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Explainer | What is the INX Media Case in Which Karti Chidambaram Has Been Arrested

The CBI has alleged that firms with links to Karti Chidambaram had influenced FIPB approval for Rs 305 crore irregular investment in INX media. This took place in 2007 when his father was the Finance Minister.

Debayan Roy | News18.com

Updated:February 28, 2018, 11:27 AM IST
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Explainer | What is the INX Media Case in Which Karti Chidambaram Has Been Arrested
File photo of Karti Chidambaram.
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New Delhi: Senior Congress leader P Chidambaram's son Karti was arrested by the Central Bureau of Investigation (CBI) in Chennai on Wednesday for not cooperating in the investigation of a money laundering case. He was taken into custody at the Chennai airport on Wednesday morning just after he landed from London.

Karti is currently being questioned inside the airport and will be taken to Delhi later in the day, sources said.

But what is the case all about? News18.com breaks it down:

What is FIPB?

FIPB was a national agency of the central government with the remit to consider and recommend foreign direct investment (FDI) that does not come under the automatic route.

What is the case?

The CBI has alleged that firms with links to Karti had influenced FIPB approval for Rs 305 crore irregular investment in INX media. This took place in 2007 when his father was the Finance Minister. The FIR has been registered against Karti, INX Media along with eight others and unknown officials of the finance ministry.

The Case Files

The Finance Ministry received an application from INX media for FIPB approval on March 15, 2007. The FIPB, in a meeting on May 18, 2017, recommended the proposal of INX media. However, the board did not approve downstream investment by INX media in INX news. And even for INX media, FIPB allowed FDI inflow of only Rs 4.62 crore.

As per the CBI FIR, contrary to approval of FIPB, INX media deliberately violated conditions and made downstream investment up to 26% in the capital or INX news.

They allegedly generated over Rs 305 crore of FDI in INX media against the allowed foreign inflow of Rs 4.62 crore by issuing shares to foreign investors at a premium of over Rs 800 per share

The CBI has alleged that officers concerned of the FIPB unit by virtue of influence of Karti Chidambaram, not only ignored serious illegalities on part of INX media, on both accounts, but also deliberately showered undue favours. The officers also ignored the request of Revenue Department seeking an investigation into the matter.

Role of Karti Chidambaram

As per the CBI, INX Media tried to wriggle out of the situation by entering into a criminal conspiracy with Karti Chidambaram, promoter of Chess Management Services, “to get the issue resolved amicably by influencing public servants of FIPB unit of the Finance Ministry by virtue of his relationship with the then Finance Minister (P Chidambaram).”

The FIR goes on to describe the quid pro quo by showing how INX media made the payment to Karti “for the services rendered by Karti P Chidambaram to INX Group through Chess Management Services…considerations in the form of payment were received against an invoice raised on INX Media by one Advantage Strategic Consulting (P) Limited (ASCPL).”

The FIR further states that the “very reason for getting the invoice raised in the name of M/s/ ASCPL for the services rendered by Chess Management Services was with a view to conceal the identity of Karti.”

The CBI in its FIR has also claimed that “such deceitful and fallacious deal was favourably considered by Ministry of Finance and Approved by the then Finance Minister.” And thus in a way has also brought the role of his father P Chidambaram under scanner.
| Edited by: Aditya Nair
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