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P Chidambaram arrested in INX Media case, but what did he do wrong?

INX Media case: P Chidambaram arrived at the AICC headquarter in New Delhi to address the media before leaving for his residence in Jor Bagh, even as probe agencies continued their efforts to arrest him.

twitter-logoBusinessToday.In | August 21, 2019 | Updated 22:58 IST
P Chidambaram faces arrested in INX Media case, but what did he do wrong?
INX Media case: The Supreme Court on Wednesday refused to grant P. Chidambaram an urgent hearing on his plea seeking protection from arrest

In less than 24 hours of high drama, former Finance Minister P Chidambaram found himself named the kingpin of the INX Media case and his anticipatory bail plea rejected by the Delhi High Court. But when the CBI, followed by the ED, went to arrest him at his residence on Tuesday evening, the Congress stalwart was missing. On Wednesday, the Supreme Court today refused to grant him an urgent hearing on his plea seeking protection from arrest.

Chidambaram remained untraceable till he appeared at the AICC headquarters in New Delhi on Wednesday evening to address the media. Even as a CBI team arrived at the Congress office, Chidambaram managed to leave the premises with Congress leaders Kapil Sibal and Abhishek Manu Singhvi in tow.

Here's all you need to know about the INX Media case and how Chidambaram and his son Karti got involved in it.

What is the INX Media case?

The case concerns alleged irregularities in the Foreign Investment Promotion Board's (FIPB) clearance granted to INX Media, a media venture owned by Peter Mukerjea and his wife Indrani, over a decade ago. In March 2007, INX Media had approached Chairman of FIPB, seeking permission for issuing equity shares to three non-resident investors based in Mauritius through the foreign direct investment (FDI) route. While the FIPB approved the request two months later, allowing INX Media to receive foreign funds to the tune of Rs 4.62 crore, it rejected the venture's other request for downstream investment of foreign funds in its subsidiary, INX News Pvt Ltd.

As per the CBI FIR filed against the company, its directors and other involved parties in May 2017, "INX Media deliberately and in violations of the conditions and approval" went ahead with the downstream investment and generated FDI exceeding Rs 305 crore in the company by issuing shares to foreign investors at a premium of more than Rs 800 per share between August 2007 and May 2008. The foreign firms allegedly bought each share for Rs 862.31, a price that was more than 86 times its face value.

The Enforcement Directorate subsequently lodged a money laundering case against INX Media and related parties in 2018.

Also read: What is INX Media case; a look at the genesis of P Chidambaram and son Karti's misfortunes

What is the CBI's case against P. Chidambaram?

Chidambaram was the finance minister in 2007 so his role came under the scanner of investigating agencies in connection with the above FIPB clearance. The CBI later alleged that instead of ordering investigation into the irregularities, the FIPB - under Chidambaram - suggested to INX Media to simply apply for fresh approval for downstream investment of overseas funds it had already received.

The CBI backed its case with a statement from Indrani Mukerjea, who recently turned approver in this matter. According to her, INX Media got a favourable deal after she met with Chidambaram seeking FIPB clearance in 2008.

What is Karti Chidambaram's connection to the case?

Karti, P. Chidambaram's son, allegedly used his influence and accepted kickbacks to settle the mess INX Media found itself in. In January 2008, the financial intelligence unit of the finance ministry discovered the anomaly in the money flow into INX Media. As it involved foreign funds, the Income Tax department forwarded the case to the ED.

To wriggle out of the probe and settle the matter "amicably" with the finance ministry, INX Media allegedly engaged Karti's Chess Management Service Pvt. Ltd. Karti is the founder director of Chess Management Services. The CBI FIR stated that Karti received funds to the tune of Rs 10 lakh in the case - during its searches at the homes and offices of junior Chidambaram, sleuths reportedly recovered vouchers for this amount issued in favour of Advantage Strategic Consulting (P) Limited, a firm "indirectly" owned by him. The CBI also claimed that P. Chidambaram was party to the overall scheme.

Also read: INX Media case: How P Chidambaram's legal team plans to rescue former Finance Minister

Karti was arrested by the CBI in February last year in connection with the INX Media case but was released on bail the following month.

In March 2018, Indrani Mukerjea told the CBI that a deal of $1 million was struck between Karti and the Mukerjeas to secure approval from the FIPB in favour of INX Media.

Why is Chidambaram facing arrest now?

The Delhi High Court on Tuesday refused to grant the Congress stalwart anticipatory bail, saying that he seems to be the "kingpin" and "key conspirator" in the INX Media case built by the probe agencies and he needs to be interrogated in custody for the investigation to be effective. Chidambaram previously got a reprieve from arrest after the Delhi High Court granted him interim protection in May last year, which was extended from time to time till the court finally took a stand on Tuesday. He has been untraceable since yesterday evening, when the CBI and ED sent teams to arrest him, and the latter has now issued a lookout notice against him.

"Judge reserves judgement for seven months and delivers it 72 hours before retirement, the CBI/ED are sent to raid as a respected former FM is hounded," Congress leader Randeep Singh Surjewala tweeted. He added that India had witnessed the "worst kind of virulent vendetta by the Modi government as the BJP runs a "police state".

Ironically, nearly a decade ago, when Chidambaram was Home Minister, Amit Shah was on the dock and now the roles have been reversed, which again begs the question whether the recent acceleration of events in probing Chidambaram's role is an act of political vendetta - as the Congress party is claiming - or simply the due process of the law finally catching up.

After all, the father-son duo certainly need to explain the alleged bribes which the probe agencies claim were paid out. According to the ED, the proceeds of the crime helped Karti amass property and assets worth Rs 54 crore in India and abroad.

Also read: Chidambaram's legal team writes to CBI, asks not to take any coercive action till SC hearing

What can P. Chidambaram do next?

The Congress leader's counsels are trying to rescue him from this situation. P Chidambaram's lawyers on Wednesday filed a special leave petition (SLP) in the Supreme Court, seeking interim relief against yesterday's order of the Delhi High Court.

But the top court has refused the urgent listing of his petition, saying the defects in the petition were removed "just now" and it "cannot be listed for hearing today itself", PTI reported. Without listing of the petition, the bench comprising Justices NV Ramana, M. Shantanagoudar and Ajay Rastogi said it cannot hear the matter.

Sources close to Karti have told India Today that the legal team plans to base their case on 10 arguments, including the fact that the former FM is not a flight risk and there have been no allegations of evidence tampering.

Another legal argument likely to be presented is that the INX Media case pertains to events that transpired in 2007-08 for alleged amounts of Rs 10 lakh. The pecuniary limit under the PMLA at that point was Rs 30 lakh. The sources added that this amount was received by companies that had neither P. Chidambaram nor Karti as shareholders or directors and no public funds were involved.

If the Supreme Court rejects his anticipatory bail plea, Chidambaram might have to stay in the custody of the investigative agencies. If they manage to nab him, that is.

Also read: INX Media case Live Updates: Rahul Gandhi says Modi govt using ED, CBI to character assassinate Chidambaram

Also read: P. Chidambaram-INX Media case: ED spotlight back on Karti's UK cottage, tennis club in Spain

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