founder of the competing exchange, Jignesh Shah. The CBI, SEBI and other agencies have followed the Krishnan-Abhishek cue of concentrating only on Shah, rather than the brokers who actually defaulted. Abhishek, it may be added, is held in as high regard by the NDA as he was by the UPA. As for SEBI, Chidambaram was seen by officials as succeeding in having his own man in charge of that organisation, such as C.B. Bhave, who was appointed to the post despite having that very agency investigating him at that time in matters connected with NSDL. Naturally, this “investigation” went nowhere.
Another Chidambaram favourite in SEBI, according to senior officials of the time, was U.K. Sinha, whose record in ensuring that defaulters pay back the moneys taken by them was visibly less than stellar. Sources in an investigative agency claim that a very senior SEBI official (not Sinha) was even spotted transporting in a commercial flight a suitcase that was filled with cash, which represented payment by a grateful tycoon for compounding a high profile case. Within the Department of Financial Services (DFS), another Chidambaram favourite, Amitabh Verma, was claimed by colleagues to have “encouraged” Public Sector Banks (PSBs) to sell their loan portfolios to private banks at low values. These private banks very soon resold such loans for a much higher value. Thus far, no investigation appears to have been initiated into such UPA-era transactions. Chidambaram was also considered within North Block as instrumental in getting Atul Rai to be made the Managing Director of IFCI.
Thus far, the former Union Finance Minister has led a charmed life, although there have been scattered accusations, including of allegedly standing by, especially during 1996-97, as poppy growers grew more than they needed, the balance getting sold to the narcotics trade. Interestingly, the lawyer chosen by many clients involved in narcotics-related cases to represent them was Nalini Chidambaram, the wife of P. Chidambaram, who is known as a highly capable advocate who gets good results for her clients. Chidambaram too is among the best lawyers in India, while Karti seems to be a financial genius, judging by his results both domestic and global.
In the INX Media case (involving FIPB sanction), officials present during that time say that two senior officials, Ashok Chawla and Arvind Mayaram, were in the picture, allegedly at the behest of the then Union Finance Minister, who is known to be close to both of these officials. The same sources say that the duo were also involved “on Chidambaram’s say so” in the Aircel Maxis case, although only an investigation would show whether both had been acting within the rules. A detailed enquiry will bring out the truth of the case. The INX case was cleared in the FIPB and was not referred to the Cabinet Committee on Economic Affairs, a step that had been suggested by some at the time. Earlier, the senior Chidambaram’s associates were accused of having taken over land at a throwaway value in a coastal area near Chennai, land that belonged to poor fishermen. This was allegedly “facilitated” by the then Revenue Secretary to the Tamil Nadu government, Saktikanta Das. The officer concerned was subsequently promoted and shifted to the Central government as Joint Secretary in the Finance Ministry when Chidambaram was a minister. Even the NDA regards Saktikanta Das highly and has given him further promotions. This hard-working IAS officer, who was among the prime movers behind the 8 November 2016 demonetisation, is now a member of the Finance Commission. No serious investigation into lands in urban conurbations of Tamil Nadu transferred to Chidambaram’s family and associates while he was in high office has thus far been conducted, nor is any likely, judging by the record of the probe agencies thus far.
Palaniappan Chidambaram has had the good fortune of having several at the top of the LIC being close to him, such as T.S. Vijayan, who subsequently became Chairman of IRDA. The LIC invests heavily in the stock market, entirely coincidentally a favourite playground of Karti and his associates. Several nationalised bank chairpersons were known to be favourites of the former Union Finance Minister, including Canara Bank Chairman M.B.N. Rao, State Bank of India Chairman O.P. Bhat and Yogesh Aggarwal of IDBI. Several individuals were appointed to the boards of Public Sector Banks (PSBs) through Chidambaram’s efforts. These individuals are claimed to have lobbied for several loans that subsequently morphed into NPAs. No enquiry seems to have been conducted by the present government into exactly which bank directors or politicians recommended big loans during the UPA period, advances that went bust, including those to Kingfisher Airlines. From removal of duty differences between natural and man-made diamonds (benefiting defaulters Winsome and Geetanjali Jewellery); to ensuring through budget announcements the sale at a cheap price to a close friend of a mine in Goa; to making a leading state-sector bank “force exporters” (eventually at great loss to them and to the detriment of the country’s exports) to enter into forward positions on dollars through a dubious US-based paper entity; to nudging banks to make expensive changes in logo and software so as to benefit favoured entities, several charges have been made by serving and retired officials about the manner of functioning of the “Chidambaram Clique” that till the past few weeks seem to have been ignored. However, it is possible that the prediction being made by him, son Karti and wife Nalini that they will “soon be free of any taint” (through arguing their case within the legal system) may come true. And should the Congress party cash in on the errors of the BJP—mistakes pointed out every week by Columnist Chidambaram—and manages enough Lok Sabha seats to lead a coalition government in 2019, Chidambaram will almost certainly return as the Union Finance Minister. Some, especially in Washington and London, predict that he may even be made (a la Manmohan Singh) the Prime Minister, should Rahul Gandhi decide to sit it out till 2024, the way the Congress president did during 2009-2014.
Given Chidambaram’s record of assisting friends and annihilating foes, both sets of individuals will be watching the immediate fortunes of this urbane and ruthless politician from the South with unwavering attention.