Editor's note: This article was originally published on 5 July, 2016. It is being updated and republished in light of the Karti Chidambaram's arrest by the CBI in Chennai on Wednesday morning.
Karma, they say, catches up with you eventually and never misses its date.
This is true in the case of the father-son duo, P Chidambaram and Karti Chidambaram. This is probably the first time that Chidambaram Sr is facing a Central Bureau of Investigation (CBI) raid. There is a probability that the former Union finance minister and one of the top leaders of the Congress may just be paying the price for his son’s deeds — that aren’t limited to the ongoing INX episode.
At the time of writing, reports are coming out on the arrest of Karti by the CBI from Chennai for violating the Foreign Exchange Managament Act (FEMA).
In May last year, the CBI had conducted raids at the Chennai houses of Chidambaram and his son. The raids and the arrest now relates to clearances given to INX Media. Karti allegedly facilitated the clearances for kickbacks in 2008 when Chidambaram was a Union minister in the UPA government. It is here that things become difficult for the top Congress leader. His involvement, direct or indirect, in the case can come under investigations post the arrest of his son.
This isn’t the first instance in which investigative agencies have moved against the Chidambarams. In April last year, the Enforcement Directorate (ED) had issued a show-cause notice to Karti and a firm purportedly linked to him for alleged violations of the FEMA laws to the tune of Rs 45 crore. Also, the agency also issued a similar notice, after over two years of investigations, to another firm Vasan Health Care Private Limited, which is based in Chennai, for alleged forex violations of Rs 2,262 crore.
Not just the INX episode
The charges against the Chidambarams are not limited to the INX Media case. The father-son duo is also facing probes in the Aircel-Maxis case in which Karti allegedly made a killing through a company he owns — Advantage Strategic Consulting Private Limited. When the probe advances further, both the Aircel-Maxis case and Forex scams could prove to be the biggest jolt also for Chidambaram Sr in his political career, considering its multiple dimensions. What will work against the former Union minister is the fact that all through the time-frame of his son’s alleged wrongdoings, he was holding office in the UPA government. His direct involvement in Karti’s doings are still being investigated
In a piece published on 5 July last year, this writer had argued that the Enforcement Directorate (ED) summoning Karti might just have been the beginning of several sleepless nights for the father and son.
The bigger trouble in waiting for the Chidambarams may be the Aircel-Maxis case. In a nutshell, the whole story of the Aircel-Maxis case pertains to the forced selling of Aircel in 2006 by its owner entrepreneur C Sivasankaran, allegedly under pressure from former Union telecom minister Dayanidhi Maran. To return the favour, Maxis invested around Rs 47 crore in the Sun Group, owned by Dayanidhi Maran’s brother, Kalanidhi Maran.
Karti allegedly facilitated the whole transaction through his firm Advantage Consulting and passed along the bribes. Early this month, the ED said it has recovered confidential CBI report from Karti’s house.
Karti may not have a solid defence in the Maxis case. As a New Indian Express investigative series revealed, he will have a lot of explaining to do to prove the legitimacy of his assets worldwide through the firms allegedly owned by him and an army of benamis who have facilitated the transactions. When the skeletons begin to tumble out of the closet, the case may not be limited to the Aircel-Maxis deal alone. The investigations are leading to a complex web of benami transactions used by the Chidambarams to hide their ill-gotten wealth.
As the New Indian Express exposé revealed, Karti owned majority stake in Advantage through a holding company Ausbridge. But, the ownership of the company — Advantage — was shown in the names of benamis, who in turn wrote wills later to transfer the ownership to Karti’s daughter. And who keeps these wills? Here again, Karti, as found in his vault by a joint team comprising Income Tax and Enforcement Directorate authorities.
Now, what is Advantage’s wealth? Advantage India holds 90,000 shares out of the 1.5 lakh equity shares of Vasan Eye Care. The firm procured the shares at a throwaway price of Rs 100 per share. However, the report states, that it actually paid only one-third, or Rs 33 per share. It sold 60,000 shares in two tranches of Rs 30,000 to Sequoia Capital Investments, a Mauritius-based investment fund.
In the first tranche, 30,000 shares were sold at Rs 7,500 per share or Rs 22.5 crore. Assuming that the second tranche was also sold at the same price and if the balance shares are valued at the same price, then Vasan Eye Care's share would amount to Rs 112.5 crore that Advantage acquired at a mere Rs 50 lakh, according to the report. Now, that’s quite a killing, isn’t it?
Karti’s empire is spread across several countries, which would also mean several jurisdictions. The Singapore subsidiary of Advantage, Advantage Singapore, has real estate investments in at least 15 countries. But, under the Prevention of Money Laundering Act (PMLA),the ED can expand its probe to any geographies and seek help of international agencies if needed.
Chidambaram Sr has always trained his guns at the ruling BJP government citing political vendetta, whenever investigators targeted Karti or his 'friends'.
"If the government wishes to target me, they should do so directly, not harass friends of my son who carry on their own businesses and have nothing to do with politics," the former finance minister had said. But, Chidambaram’s apparent attempt to politicise the issue may not work, since the Congress itself will not want to get involved in the case given its seriousness and its larger political implications. There is immense pressure on the Narendra Modi government not to lower its guard against corruption.
In its term so far, the Modi government has gained a reputation for its way of dealing with cronies and crooks. The government would not want to damage that image in this case. It has already lent a free hand to various investigating agencies against the Chidambarams — in a series of cases including the Aircel-Maxis case — to inspect the complex threads of the deals, counter-deals and kickbacks.
Chidambaram, the lawyer-turned-politician may have to fight lot harder to wriggle out of the mess created by his son to avert political downfall.
Updated Date: Feb 28, 2018 12:11 PM