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Controversy of INX Media Case: Arrest of P Chidambaram

The Central Bureau of Investigation arrested former finance minister P. Chidambaram for alleged corruption and money laundering, a day after the Delhi High Court rejected his application to seek exemption from arrest. Though Chidambaram's bail plea was to be heard by the Supreme Court on Friday, the CBI men wasted no time in scaling the walls of Chidambaram's residence to arrest him after high drama. Many say law has taken its own course. Others are crying witch-hunt.

What led to the arrest of P. Chidambaram?

On the evening of Tuesday, August 20, officers from the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) reached Chidambaram’s Jor Bagh residence in Delhi.
However, on failing to find him at his residence, the CBI issued a notice to Chidambaram asking him to appear before the investigation officer “within two hours”. The former finance minister didn’t ‘appear’ in those two hours. He was busy filing papers with the Supreme Court, as he told in a surprise news conference at his party, Congress, headquarters the next day.

After addressing the media, Chidambaram helped by a ruckus outside 24 Akbar Road, gave another slip to the CBI officers and landed at his Jor Bagh residence followed by a team from the CBI and ED. This time, the CBI took no chances. One team of CBI officials, showing utmost commitment to duty, scaled the boundary wall of Chidambaram’s bungalow to gain entrance while another team tried to make way through the backdoor.A team of about two dozen officials was present at the bungalow.

Present also were scores of supporters of Chidambaram who came between the CBI officials and their target. This, along with a huge media build-up, meant the Central Reserve Police Force (CRPF) was also asked to intervene on behalf of the CBI. The drama ended with the inevitable outcome - senior advocate, former finance minister and senior Congress leader P Chidambaram was arrested by the CBI with his slogan-shouting supporters helplessly chasing the official car which took him to the CBI headquarters.
After Chidambaram's arrest, his son and Lok Sabha MP Karti Chidambaram, who has also been named in the CBI FIR in the INX Media case, said the allegations were politically motivated and that he would approach the court for justice. According to media reports, before being taken to the headquarters, the former finance minister was taken to a hospital for a medical check-up.

Why has he been arrested?

Tweeting about the high-voltage drama, Karti Chidambaram has said, “This is a political witch-hunt. Outrageous media leaks are the preferred tactics of the ED. I have nothing to do with INX or the FIPB. All my assets and liabilities are duly declared in statutory and regulatory filings.” He said, “I have repeated this ad nauseam. I have been raided 4 times. Appeared for over 20 summons. Each session for a minimum of 10 to 12 hours. Been a “guest” of the CBI for 12 days. There is still no chargesheet for alleged events which apparently took place in 2008 and a FIR in 2017. There is no case.”

But there is a strong case against him and his father

Chidambaram senior has been accused of facilitating a huge infusion of foreign funds into a television company, INX Media, in 2007 on the behest of his son Karti Chidambaram, who allegedly received kickbacks for this. At the time, he was the country's finance minister in the UPA government.
It is the case of the CBI and the ED that the father and son received illegal gratification from INX Media owners, Peter and Indrani Mukherjea for the clearance. Chidambaram has denied the allegations, saying the charges are politically motivated.

On May 15, 2017, the CBI registered an FIR alleging irregularities in the Foreign Investment Promotion Board (FIPB) clearance given to INX Media for receiving funds from abroad to the tune of Rs 305 crore in 2007. The ED also filed a money laundering case in the matter in 2018. INX Media was then owned by Indrani and Peter Mukerjea, currently in jail in connection with the Sheena Bora murder case.

In February 2018, Karti Chidambaram was arrested for allegedly accepting money for clearance to go through. He was later granted bail. His father meanwhile moved the Delhi HC seeking anticipatory bail in the CBI and ED cases. On Jan 25, 2019, the court had reserved its judgment on the pleas. On August 20, the high court dismissed the petitions, paving the way for investigating agencies to arrest him.

The case against the Chidambarams

According to the CBI and ED, Karti Chidambaram, promoter-director of the firm Chess Management Service, used his influence with officials of the finance ministry and the FIPB to orchestrate a cover-up of illegal foreign transactions made by INX Media.
In March 2007, INX Media was granted permission by the FIPB for FDI inflow amounting to Rs 4.62 crore from three Mauritian companies into INX Media.However, the proposal for downstream investment was at the time rejected. Downstream investment is indirect foreign investment by one Indian company to another by way of subscription or acquisition of shares.

But, according to the CBI, instead of the approved Rs 4.62 crore FDI, INX Media brought in a much larger sum of Rs 305 crore. It then went a step further and even brought in downstream investment, clearly flouting the rules.
Acting on a complaint, the Income Tax department sought clarifications from the FIPB, prompting the latter to seek an explanation from INX Media, which then hired Karti Chidambaram to resolve the matter. According to the CBI, the company entered into a 'criminal conspiracy' with Karti to get “issues resolved amicably by influencing public servants of FIPB", thanks to his "relationship with the then finance minister.” The CBI said INX Media was advised to apply for fresh FIPB approval for the downstream investment that had already been made by the company.

According to the investigating agencies, money was transferred to companies with links to Karti, including Advantage Strategic Consulting, which received a Rs 10 lakh payment from INX Media, along with other funds from dubious sources. Further, Indrani Mukerjea, who turned approver in the case in July 2019, said Karti had then demanded $1 million for his services.

Indrani Mukerjea told the ED that she and her husband Peter met Chidambaram in 2008 when he was a minister. The Congress leader allegedly told Peter to help his son Karti in his business and make possible overseas remittances in lieu of FIPB approval. Indrani also met Karti who asked for $1 million to be transferred into an overseas account to sort the matter.
Chess Management and Advantage Strategic were the two firms suggested as alternatives to make payments when Peter Mukerjea said overseas transfer would not be possible, Indrani claimed. The two reportedly agreed to settle the amount at Rs 3.5 crore, which was paid to Advantage Strategic.

According to the ED, Karti purchased a tennis club in Spain, cottages in UK, and several other properties in India and abroad worth over Rs 54 croreAll these properties were allegedly bought through bribes received by Karti in the INX Media case.
NoteFIPB was a national agency of the government of India, with the remit to consider and recommend foreign direct investment (FDI) which does not come under the automatic route. It acted as a single window clearance for proposals on FDI in India. It was housed in the Department of Economic Affairs, Ministry of Finance. FIPB was abolished in financial year 2017-18, as announced by the Finance Minister Arun Jaitley during 2017-2018 budget speech in Lok Sabha.

When did Chidambaram make his last attempts to evade arrest?

After remaining untraceable for almost 27 hours, P Chidambaram made a dramatic appearance at a press conference in the Congress headquarters on Wednesday, Aug. 21, evening, and asked probe agencies to "respect" the law and wait till Friday when the Supreme Court hears his bail plea.
Addressing the media in the short, six-minute long, conference, he said, "Neither me, nor any member of my family has been accused of any offence in the INX media case. None of my family members are also implicated in the case." Top Congress leaders, including Kapil Sibal, Ghulam Nabi Azad, Salman Khurshid and Ahmed Patel were also present at the AICC headquarters.
He also said false information was being spread by pathological liars"No charge-sheet has been filed against me by either CBI or ED. Even the FIR filed by CBI doesn't accuse me in any wrong doing," he said.
"I was aghast that I was accused of hiding from the law. On the contrary, I was seeking the protection of the law. I was accused of running away from justice. On the contrary, I was engaged in the pursuit of justice," Chidambaram told reporters. He said he would wait till Friday, when the Supreme Court had decided to hear his plea against his arrest. "I shall respect the law even if it is applied in unequal measures," the former Finance Minister said.
The senior Congress leader did not take any questions.

On Wednesday morning, a Supreme Court bench headed by Justice N.V. Ramana refused to grant interim relief from arrest to Chidambaram and referred his plea for anticipatory bail in the INX media case to Chief Justice Ranjan Gogoi for urgent hearing.

Chidambaram has challenged the Delhi High Court order which rejected his anticipatory bail plea on Tuesday. The agencies had opposed Chidambaram's bail plea, saying his custodial interrogation was necessary as he was evasive and had given false information during questioning.
“The hunger for sensationalisation in this case is deadly and could lead to character assassination of a towering political figure. How can somebody be an absconder who was with me till in legal conference with me till 6.30 PM yesterday?” Congress leader and Chidambaram’s lawyer Abhishek Singhvi tweeted after the arrest.
Yahoo India, in an article, had an interesting take on the matter: “That he managed to stay incommunicado from late afternoon yesterday makes it clear that Chidambaram still has someone helping him from the inside. It beggars belief that a former Home and Finance Minister's whereabouts were untraceable for the authorities. Chidambaram has government security cover. It is inconceivable that he gave his security the slip and go totally underground. Is some invisible force still saving Chidambaram? After all, the former Finance Minister, with all his riches, can buy support from any quarter.”

Where is the real problem for the Chidambarams?

It’s not just the INX Media case that haunts them. The ghost of Aircel-Maxis also looms large upon the former finance minister.
Founded by entrepreneur C Sivasankaran, Aircel is an Indian network operator, while Malaysian communications service provider Maxis Berhad is owned by T Ananda Krishnan, a Malaysian citizen of the Sri Lankan Tamil descent.

In 2006, Maxis had taken over Aircel by acquiring a 74% stake. The Aircel-Maxis deal had come under the scanner in 2011 when Aircel owner C Sivasankaran lodged a complaint with the CBI alleging he had been pressured to sell his stake to Maxis. Sivasankaran also alleged that former union minister Dayanidhi Maran of the DMK party (which was a constituent of the ruling UPA coalition) and his industrialist brother Kalanithi received kickbacks in the form of Maxis group’s investments (through the Astro network) in Sun TV Network, which is owned by the Maran family.

On October 10, 2006 the CBI registered a case. The following year, the Enforcement Directorate registered a money-laundering case against the Maran brothers for allegedly receiving illegal compensation of about Rs 550 crore in the Aircel-Maxis deal.
So, where does Chidambaram fit in here?
BJP leader, advocate and serial petitioner Subramanian Swamy then alleged that a company controlled by Karti Chidambaram, the son of former finance minister P Chidambaram, had in 2006 received a 5 per cent stake in Aircel in return for getting Maxis to pay for 74 per cent shares of Aircel. According to Swamy, Chidambaram withheld Foreign Investment Promotion Board (FIPB) clearance of the deal until his son received the five-per cent share in Sivasankaran's company.
"The dubious transactions show that P Chidambaram as a finance minister ensured that the FIPB would clear the Aircel-Maxis deal only if the company controlled by his son Karti P Chidambaram gets a stake in Aircel Televenture Ltd as his share of the booty from Maxis," alleged Swamy. The BJP (then in the Opposition), raised the issue several times in Parliament and demanded Chidambaram's resignation. Chidambaram, however, denied the allegations.

In July 2018, with the BJP in power, the CBI named P Chidambaram and his son as accused in its supplementary charge sheet. The charge sheet named 16 other co-accused, including former finance secretaries Ashok Chawla, Ashok Jha, and former Aircel CEO V Srinivasanand, besides Maxis owners T Ananda Krishnan and Ralph Marshal.
There are apparently more cases under consideration

The ED officials claim that besides the INX Media and Aircel-Maxis cases, Chidambaram is suspected to have favoured four other companies when he was the Union finance minister. An ED note says that both the CBI and the ED were probing Chidambaram’s role in Diageo Scotland, Katara Holdings, Essar Steel Limited and Elforge Limited.
"The CBI is investigating illegal FIPB approvals by Chidambaram in lieu of kickbacks paid to various shell companies floated by Karti in the name of his employees and other business associates. The ED is investigating the offence of money laundering of the kickbacks and their investments in movable and immovable properties in India and foreign countries. The investigation under Prevention of Money Laundering Act (PMLA) in the case of Aircel-Maxis is still continuing due to deliberate withholding of requisite information by Chidambaram and his son Karti,” the ED note reads.

During the investigation, several shell companies of Karti both incorporated in India and abroad have been identified in which kickbacks received from illegal favours granted by Chidambaram were deposited. In one of the shell companies, deposits of more than Rs 300 Crore have been made and it has been established by the probe agency that Chidambaram and Karti are the beneficial owners of the shell companies.
The ED said that shareholders and directors of the main shell company have made a will transferring the entire shareholding to the granddaughter of P Chidambaram and the executor of the will is Karti. One of the shell companies also received payments from a company located in the British Virgin Islands, a tax haven territory.

The agency claims it has also unearthed evidence to establish the fact that the deposits in these shell companies have been used to meet personal expenses of Chidambaram and his son Karti. The father-son duo, ED alleges, has also opened more than two dozen foreign bank accounts and purchased several immovable properties in Malaysia, the UK and Spain.
"Even though several incriminating document and emails were seized by the ED and the CBI during search operation from the premises of Chidambaram and Karti, both the accused have not cooperated during interrogation and deliberately refused to divulge any information about their investment in foreign bank accounts and immovable properties located in several other countries,” the ED note further adds.

The cases against the Chidambarams are really strong and though P Chidambaram should be able to get a bail from the Supreme Court, it’s likely that the 72-year old will spend most of the rest of his life dealing with the legal fallouts.

Who believe this is a ‘witch hunt’?

Former Union Minister P Chidambaram's arrest is a "shameless witch-hunt" and an "abuse" of investigation agencies by the Narendra Modi government, the Congress said after the arrest played out on the national television.
Congress came out in full support of its leader, slamming the government for using the investigating agencies to persecute the former minister. "The shameless witch-hunt and unheard of abuse of CBI/ED by Modi Government 2.0 is playing on every TV screen in India. It's a sham and shame that democracy stands dead in the hands of the BJP," Congress spokesperson Randeep Singh Surjewala tweeted.

Karti Chidambaram said the case was about revenge and distraction. "This is totally a politically motivated witch-hunt," the Congress MP, who is also an accused in the INX media case, told reporters outside his residence in Delhi. "It is being done just to divert attention from the issue of Article 370," Karti told media. "This whole thing is politically trumped-up. There are no merits whatsoever. These are apparently about alleged events which took place in 2008 for which an FIR was filed in 2017.”

On the arrest of his father, Karti said, "This is like a staged reality show to have all these dramatic visuals on television. There is no reason for this kind of drama... It's not done in an honest investigation... They are still in an FIR stage. There is no charge-sheet for an event which apparently happened in 2008. Nearly eleven years after you still can't have a charge-sheet for an event; your FIR was filed in 2017."
Karti claimed that the officials who are investigating "clearly know that there is no case, but nobody has the courage to actually write in the file that there is no case, let's close." "They will just keep the pot boiling and can have a never-ending investigation. In India, unfortunately, there is no time limit to close an investigation. You can keep the investigation open forever and that's a great tool for harassment. My father has appeared for every summon which is being served upon," he said.

When asked about the Delhi High Court's August 20 order denying anticipatory bail to his father, Karti said, "If you are going to rely on the judgment of August 20, 2019, I would only respectfully say that you must contrast it with the judgment of March 23, 2018 of Justice RS Garg of the Delhi High Court. Please read that judgment. It's on the same case and the same facts. It pertains to me." He added, "We will go through the legal process. I have full faith in the judiciary. I am very glad that the entire Congress party is with us. I want to particularly thank Rahul Gandhi and Priyanka Gandhi Vadra for coming out in our support. We will win this politically and legally together."

Rahul and Priyanka Gandhi of the Congress, which has restored Sonia Gandhi, their mother, as Party President, earlier spoke against the alleged witch hunt.
“Modi's government is using the ED, CBI and sections of a spineless media to character assassinate Mr Chidambaram. I strongly condemn this disgraceful misuse of power,” Rahul said. Sister and AICC general secretary Priyanka Gandhi Vadra, was more cutting in her criticism of the government, claiming Chidambaram was being “hunted down” because he had exposed the government’s many failures.
“An extremely qualified and respected member of the Rajya Sabha, P Chidambaram ji has served our nation with loyalty for decades including as Finance Minister and Home Minister. He unhesitatingly speaks truth to power and exposes the failures of this government, but the truth is inconvenient to cowards so he is being shamefully hunted down. We stand by him and will continue to fight for the truth no matter what the consequences are,” she said.
The former minister’s dramatic arrest is also expected to cast a long shadow over Congress’ commemorative program for Rajiv Gandhi to be held in the national capital on August 22, where Congress president Sonia Gandhi and top leaders are expected to speak. They will also think of this as a political opportunity to take on the government, which maintains that the law has taken its own course.

How ‘independent’ is the CBI really?

Well, let’s take the Supreme Court’s word on the matter.

On May 9, 2013, when the BJP was in the opposition and the Congress, through the UPA coalition, was in power, a packed courtroom sat in rapt silence this week as an irate Supreme Court judge denounced the elite Central Bureau of Investigation (CBI) as a “caged parrot” and “its master’s voice”. Justice R.M. Lodha loudly reprimanded the attorney-general, the government’s top lawyer, for what he said was clear evidence of interference in a CBI inquiry into alleged irregularities in the allocation of coalfield licences to private companies, a case dubbed “Coalgate” by the media.

The Supreme Court judge’s statement gave, for the first time, an authoritative voice to opposition complaints that for years the Congress-led government had been using the investigating agency to cover up wrongdoing, keep fickle coalition allies in line and political opponents at bay. Government ministers and the CBI repeatedly denied such accusations. “The CBI conducts all investigations in a free, fair and impartial manner as per the law,” said the CBI spokeswoman, Dharini Mishra, at the time.

Not many believed the CBI’s claim of independence, including its former bosses. “The political class will never give independence to the CBI,” said former director Joginder Singh, who said he was forced out after refusing to back off from an investigation into a chief minister of Bihar in the 1990s. Vijay Shanker, who was CBI director between 2005 and 2008, said there was “no question” that political pressure was brought to bear on the agency, although he declined to say whether he had personally experienced such interference.

The CBI, which proudly proclaims its motto to be “Industry, Impartiality and Integrity”, denied the Coalgate allegations and said the government made only minor changes to a confidential progress report on its investigation. Not so, said Judge Lodha. The “heart of the report” had been altered, he thundered.
Caged, still. Caged, forever.

In its initial years the organisation was widely respected on account of the high calibre and integrity of its directors like D P Kohli, F V Arul and others backed by the high degree of professionalism of its investigating officers and inbuilt multi-layered decision making procedures and strict internal vigilance mechanism.

It was also able to maintain a much more impressive track record of securing convictions, as compared to the state anti-corruption bureaus which perform a similar function in respect of the state government employees, largely by being selective in registering offences and the expertise and professionalism of its investigating officers built over years.
Over the years, its charter was expanded to not only investigate cases of bribery against central government employees but also serious fiscal crimes, including hawala transactions, trans-border offences having national security ramifications, anti-terrorism cases, thus transgressing into the State List under the Constitution.
The CBI at present is a troubled organisation on many fronts.

Over the years, it has been saddled with investigations of a multitude of crimes including sensational cases of murders, involving politicians or celebrities, crimes by the underworld without either the statutory and constitutional back-up to define its role and responsibilities, or the matching manpower and forensic resources.

The Central Vigilance Commission, which was meant to provide the oversight and support to the CBI, has also failed to give it the desired direction, or insulate it from governmental interference. The CBI also does not have a cadre of supervisory officers of its own and relies on the tedious and uncertain system of induction of officers through deputation from the state police forces and central police organisations.
Within the government, its control has been shifting from one ministry to another. Initially it was Home, then Department of Personnel and Training. Development of requisite expertise in investigation and prosecution of anti-corruption cases thus became a casualty. The CBI began being treated like a camel in the desert by the government which kept loading it with all kinds of baggage, including using the agency for applying pressure on its political opponents.

Although many past and present chiefs of CBI have denied this, it would be utterly naïve to believe that the CBI is completely autonomous and free from all controls of the government. So, let us make three reasonable conclusions:

  1. Something is definitely wrong with the conduct of the Chidambarams – how much exactly will be determined by the Supreme Court in a long-drawn legal battle.
  2. The Narendra Modi-led government is unwilling to forgive and forget. It learned the tricks by minutely observing the methods while in Opposition.
  3. The CBI is independent in theory and a parrot in practice, and this government, like the previous government, prefers the agency this way.

We can also infer that the current ministers of the BJP should be taking extra care in all their dealings, just in case they are on the other side of the table in 2024. In the end, this era of vindictive politics can even be good for India.

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