19 March 2018 Business Scam Opera

The Case Against Karti

How the CBI built its case against the former FM’s son
The Case Against Karti
Netted
Karti Chidambaram at a Delhi court
Photograph by Getty Images
The Case Against Karti
outlookindia.com
2018-03-10T10:55:48+0530

After more than two years of stacking up evidence against Karti Chidambaram, the CBI arres­ted him from Chennai Airport on February 28 in connection with a probe into all­eged bribery. The case dates back to when Karti’s father P. Chidambaram was finance minister in the Congress-led UPA-1. In an FIR filed last May, the CBI claimed that INX media founder, Indrani Mukherjee, had paid Karti a bribe of Rs 3.6 crore to manage a Foreign Investment Promotion Board (FIPB) app­roval for 26 per cent FDI in the media company. As per the FIR, INX paid Karti-owned Chess Management Services Rs 10 lakh for “management consultancy charges toward FIPB notification and clarifications”. The remaining Rs 3.5 crore was all­egedly paid to a firm named Adv­antage Strategic Consulting, though Karti’s legal counsel Abh­ishek Manu Singhvi says only four invoices reportedly rec­overed from the computer of Karti’s chartered accountant, Bhaskaran, were produced by the CBI and not evidence of the actual remittances.

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The CBI claims Advantage Str­a­tegic is Karti’s ‘benami’ company, controlled through family retainers. These allegations were also made earlier by Thuglak editor S. Gurumurthy, relying on documents recov­ered by Income Tax authorities and the Enforcement Directorate, including a will by Adv­antage’s shareholders beque­athing their shares to Karti’s daughter.

Confronted with the evidence, Karti is said to be stonewalling the probe. Add­itional solicitor general Tushar Mehta told the CBI court that even when asked his name, Karti replies, “This is political vendetta.” Mehta also alleged that a witness was approached and ­evidence tampered with while Karti was in ­police custody.

The CBI, which is probing the Sheena Bora murder case, too, in which Indrani, held in a Mumbai jail, is facing trial, has also relied on Indrani’s testimony to a magistrate that she bribed Karti. The probe agency arranged a face-to-face of Karti with Indrani in Mumbai, all through which he remained silent.

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In 2007, the INX Media group had initially sought approval for 46.216 per cent investment. An I-T and FIPB probe found that the foreign investment had been made without FIPB clearance. The CBI’s FIR states that when the FIPB and I-T departments pulled up INX group, Indrani conspired with Karti to bribe FIPB officials to solve the issue. As FM, Karti’s fat­her was then heading the FIPB.

ASG Tushar Mehta told the CBI court that even when asked his name, Karti replies, “This is political vendetta.”

Outlook has reviewed the I-T probe report, to which are anne­xed letters exchanged with the FIPB. INX had raised foreign capital of Rs 305 crore, 66 times the permitted Rs 4.62 crore, trea­ting the excess amount as prem­ium—a whopping Rs 800 per share. In a letter dated April 30, 2008, the FIPB told the I-T dep­artment that “foreign investment includes equ­ity investment as well as premium, which is reg­arded as total FDI inflow”, and clarifies whether INX group had sought approval: “The company, in their application dated March 31, 2007, had mentioned…their intention to make downstream, investment in M/s INX Media Pvt Ltd, but no app­roval was sought. Therefore, the Foreign Col­l­aboration approval dated 31.5.2007 does not contain app­roval in this regard.”

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INX group had both entertainment and news channels, with INX Media and affiliates owning a large stake in INX News. Therefore, any investment in INX Media and its affiliates was also an indirect investment in INX News. In anot­her letter, dated May 26, 2008, the FIPB said, “As per approval letter dated 31.5.2007, the percentage of foreign equity is 46.216 per cent, which amounts to Rs 4.62 crore. However, the FDI of Rs 268 crore repor­tedly received by the company is being verified from the company.”

The CBI’s FIR says finance ministry officials granted the fresh approval, which was approved by the FM. Records accessed by Outlook show that the change in FDI approval to INX began in 2008, but the CBI didn’t respond to Outlook’s queries about the date, which isn’t mentioned in the FIR. P. Chid­ambaram had demitted office as FM on November 30, 2008 and rep­laced Shivraj Patil as home minister.

Singhvi argued against Karti’s custodial remand citing lack of a direct money trail leading to him, and that all documents related to the 10-year-old alleged scam were frozen in North Block. The CBI remand may get over soon, but the ED is just cracking its knuckles.

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