NEW DELHI: Former finance minister and senior Congress leader P Chidambaram and his son Karti Chidambaram were on May 16 raided by Central Bureau of Investigation after the agency registered a case against Karti, Peter Mukerjea and Indrani Mukerjea, two private companies and unknown officials of ministry of finance for alleged corruption and criminal conspiracy for FDI approval (Foreign Investment Promotion Board (FIPB) approval) for INX Media Pvt Ltd.
The agency teams swooped in at the residence of P Chidambaram and Karti Chidambaram in Chennai, and office and residences of other named accused persons in Delhi, Mumbai and Gurugram.
CBI has booked Karti Chidambaram, INX Media (P) Limited and its former Director Indrani Mukerjea, INX News (P) Limited and its former Director Peter Mukerjea (the couple accused in Sheena Borah murder case as well), M/s Chess Management Services (P) Limited, a company owned by Karti Chidambaram. M/s Advantage Strategic Consulting (P) Limited and its Director Padma Vishwanathan and unknown officials of ministry of finance for alleged “criminal conspiracy”, cheating and prevention of corruption act.
CBI has alleged that recommendation for FIPL proposal of INX Media was approved” by P Chidambaram, who was finance minister at that time.
The agency also says that INX Media, in order to wriggle out the situation without any punitive action by the FIPB, entered into a criminal conspiracy with Karti Chidambaram, son of former finance minister P Chidambaram+ , and promoter of Chess Management so as to get the issues amicably resolved by influencing the public servants of the FIPB unit of the ministry of finance “by virtue of his relationship with the then finance minister (P Chidambaram)”.
Sources say that even though P Chidambaram has not been named in the FIR and only unknown officials of finance ministry have been mentioned, the senior Congress leader, who served as finance minister during the UPA regime, is “very much under the CBI scanner”.
The agency has received an information that M/s INX Media P Limited, incorporated on August 8, 2006, under the provisions of Companies Act 1956, was having its registered office at Phoenix Mills compound, approached the Chairman of FIPB, which comes under the Department of Economic Affairs of ministry of finance seeking approval of the FIPB for permission to issue by way of a preferential allotment, in one or more tranches – a) up to 1498995 equity shares of Rs 10 each and b) up to 3122605 convertible, non-cumulative, redeemable preference shares of Rs 10 each collectively representing approximately 46.215 percent of the issued Equity Share Capital of INX Media P Ltd on an as converted’ basis to three non-resident investors under the Foreign Direct Investment (FDI) route.
The foreign investors named by INX were Dunearn Investment (Mauritius) Pte Ltd., NSR PE Mauritius LLC, and New Vernon Pvt. Equity Ltd.
INX Media sought this approval for engaging in the business of creating, operating, managing and broadcasting of bouquet of television channels including Hindi entertainment channel, multiple vernacular entertainment channels.
In its application, CBI says, it sought permission for issuing the shares at its face value of Rs 10 each and its intention, subject to provisions of applicable laws, to make a downstream financial investment to the extent of 26% of the issued and outstanding equity share capital of M/s INX News P Ltd.
The company’s application was received and acknowledged by FIPB unit through its letter dated March 15, 2007. The comments of various departments was sought on the same.
CBI says that the FIPB unit, while sending the brief of proposal, which was to be put to the FIPB for its meeting scheduled on May 18, 2007 had clearly mentioned the inflow of FDI to the extent of Rs 4,62,16000 (Rs 4.62 crore) taking the proposed issue at its face value. The FIPB unit also clearly stated that for downstream investment in INX News, a separate FIPB approval will be required.
In its meeting, FIPB recommended the proposal of INX Media for consideration and approval of the finance minister (P Chidambaram at that time). However, in the meeting, the board didn’t approve the downstream investment by INX Media in INX News. Accordingly the recommendations were approved by the then finance minister, says CBI.
CBI says it was further disclosed that in the press release dated May 30, 2007, issued by FIPB unit indicating the details of proposals approved in the FIPB meeting the quantum of FDI/NRI inflow against INX Media was shown as Rs 4.62 crores.
“Contrary to the approval of FIPB conveyed through letter dated May 31, 2007 and condition mentioned therein, INX Media deliberately and in violation of the conditions of the approval made a downstream investment to the extent of 26% in INX News without the specific approval of FIPB which included indirect foreign investment by the same foreign investors and generate more than Rs 305 crores FDI in INX Media against the approval foreign inflow of Rs 4.62 crores by issuing the shares to the foreign investors at a premium of more than Rs 800 per share,” says CBI in its FIR.
CBI says information further disclosed that upon receipt of a complaint in this regard, the investigation wing of Income Tax department, in February 2008, sought clarifications on the above two issues from the FIPB unit.
When FIPB sought clarifications from INX Media, in order to wriggle out of the situation without any punitive action, entered into a criminal conspiracy with Karti Chidambaram, son of then finance minister P Chidambaram, and Promoter Director of Chess Management Services so as to get the issues resolved amicably by influencing the public servants of the FIPB unit of ministry of finance “by virtue of his relationship with the then finance minister”.
Based on the clarifications suggested by Chess Management, INX Media through their letter dated June 26, 2008, tried to justify their action on both the counts as – a) on the un approved and unauthorized downstream investment, it falsely claimed that same was in accordance with the approval and b) on the excess foreign inflow received, it was justified as premium received against the shares issued, says CBI FIR.
The agency adds that after receiving a letter from INX Media, the officials of FIPB unit, by virtue of influence exercised over them by Karti Chidambaram, “not only ignored the serious illegality on the part of INX Media on both the counts but also deliberately embarked on showing undue favor to INX Group by abusing their official position and advised the company to apply fresh for FIPB approval in respect of the downstream investment which had already been made by INX Media.
The officials of FIPB also ignored the “request of department of revenue to investigate the matter”.
“Such deceitful and fallacious proposal was favorably considered by the officials of ministry of finance and approved by then finance minister,” says CBI.
The agency further says that for the services rendered by Karti Chidambaram to INX Group through Chess Management in getting the issues scuttled, consideration in the form of payments were received against invoice raised on INX Media by Advantage Strategic Consulting P Limited (a company owned by Karti).
CBI says that “the very reason for getting the invoice raised in the name of ASCPL was with a view to conceal the identity of Karti Chidambaram in as much as on the date when the invoice was raised or when payment was received, Karti was promoter/Director of Chess Management, whereas ASCPL was being controlled by him indirectly”.
CBI says that invoices of Rs 3.5 crores were raised by INX in the name of other companies in which Karti Chidambaram was having sustainable interests either directly or indirectly.
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