Raids conducted in Mumbai, Delhi and Chennai; Karti's father P. Chidambaram alleges that the Centre is targetting him and and his son.

The Economic Offences Wing of the Central Bureau of Investigation has registered a case against Karti Chidambaram, son of former Union Minister P. Chidambaram; M/s INX Media (P) Ltd., represented by its then directors Indrani Mukherjea and Pritam Mukherjea alias Peter Mukherjea; Chess Management Services (represented through its director Mr. Karti Chidambaram); Advantage Strategic Consultancy (P) Ltd., represented through its director Padma Vishwanathan and others; besides unknown Finance Ministry officials on the charges of criminal conspiracy, cheating and corruption.

Special teams on Tuesday conducted simultaneous searches on the premises of the accused in Delhi, Mumbai, Hyderabad and Chennai in connection with alleged irregularities in foreign direct investments to the tune of ₹305 crore in INX Media and INX News.

The premises that were searched are Mr. Karti Chidambaram’s residence, Chess Management Services office, Advantage Strategic Cosultancy (P) Ltd. (ASC) office and the premises of ASC director Padma Vishwanathan in Chennai; INX media office and Indrani and Peter Mukherjea’s residence in Mumbai; Direct News Private Limited in Okhla Phase - I; and Chess Management Services office at JMD Tower, Sohna Road in Gurugram.

Also Read CBI FIR against Karti Chidambaram

The CBI has accused Mr. Karti Chidambaram of having received commissions through companies such as Chess Management and ASC to scuttle a probe by the Department of Revenue into the allegations. It is alleged that INX Media got an approval from the Foreign Investment Promotion Board (FIPB) for ₹4.62 crore investment, but it received ₹305 crore foreign direct investment (FDI) by sale of shares at a premium of ₹800 a unit. Against the FIPB decision, a downstream investment of 26% of the funds was also allegedly made in INX News.

However, Mr. Karti Chidambaram is not being questioned right now, the CBI has said.

When asked about the FIR mentioning the then Finance Ministry officials and then Finance Minister (P. Chidambaram) having approved the FIPB clearance on the second application filed by INX Media, CBI Joint Director Vineet Vinayak said the agency would probe all relevant facts pertaining to the approval.

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INX Media, which was incorporated in August 2006, had approached the FIPB in March 2007 seeking the approval for issue of shares by of preferential allotment in one or more tranches and convertible non-cumulative redeemable preference shares of ₹10 each, to three non-resident investors. Collectively, that amounted to 46.2% of the issued equity share capital of INX Media. The company also applied for downstream investment in INX News.

Security personnel at the residence of P. Chidambaram in Chennai. | Photo Credit: K.V. Srinivasan

Allowing the company to receive funds of ₹4.62 crore, the FIPB, in May 2007, said it would have to seek a separate approval for investments in INX News. “However, the company received ₹305 crore from the three investors, who have been identified as Dunearn Investment (Mauritius) Pte Ltd, NSR PE Mauritius LLC and New Vernon Pvt Equity Ltd,” said a CBI official. When the matter came to light, the Income Tax Department and then the FIPB sought an explanation from INX Media.

It is alleged that the company then conspired with Mr. Karti Chidambaram to wriggle out of the situation. It approached Chess Management, of which he was the promoter-director, for “consultancy”. As suggested, INX Media tried to justify the investments.

P. Chidambaram and Karti Chidambaram. File photo | Photo Credit: M. Prabhu

“Owing to the influence exercised by Mr. Karti Chidambaram, the then FIPB officials not only ignored the illegalities, but also extended favour to the company by suggesting to it to apply for a fresh approval,” alleged the official.

It is alleged that for the services rendered by Mr. Karti Chidambaram to the INX group through Chess Management, consideration in the form of payments were received from INX Media to the Chennai based ASC, to evade detection of his role.

“Mr. Karti Chidambaram was the promoter-director of Chess Management, whereas Advantage Strategic was being controlled by him indirectly. Informer also disclosed that invoices of about ₹3.5 crore were also got raised by INX group in the name of other companies in which he was having sustainable interests, either directly or indirectly. Such invoices were raised on various pretexts. However, the INX group, in its record, has also clearly mentioned the purpose of a payment of ₹10 lakh to Advantage Strategic as towards management consultancy charges towards FIPB notification and clarification,” said the official.

Also Read ‘Karti has secret bank accounts’

Centre targeting me: P. Chidambaram

Reacting to the raids, Mr. Chidambaram alleged that the Union government, with the CBI, was targetting him and and his son. "They want to silence my voice and stop me from writing".

In a statement, Mr. Chidambaram said there were no allegations against the five Secretaries, who constitute the FIPB, other officials and competent authorities who are public officials. Every case was processed according to the law and approval was granted or refused in accordance with the recommendations of the FIPB. "There is no allegation against me", he said.

"I will continue to speak and write [sic]", he said.

(With inputs from S. Vijay Kumar in Chennai)