Explained: What is INX Media Case and Why is Karti Chidambaram Arrested?
Karti Chidambaram was arrested by CBI on Wednesday, as soon as his flight from London landed at Chennai airport.
New Delhi, Feb 28: Karti Chidambaram, the son of former finance minister P Chidambaram, was arrested by the Central Bureau of Investigation (CBI) on Wednesday, as soon as his flight from London landed at Chennai airport. Karti, 46, was taken into custody for his alleged involvement in the money laundering case involving INX Media.
Congress raised apprehension over the arrest of Karti, accusing the BJP government at Centre of practicing vendetta politics. The latter, however, struck back, saying "those who land on the wrong side of the law won't be spared no matter how influential they are".
Explained: What is the INX Media case?
In 2006, the INX Media was co-founded by erstwhile media barons Peter and Indrani Mukerjea. For setting up their business operations, the company sought overseas funds via the Foreign Direct Investment (FDI) route.
In 2007, INX Media appealed the Foreign Investment Promotion Board (FIPB) to grant permission for two purposes: to seek approval for claiming funds from three Mauritius-based firms - Dunearn Investment (Mauritius) Private Ltd, NSR PE Mauritius LLC and New Vernon Private Equity Ltd - to the tune of Rs 4.26 crore. Secondly, it sought the board's nod for 26 per cent downward financial investment of the amount issued for its news channel - NewsX.
While the FIPB agreed to the FDI investment at Rs 4.26 crore cap, it disapproved the proposal to make downward financial investment.
INX Media, however, blatantly violated the guidelines issued by FIPB. Despite being allowed to claim overseas investment only to the tune of Rs 4.26 crore, it accepted an amount of Rs 305 crore -- nearly 80 times more than what was approved.
The company also made downward financial investment towards NewsX, despite not being granted clearance by the FIPB.
The violation was red-flagged by the Income Tax Department, which raised the matter with FIPB.
How is Karti Chidambaram involved?
After the investigation wing of I-T department launched a probe against Indrani and Peter Mukerjea, the then owner of INX Media, the Mukerjeas reached out to Karti Chidambaram, allegedly for seeking respite from legal hurdles.
The CBI, in its FIR filed in the case in 2015, said the FIPB, under the directions of the then Finance Ministry, refrained from taking action against INX Media. Instead, the Mukerjeas were asked to send a new proposal for increasing FDI and rerouting the funds downward towards NewsX.
In doing so, the Finance Ministry 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," CBI said in its FIR.
The central probe agency claims the favour was shown towards INX Media due to Karti's father P Chidambaram heading the then Finance Ministry.
"The fresh proposal of (INX Media) was approved by FIPB by virtue of influence exercised over them by Karti P Chidambaram," the CBI FIR states.
In lieu of allegedly shielding INX Media from legal action using his father's clout, the company paid Rs 10 lakh to Advantage Strategic Consulting, "the company indirectly controlled by Karti", the CBI claimed.
Apart from Rs 10 lakh payment, the CBI also found invoices valuing Rs 3.5 crore in favour of INX Media raised by companies in which Karti has “sustainable interest” and “where there are common directors".
Karti, however, has denied the charges levelled against him by the CBI. His father, P Chidambaram said the Centre is "hounding his son" due to his criticism of the government's work, schemes and policies.
(The above story first appeared on LatestLY on Feb 28, 2018 02:02 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).