NEW DELHI: The Enforcement Case Information Report (ECIR) in the INX Media case and the subsequent order issued by the Directorate of Enforcement (ED) in October 2018 to attach properties bought by Karti Chidambaram, allegedly with the bribe money he got in the INX Media case, state several times that Karti got the bribe money after his father P. Chidambaram said that he would help INX Media only if his son was “taken care” of.  Chidambaram was the country’s Finance Minister at the time.

A perusal of the attachment order, which has been challenged in the court by Karti, leaves no ambiguity on the role allegedly played by P. Chidambaram in the entire case, contrary to the claims of senior Congress leaders, including Priyanka Gandhi Vadra and Rahul Gandhi that Chidambaram senior was being targeted for political reasons.

Information on the role played by Chidambaram senior in the case, as outlined in the FIR and the order, is based on the statements made by private individuals and government officials, some of whom are retired, and is supported by electronic and other hard evidence and proof of properties in and outside India that were allegedly bought by the Chidambarams, allegedly by using the bribe money that they got in the INX Media case.

Karti’s lawyer N.R.R. Arun Natarajan, in a statement on the attachment order, which was given to the media, has already stated that his client “Karti Chidambaram is neither a shareholder or director of the company ASCPL (Advantage Strategic Consulting Pvt Ltd). It is subject to confirmation by the Adjudicating Authority and a further appeal to appellate authority. The attachment order will be contested by my client”.

HOW IT ALL STARTED

In March 2007, INX Media sought the approval of Foreign Investment Promotion Board (FIPB) for a foreign direct investment (FDI) of Rs 4.62 crore. This investment was to come from issuing equity shares to three non-resident investors based in Mauritius through the FDI route. While the FIPB approved the request two months later on 18 May, it rejected the venture’s other request for downstream investment of foreign funds in its another subsidiary, INX News Pvt Ltd.

Though it was denied permissions, it 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. The foreign firms allegedly bought each share for Rs 862.31, a price that was more than 86 times its face value.

In January 2008, the financial intelligence unit of the Ministry of Finance found the anomaly in money flow into INX Media, after which the case was forwarded to the ED.

Interestingly, these anomalies were pointed out to the Ministry of Information and Broadcasting (MIB) by certain journalists on 30 January and 1 February, after which the MIB forwarded these complaints to the Ministry of Finance.

Later, in the course of time, the FIPB, in May 2008, sought clarification from INX Media about the overpriced sale of shares and receiving foreign funds in violation of its conditions.

ENTRY OF THE CHIDAMBARAMS

This is when the Chidambarams, as per officials, came into the picture. INX Media, as per official records, entered into a criminal conspiracy with Karti Chidambaram, who was the director of Chess Management Services, so as to resolve the issue amicably by influencing officials at the Ministry of Finance by virtue of his relationship with P. Chidambaram. This is for the first time that P. Chidambaram’s name came up in the attachment order.

The investigators then found how, under the advice of Chess Management Services, INX Media drafted their responses to the FIPB, which was sent on 26 June 2008. Later, the officials at FIPB not only ignored the illegality of what INX had done, but also advised them on how to wriggle out of this situation.

The FIR further states that “such deceitful and malicious proposal was favourably considered by officials of the Ministry of Finance and approved by the then Finance minister”.

In return, INX Media, as per the FIR and the order sheet, raised invoices in the name of Advantage Strategic Consulting Private Limited, another company indirectly owned by Karti Chidambaram.

On 24 October 2008, the FIPB, in its 128th meeting, approved, illegally, as per officials, the downstream investment into INX News.

STATEMENTS

In its statement to the ED, Dipak Kumar Singh, a 1992 batch IAS officer who was in FIPB from February 2006 to December 2010, said INX Media had not sought approval for downstream investment, but had only applied for Rs 4.62 crore approval.

D.V. Subbarao, IAS officer of the 1972 batch, who was the ex-officio chairman of FIPB, said, “The discrepancy should have been sorted out by the FIPB unit and the officer responsible for ensuring compliance of SEBI and RBI guidelines did not bring it to the notice of the FIPB.”

“The fact that downstream investment had already been made was in the knowledge of the FIPB unit; however, it did not bring it to the notice of the RBI or the FIPB; on the contrary, it asked INX Media to seek a separate approval. The FIPB unit, in violations of rules, suppressed the fact that INX Media had already made downstream investment,” the observation of the ED says.

Very importantly, during the 128th meeting of the FIPB, when INX Media got the approval for something which it had already done, P. Chidambaram, while approving the minutes of the meeting, made the following observations: “approved except para 5 serial number 4,5,6. Those three cases may be discussed separately.” As per the ED, this shows that P. Chidambaram had applied his mind with due diligence at the time of according approval to the minutes of the meeting.

“Further investigations show that the Finance Minister had met the key persons of INX Media and was aware that on the request of Information and Broadcasting minister, the matter was being investigated. However, he approved the FDI without raising any questions due to his son’s interest,” the FIR says.

The examination of Indrani Mukerjea by the Enforcement Directorate revealed: “After the application of INX Media was submitted to the FIPB for FDI approval, Peter (her husband), Indrani and Vir Sanghvi (who was the CEO), went for  meeting P. Chidambaram at his office chamber in North Block. The appointment with Sh. P. Chidambaram was fixed by Mr Vir Sanghvi. Peter Mukerjea started the conversation with Mr P. Chidambaram referring to the application of INX Media for bringing in FDI and handed a copy of the application to Mr Chidambaram. After having understood the issue, Mr P. Chidambaram told Peter Mukerjea to help his son Karti in his business and make possible remittance in lieu of FIPB approval.”

After that, when Peter Mukerjea and Indrani Mukerjea came to know about the investigations into the irregularities by allowing FDI into INX Media, they met Karti Chidambaram at Hyatt hotel in Delhi where he asked them to transfer $1 million into an overseas account or into the account of Chess Management Services or Advantage Strategic Consulting Pvt Ltd.

Peter Mukerjea said that in the “year 2007/2008, he and Indrani Mukerjea met P. Chidambaram in New Delhi along with Vir Sanghvi who was to be their editor-in-chief and CEO. The meeting was held at the Finance Minister’s office. The meeting was to seek the minister’s blessings as they were about to launch a new media company with several channels and approvals for those would have been required before they could launch. He stated that they met the Finance Minister to ensure that there was no hold up or delay in their application. P. Chidambaram asked for his son’s business interests to be kept in mind, if any opportunity arose and for making overseas payments.”

Later, Peter Mukerjea too narrated the same incident regarding the meeting in Hyatt in June 2008 where Karti Chidambaram assured them of help in lieu of $1 million for the FIPB approval. The payments, as per the investigations, were made under the supervision of Ajay Sharma, group director, legal and regulatory affairs of INX Media Private Limited. The statements of Ajay Sharma, which are a part of the order, too, state the same narration as given by Indrani Mukerjea and Peter Mukerjea.

The ED subsequently found four invoices amounting to $0.7 million or Rs 3.3 crore, which were raised on 22 September 2008 and 26 September 2008 after the FIPB had accepted INX News application for downstream investment and FIPB gave it a clean chit through a letter dated 2 September 2008.

The ED found that Advantage Strategic Consulting Private Ltd. purchased a tennis club in Spain, cottages in the UK and several other properties in India and abroad worth in accumulated cash and kind over Rs 54 crore when P. Chidambaram was minister during UPA-1 and UPA-2.

An official asked: “It is a very simple question that the Congress leaders who are defending Karti Chidambaram need to answer to the public. In less than five years, how was Karti Chidambaram able to get properties and cash worth crores?”

In an official correspondence, which was shared by former ED Joint Director Rajeshwar Singh on 15 December 2016 with the CBI director, and which was accompanied by statements of various individuals made it clear how irregularities were committed to help INX Media on behalf of the Chidambarams. Singh clearly stated that “Ongoing investigations have revealed that ASCPL had received funds in the guise of consultancy charges from some more companies and individuals that have received FIPB approvals from the Ministry of Finance. Investigation has revealed that ASCPL never had the requisite staff to render consultancy service or tender advice. Documents suggest that since inception, ASCPL has been controlled by Karti Chidambaram.”

It was among the first of many correspondences that finally culminated with the unravelling of the alleged role of Karti Chidambaram and P. Chidambaram in the INX case.

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