Charges against P Chidambaram
P Chidambaram is being probed for allegedly helping INX Media get illegal Foreign Investment Promotion Board (FIPB) clearances for funds amounting to Rs 305 crore. This happened when P Chidambaram was finance minister in the UPA-I government.
Senior Congress leader P Chidambaram was arrested by the Central Bureau of Investigation (CBI) on Wednesday night in connection with the INX Media case. The case related to the media company dates back to 2008 when the Financial Intelligence Unit (FIU) of the finance ministry found anomalies in money flow from three Mauritius-based firms to INX Media Private Limited.
Views of Delhi High Court
He was arrested just a day after Delhi High Court said that the INX Media case was a classic case of “money laundering”. Chidambaram is being probed for allegedly helping INX Media get illegal Foreign Investment Promotion Board (FIPB) clearances for funds amounting to Rs 305 crore. This happened when P Chidambaram was finance minister in the UPA-I government.
What is INX Media case?
INX Media, founded by media entrepreneurs Indrani Mukherjea along with husband Peter Mukherjea, was allegedly helped by P Chidambaram in violating foreign investment laws. While INX Media had permission to source foreign investments to the tune of Rs 4.62 crore, it allegedly received funds worth Rs 305 crore.
When the FIU found anomalies in the FIPB clearances and amount received by INX Media, the investigation was handed over to the Enforcement Directorate (ED). The ED conducted an investigation and found traces of corruption, following which the matter was referred to CBI.
The CBI registered an FIR in the case on May 2017 and ED also lodged a separate case of money laundering. In its FIR, CBI highlighted irregularities in the FIPB clearance granted to INX Media in 2007.
In March 2007, INX Media had approached the finance ministry for issuance of 14.98 lakh equity shares and 31.22 lakh convertible non-cumulative redeemable preference shares. The shares were to be transferred to three non-resident companies under the FDI route. The FIPB, however, did not approve the downstream investment of the foreign fund in INX Media’s subsidiary, INX News Private Limited.
The fact that it received Rs 305 crore instead of the approved Rs 4.62 crore was in violation of FIPB rules and regulations. Its downstream investment in the subsidiary was also in violation of FIPB rules.
When the I-T department had initially raised red flags in connection with the anomaly in 2008, INX Media allegedly sought to escape the mess by offering kickbacks to a firm (Chess Management Services) owned by Karti Chidambaram, son of P Chidambaram.
The CBI also said that instead of investigating the violations, the FIPB had then suggested INX Media apply for fresh approval for foreign funds for downstream investment.
While the Chidambarams have vociferously denied allegations against them, Indrani Mukherjea in 2018 told CBI that a deal of $1 million was struck between Karti Chidambaram and the Mukherjeas to secure approval from the FIPB in favour of INX Media. In July 2019, she agreed to turn approver in the case.
After P Chidambaram was arrested by the CBI on Wednesday, his son Karti has slammed the Centre and accused it of “settling” political scores.