INX Media case: P Chidambaram’s arrest brings role of middlemen orchestrating corporate-political nexus back to spotlight
P Chidambaram, as the then union finance minister, allegedly played a role in clearing foreign investment approvals in INX Media
For several years, the middlemen and the corporate-banker-political nexus have thrived in India, resulting in big losses to banks
Shady institutions who would not get money otherwise are a big reason why India’s banking system is now neck-deep in bad loans
The arrest of P Chidambaram in INX Media case put the focus back on middlemen like ASCPL and abuse of power
P Chidambaram’s arrest--political vendetta or all-out war on the corporate-political nexus--as the Congress party and BJP would call it respectively, will send out a strong signal to the shady middlemen who have thrived for long in India nurturing unholy alliances.
Several such firms are in existence in India which typically lobby large corporate deals for sweet kickbacks (they call it a fee). Such entities (in Chidambaram’s case, Advantage Strategic Consulting Pvt Ltd or ASCPL) have been instrumental in orchestrating several big corporate scams that shook Indian business/financial system.
One example is the 2010 corporate loan scam where several bankers and middlemen were arrested by the Central Bureau of Investigation (CBI). In 2010, the role of the company called Money Matters Financial Services came to spotlight when the CBI unearthed the corporate loan scam. This company allegedly got kickbacks from unworthy borrowers for arranging loans from a clutch of financial institutions.
According to investigators, Money Matters rewarded the bankers facilitating bribes and negotiating loan terms. Logically, this banker-corporate nexus game didn’t go on forever when the CBI sleuths finally joined the dots. Along with the CEO of LIC Housing Finance Corporation Ramachandran Nair, the CBI arrested Rajesh Sharma, the CEO of Money Matters Financial Services, registered as a financial services company.
The others arrested in this case included Central Bank of India director Maninder Singh Johar, Punjab National Bank deputy general manager Venkoba Gujjal, Bank of India general manager RN Tayal, LIC Secy (Investment) Naresh Chopra. Now, replace the banker in this case with politicians, what Money Matters did was not so different from Karti Chidambaram-linked ASCPL.
Consider another scenario: In Chidambaram’s case, the charges levelled against the former union finance minister have uncanny similarities with the role of former ICICI Bank CEO, Chanda Kochhar in the infamous Videocon loan scam. In both cases, individuals holding powerful positions misused that to benefit their close relatives.
P Chidambaram, as the then union finance minister, allegedly played a role in clearing foreign investment approvals in INX Media, Aircel-Maxis case and according to a Firstpost report, in four more cases--Diageo Scotland, Katara Holdings, Essar Steel Limited and Elforge Limited. Chidambaram allegedly favoured all these deals to benefit his son Karti, who has alleged links with Advantage consulting and got kickbacks from these deals which were, in turn, used to buy assets in foreign countries.
While Chidambaram did this to help his son, Chanda Kochhar, in the capacity of ICICI Bank’s CEO facilitated quid-pro-quo deals with Videocon’s Venugopal Dhoot to benefit her husband, Deepak Kochhar. According to a shareholder, Arvind Gupta, who first flagged this case with authorities, Videocon group promoter Dhoot floated an equal joint venture - NuPower Renewables Pvt Ltd (NRPL) - with Chanda Kochhar's husband, Deepak, investing Rs 64 crore in the JV. The entire stake was later transferred to Kochhar. Gupta then linked those transactions to a 2012 loan worth Rs 3,250 crore from the ICICI Bank to the Videocon group, and termed it as a possible quid pro quo deal. Chanda Kochhar was part of the credit committees that approved the loan to Videocon.
In both cases, persons in power misused their positions to help family members make quick money. In both these cases, the probes have scope to expand further since the role of bureaucrats and bank board members who were a party to the deals will logically come under question. For several years, the middlemen and the corporate-banker-political nexus have thrived in India, resulting in big losses to banks and financial institutions. Shady institutions who would not get money otherwise minus the work of corporate-political nexus are a big reason why India’s banking system is now neck-deep in bad loans, most of which happened during the UPA-years. The ICICI-Videocon episode and the arrest of P Chidambaram in INX Media case put the focus back on middlemen like ASCPL and abuse of power. This should send a strong signal to habitual offenders to come clean on their business transactions.
That said, in many high-profile cases, the war on powerful industrialists cornered in corruption-fraud cases is still half the way. There isn’t a certain victory yet although there has been considerable damage done to the accused be it Vijay Mallya or Nirav Modi. For instance, although there is hard evidence against Nirav Modi in the PNB-scam, his arrest and recovery of money will depend on whether India manages to bring him back to home soil. This isn’t easy once they cross the border. So is the Vijay Mallya case, where the CBI, government and banks have been fighting a tough legal battle ever since he left India. Till the time Mallya’s extradition isn’t possible, there is no hope of any meaningful victory in the battle. But, what is clear here is the intent of the government to crack down on perpetrators.
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