Karti Chidambaram arrested by CBI in INX Media case: All you need to knowhttps://indianexpress.com/article/business/karti-chidambaram-arrested-by-cbi-in-inx-media-case-all-you-need-to-know-5081068/

Karti Chidambaram arrested by CBI in INX Media case: All you need to know

Karti Chidambaram arrested: The INX Media case has been on the radar of investigative agencies as early as January 2008 when the Financial Intelligence Unit (FIU-IND) flagged the foreign direct investment of over Rs 305 crore by three Mauritius-based companies in INX Media Pvt Ltd.

Karti Chidambaram arrested in INX Media money laundering case: Here's all you need to know
Karti Chidambaram, son of former Union minister P Chidambaram. Karti was arrested this morning at the Chennai airport. (Express Photo by Prem Nath Pandey)

The Central Bureau of Investigation on Wednesday arrested Karti Chidambaram, son of former finance minister P Chidambaram, in connection with the INX Media case. Karti was arrested at the Chennai airport as soon as he got out of his flight from London. CBI officials said that Karti was arrested for “not cooperating with investigations”.

CBI had, in May last year, filed an FIR against Karti and INX Media among others for alleged irregularities in FIPB approval given to the media house for foreign direct investment (FDI) in 2007. The CBI has alleged that the INX Media’s FDI proposal was “deceitful and fallacious” but was approved by then finance minister P Chidambaram.

The Enforcement Directorate (ED), too, is probing Karti in the case under provisions of Prevention of Money Laudering Act (PMLA). The agency had only last week arrested Karti’s chartered accountant Bhaskarraman. Bhaskaraman was arrested from right outside Karti’s hotel room in Delhi.

It was on ED’s reference that the case against Karti and INX Media was registered by the CBI. The ED, which is already investigating a company associated with Karti in connection with the Aircel Maxis deal and FDI inflow into Vasan Healthcare, had found documents related to the INX Media FDI inflow during searches.

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The ED had found documents that showed Advantage Strategic Consulting, a company that CBI claimed is indirectly controlled by Karti, was paid Rs 10 lakh as consultancy fees to help it get FIPB approval in 2008. Karti’s father P Chidambaram was then finance minister.

After registering the FIR, CBI had conducted raids at premises linked to Karti and the residence of Peter Mukerjea and Indrani Mukerjea among 14 locations spread across Mumbai, Chennai and Delhi NCR in connection with the case.

karti chidambaram arrested by cbi inx media case
Karti Chidambaram at the CBI office in New Delhi last year. Express Photo by Prem Nath Pandey.

The CBI FIR has alleged that INX’s FDI inflow had been initially flagged by FIPB for irregularities and it had sought clarification from the media house. However, after it roped in a company owned by Karti Chidambaram for consultancy, its fresh proposal was approved by FIPB “by virtue of influence exercised over them by Karti P Chidambaram”, the CBI FIR says.

By doing this, the CBI has alleged that the officials “not only ignored the serious illegality on the part of M/S INX Media… but also embarked on showing undue favour to INX Group by abusing their official position”.

In return of the services, CBI has alleged, Karti Chidambaram got a payment of Rs 10 lakh through Advantage Strategic Consulting, “which was controlled by him (Karti) indirectly”. It has also alleged that it found invoices for Rs 3.5 crore in favour of INX Media raised by companies in which Karti has “sustainable interest” and “where there are common directors”.

Denying any wrongdoing, Karti Chidambaram had then said: “I am being targeted politically and personally to besmirch the name of my father. They have not seized any documents and cannot prove any charges against me. I have not done anything wrong.”

Reacting to the raids, P Chidambaram, had said: “The government’s aim is to silence my voice and stop me from writing, as it has tried to do in the cases of leaders of opposition parties, journalists, columnists, NGOs and civil society organisations. All I will say is I shall continue to speak and write.”

The INX Media case has been on the radar of investigative agencies as early as January 2008 when the Financial Intelligence Unit (FIU-IND) flagged the foreign direct investment of over Rs 305 crore by three Mauritius-based companies in INX Media Pvt Ltd (now called 9X Media Pvt Ltd), formerly owned by Peter and Indrani Mukerjea.

The alert generated by the FIU was picked up by the investigation wing of the Income Tax (IT) department in Mumbai,which later forwarded the case to the Enforcement Directorate (ED). In 2010, ED registered a case against INX Media for alleged violations of the Foreign Exchange Management Act (FEMA).

According to the CBI FIR, on March 13, 2007, INX Media approached the FIPB for permission to issue 14.98 lakh equity shares and 31.22 lakh convertible non-cumulative redeemable preference shares of Rs 10 a piece to three non-resident investors — Dunearn Investment (Mauritius) Pte Ltd; New Silk Route PE Mauritius LLC and New Vernon Pvt Equity Ltd under the FDI route. These shares represented 46.21 percent of the issued equity capital of INX Media.

INX Media, according to CBI sources, sought this approval to start a music channel, 9XM, a Hindi general entertainment channel (GEC) and multiple vernacular entertainment channels.

The CBI said the media firm, in its application to FIPB in 2007, also mentioned its intention to “make a down stream financial investment to the extent of 26 per cent of the issued and outstanding equity share capital of INX News Pvt Ltd, a subsidiary of INX Media.”

karti chidambaram arrested by cbi inx media case
The CBI has alleged that Karti Chidambaram exercised influence over certain FIPB officials and the department, instead of investigating the case, extended undue favours to the media firm. File/Express Photo by Prem Nath Pandey

While the FIPB granted permission to INX Media on May 30, 2007 to bring in FDI of Rs 4.62 crore, it rejected the proposal of downstream investment of INX Media in INX News.

The CBI has alleged that INX Media flouted the conditional approval of FIPB and brought in over Rs 305 crore of FDI in the firm against the approved inflow of Rs 4.62 crore. According to sources, the foreign entities bought shares of INX at Rs 862.31 a piece, which was 86.2 times more than the face value of the shares.

The media firm also made a down stream investment of 26 per cent in its subsidiary, INX News.

The CBI has alleged that on May 26, 2008, when the FIPB sought clarification from INX Media after the Income Tax department began its probe, the media firm engaged Karti Chidambaram, promoter director of Chess Management Service (P) Ltd, to “amicably” resolve the issue by “influencing the public servants of the FIPB unit of Ministry of Finance by virtue of his relationship with the then Finance Minister, P.Chidambaram.”

The CBI has alleged that Karti Chidambaram exercised influence over certain FIPB officials and the department, instead of investigating the case, extended undue favours to the media firm by asking INX News to apply for fresh FIPB approval on the downstream investment already received by it.

According to the CBI, INX Media was later granted FIPB permission for the investment in violation of norms.

In 2008, the media firm launched NewsX, an English news channel. Within a year of launch, the news channel was sold to Indi Media Network, a joint venture between Nai Duniya owner Vinay Chhajlani and Jehangir Pocha.

In March 2009, Peter and Indrani exited the company after selling their 30% stake in the loss-making INX Media. In April 2010, the Hindi GEC of the company was sold to Zee Network for Rs 64 crore.

The same year, INX Media was renamed as 9X Media. Subsequently, in 2011, New Silk Route increased its stake in the company to 80% by buying out all the other private equity investors in the company.

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Both Peter and his wife Indrani, founders of INX Media, are accused in the Sheena Bora murder case and are lodged in jail in Mumbai.