The foreign fundings that landed Chidambaram Jr in trouble

Our Bureau Chennai | Updated on February 28, 2018 Published on February 28, 2018

Karti Chidambaram leaves Patiala House Courts, in New Delhi   -  PTI

Karti Chidambaram, who has emerged a power centre within the Congress in Tamil Nadu, has been in the eye of a legal storm in recent years. He was at the centre of CBI and Enforcement Directorate probes into high-profile transactions in which he and his close associates have been linked.

However, both he and his father, P Chidambaram, former Finance Minister, have consistently denied these allegations as false and motivated by political opponents. Chidambaram has on various occasions accused the BJP-led government of using his son to get at him. As a vocal critic of government policies, Chidambaram has come out strongly against demonetisation, implementation of GST and major Budgetary announcements.

As of now, Karti is at the centre of three major investigations. These relate to foreign investments in eye hospital chain Vasan Healthcare, the Aircel-Maxis case and the INX Media case for which he has been arrested by the CBI.

Vasan Healthcare

According to the ED, in the sale of Vasan Healthcare shares to overseas investors, Advantage Strategic Consulting associated with the deal contravened FEMA (Foreign Exchange Management Act) provisions involving over ₹45 crore. A total of ₹2,100 crore is linked to FEMA violations in the Vasan Healthcare deal relating to the period from 2009 to 2014.

Apart from the promoters of Vasan Healthcare, the show-cause notice was issued to Strategic Consulting’s Directors and to Karti, “who appears to be the controller and ultimate beneficiary” of these transactions, according to the notice.

Aircel-Maxis deal

Karti is also being investigated by the ED, which has conducted searches at his property and those of his associates at various locations. This is in connection with allegations of money laundering associated with the Aircel-Maxis deal and a Foreign Investment Promotion Board (FIPB) approval granted in 2006 by Chidambaram as Finance Minister. However, Chidambaram has categorically denied any irregularities and said the FIPB approval had gone through the routine process.

Karti had also denied media reports that the ED investigations showed he had amassed wealth through the transaction. Advantage Strategic Consulting had also denied links to the Aircel-Maxis transaction and said Karti was neither a shareholder nor a director in the company.

According to the ED, the ₹3,500-crore foreign fund infusion in the transaction should have been approved by the Cabinet Committee on Economic Affairs. ED has attached ₹1.16-crore property belonging to Karti in connection with the case. The CBI had summoned Karti for questioning in the case. But he approached the Supreme Court challenging the summons.

INX Media case

Karti individually, and as Director of Chess Management Services, is among the accused named in the FIR of May 15, 2017.

Advantage Strategic Consulting is also named in the FIR with its Director Padma Viswanathan among the accused.

INX Media had sought an FIPB approval in 2007 for a FDI of ₹4.62 crore and also to make a downstream investment in INX NewsLtd. The FIPB approved INX Media’s FDI but said a fresh application should be made for downstream investments. But the company went ahead with the downstream investment and generated over ₹305 crore in FDI against the approved ₹4.62 crore.

According to the FIR, INX Media had then approached Karti to sort out the issue. Karti used his influence in the Finance Ministry to get approval after the downstream investment was made, it claims. Invoices were raised by Advantage Strategic for services rendered by Chess Management to hide the identity of Karti, according to the FIR.

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Published on February 28, 2018
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