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Last Updated : Sep 17, 2018 10:16 PM IST | Source:

Digging Deeper | Aircel-Maxis - What lies behind and beyond Karti Chidambaram?

Transparency International, a leading non political, independent, non-governmental anti-corruption organisation to inform that India continues to be among the most corrupt countries in the world.

Moneycontrol News @moneycontrolcom

The story is familiar and only the characters are interchangeable. The whiff of a scam and the collusion between politics and big money. The hazy outline of political players and their rivals and the desensitisation of the citizen who cannot even at times fathom the scale of the intrigue, the boggling numbers and corruption that seems to have become a mainstay of news headlines. One might go so far as to say that the country suffers from Scam Fatigue - a relentless numbing of our capacity to be outraged.

Here is just one such story. On August 28, 2018, according to a MoneyControl report, former union minister P Chidambaram moved a Delhi court alleging that the Central Bureau of Investigation (CBI) is leaking parts of the charge sheet in the Aircel-Maxis case to the media, "to sensationalise the issue and "make mockery of judicial process.” Special Judge O P Saini issued notice to the agency and sought its response by October 8.

This is Seetal and before we dive deep in this story and what the Aircel- Maxis narrative is all about, let us look back in time and try to understand the anatomy of scams because, let's face it, over the past seventy years as an independent nation, we have experienced more than our share of these.

What also needs to be noted is just how any ruling party responds to a financial scandal when it is in the hot seat and not just in the opposition, questioning those in power.

Remember how in the eighties, day after day journalist Arun Shourie relentlessly used the front page of a national daily to hurl questions about the Bofors deal at the then Prime Minister Rajiv Gandhi? And how the government first announced and then withdrew the infamous Defamation Bill?

More recently, the Supreme Court has had to step in to resolve the ongoing tussle between BJP chief Amit Shah's son Jay Shah and news portal, The Wire over a story  claiming that the turnover of Jay’s firm grew exponentially after BJP came to power in 2014. Even though, Jay's counsel said his client was open to a settlement, the lawyer of The Wire refused to negotiate on the grounds that the report, according to the publication, was factual.

The Supreme Court has also continued the restraint on criminal defamation proceedings initiated against The Wire by Jay.

But we are just looking at the tip of the iceberg. Corruption has been a part of everyday life in India even before unheard of amounts of siphoned money and blatant embezzlement became fodder of news reporters.

The disillusionment with corruption and with those in power has been an ongoing theme even in popular culture

As early as in 1955, Raj Kapoor's Shri 420, depicted how a ponzi scheme crushes the dreams of the poor. Hrishikesh Mukherjee's  1969 film Satyakam explored the corrupt practices that go on in the garb of nation building and target whistle blowers while the same year, BR Chopra's production Aadmi Aur Insaan alluded to kickback scams facilitated by leaders and builders and depicted how an honest judge investigating the collapse of a railway bridge is murdered.  The angry young man in the seventies was a response to the disenchantment with the establishment though even before all of these films was Chetan Anand's  1946 Neecha Nagar that spoke of how the underprivileged are often shut out from using even natural resources like potable, clean water.

The ground reality

But cinema can only reflect the existent reality.  Governments may come and go but corruption remains a constant with a few variations here and there.

Media outlets  have routinely covered stories like the infamous Harshad Mehta securities scam, St Kitts forgery, the Punjab National Bank scam, the AgustaWestland chopper scam, the Vyapam scam, Lalit Modi's money laundering case, the Gujarat fisheries scam, Robert Vadra's real estate deals among many others and such reports have dotted our timeline regularly across the decades.

What does change though from time to time , depending on power equations, is how such news is covered and reported and responded to. And questions are raised also once in a while why fugitive economic offenders escape the consequences of their actions easily while smaller fish are netted easily. In recent times, such absconders include jewellery designer Nirav Modi ,  the prime accused in fraudulent transactions worth $1.77 billion, embattled liquor baron Vijay Mallya who is facing  several cases where his companies have allegedly defaulted on loans of around $1.5 billion,  businessman and erstwhile cricket administrator, Lalit Modi  and Mehul Choksi who is wanted by the Judicial Authorities of India for criminal conspiracy, criminal breach of trust, cheating and dishonesty including delivery of property, corruption and money laundering.

There is also Sanjay Bhandari, a proclaimed offender in an Official Secrets Act case related to the recovery of confidential documents of the Ministry of Defence and involving obviously huge sums of money. There is also Deepak Talwar, known for his political, official and media connections  who is being investigated by the income tax department for undisclosed income amounting to Rs 1,000 crore in various tax jurisdictions, including tax havens, across the world.

The common thread in all these stories is the lack of a fail proof system or law that can prevent or curtail such corrupt dealings at the onset. We also need  a vigilant, free and impartial media and a level of transparency in the way political collusion across party lines at times abets economic corruption.

But, coming back to the story of the day.

According to Money Control, in an application, moved by advocates P K Dubey and Arshdeep Singh, former union minister P Chidambaram has alleged that the Central Bureau of Investigation (CBI) is not interested in a fair trial in the court of law and only wanted a trial by the media.

He is of course referring to the fact  that even before the court was to take cognisance of the charge sheet, the CBI apparently  has provided a copy of the same to the newspaper which is publishing the same in installments that according to Chidambram is only  sensationalising the issue and prejudicing the accused named therein.

The application added and we quote,  "The CBI is making a mockery of the judicial process resulting in complete travesty of justice." Unquote.

The application follows a  series of tweets, in which the former finance minister alleged that the investigating agency has leaked the charge sheet to the media even before providing copies to the persons named in it.

Chidambaram and his son were earlier named in a charge sheet filed by the Central Bureau of Investigation (CBI).

The CBI, according to the Money Control report, is probing how Chidambaram, who was the Union finance minister in 2006, granted a Foreign Investment Promotion Board (FIPB) approval to a foreign firm, when only the Cabinet Committee on Economic Affairs (CCEA) was empowered to do it.

We quote, "The senior Congress leader's role has come under the scanner of investigating agencies in the Rs 3,500 crore Aircel Maxis deal and the INX Media case involving Rs 305 crore." Unquote.

Earlier Karti Chidambaram had filed anticipatory bail pleas in cases relating to the alleged irregularities in FIPB clearance to a company in Aircel-Maxis matter arising out of the 2G spectrum cases.

But what is this case all about?

As we know Aircel, an Indian network operator was founded by Tamil entrepreneur C Sivasankaran.

Maxis, also known as Maxis Berhad happens to be a communications service provider in Malaysia, owned by Ananda Krishnan, a Malaysian citizen of Sri Lankan Tamil roots.

In 2006, Aircel was taken over by Maxis with the acquisition of  74 percent shares.

The controversy revolves around the fact that Karti Chidambaram, son of former Finance Minister P Chidambaram, owned 94 percent shares in Ausbridge Holdings & Investments .

Ausbrdige in turn owned 67 percent shares in another company called Advantage Strategic Consulting.

Advantage, before March 31, 2006 had loaned Rs 26 Lakh to Aircel.

According to BJP leader and petitioner Subramanian Swamy,  Karti owned Advantage converted this loaned money into shares.

The accusation was that Karti became a five per cent share holder in Aircel. Later, when Maxis acquired Aircel, Karti continued to be a share holder.

The scam came into light when it was revealed that Maxis was one of the alleged beneficiaries of the 2G scam.

About P Chidambaram's role specifically, it was alleged that  as a finance minister, Chidambaram ensured that the Foreign Investment Promotion Board clearance (FIPB) on Aircel- Maxis deal would be cleared, only if his son Karti P Chidambaram-controlled company got a share in Sivakumar's Aircel Televenture.

Chidambaram has denied any wrongdoing and the Enforcement Directorate and the Income Tax Department on December 1, 2015, conducted raids on firms linked to Karti in connection with the Aircel-Maxis scam.

Former telecom Minister Dayanidhi Maran, his brother Kalanithi Maran and four others were summoned on February 27, 2016 as accused by a special court in a Aircel-Maxis deal.

Karti  was arrested  on February 28. While seeking the relief, Karti had said that the CBI's conduct was "mala fide" in the INX Media case.

The Supreme Court on March 12 directed investigating agencies the CBI and the ED to complete their probe into the 2G spectrum allocation cases, including the Aircel Maxis alleged money laundering case, in six months.

First in June and then in August this year, the ED  questioned P Chidambaram  to record his statement under the Prevention of Money Laundering Act (PMLA) after taking cognisance of a 2011 CBI FIR in the case.

The official stand has been that  the  Foreign Investment Promotion Board (FIPB) approval in the Aircel-Maxis FDI case was granted in March 2006 by Chidambaram even though he was competent to accord approval on project proposals only up to Rs 600 crore and beyond that it required the approval of the Cabinet Committee on Economic Affairs (CCEA).

The ED is investigating and we quote, "the circumstances of the FIPB approval granted (in 2006) by the then finance minister". Unquote.

According to ED and we quote  various news sources, " the approval for FDI of $800 million (over Rs 3,500 crore) was sought. Hence, the CCEA or Cabinet Committee on Economic Affairs (CCEA) was competent to grant the approval.

However, the approval was not obtained from the CCEA." Unquote.

According to the agency, the case of the said FDI was and we quote,  "wrongly projected as an investment of Rs 180 crore so that it need not be sent to the CCEA to avoid a detailed scrutiny". Unquote.

P Chidambaram has reportedly  described the ED action and we quote him,  as a "crazy mixture of falsehoods and conjectures" and said that the chargesheet filed by probe agencies was rejected by the court.

However, the agencies have maintained that the FIR in the case had not been quashed. In September 2017, the ED  went on to attach Karti's assets worth Rs 1.16 crore and that of a firm allegedly linked to him in connection with this case.

Bubbling in the mix are also the various news reports featuring controversial  senior Enforcement Directorate (ED) official Rajeshwar Singh and we have a story that makes for a compelling reading.

P Chidambaram has maintained all along, that ED is abusing its power at the behest of the government.

This accusation came again in January after the Enforcement Directorate (ED) carried out raids and searches  at 10 premises linked to his son Karti Chidambaram.

P Chidambaram termed the raids and we quote, "a comedy of errors" and claimed the officers could not find anything.

The accusations of Raid Raaj are not  case specific and have swirled across party lines through the decades.

On September 10,  the Enforcement Directorate moved  a Delhi court seeking to cancel the interim relief from arrest granted to Karti Chidambaram.

Who is Karti Chidambram?

This question is not literal because we know who he is but he burst into national infamy in  2015–16, when the New Indian Express and other newspapers uncovered his hidden ownership of an international network of companies.

Wikipedia and other information portals in the public domain outline his  alleged  involvement  in Aircel-Maxis and Sequoia Capital case .

In April 2015, the Enforcement Directorate (ED) searched the Bengaluru offices of Sequoia Capital India, the Indian subdivision of a Mauritius-based investment fund, in connection with a probe of Vasan Healthcare Group, which was partly owned by Karti . This was done on the basis of the suspicion that Sequoia was abusing India's foreign direct investment policy.

On 25 August 2015, it was reported that the ED had summoned two directors of Advantage, Vishwanath Ravi and C.B.N. Reddy, for questioning in Delhi under the Prevention of Money Laundering Act. The ED said it would later be summoning Karti Chidambaram himself in connection with the case.

In a series of articles published in September and October 2015, the New Indian Express charged that Karti Chidambaram was the secret owner, or perhaps co-owner with his father, of a large international network of companies.

On 17 September 2015, the newspaper reported that Advantage had bought shares of Vasan Eye Care at a reduced price and had later sold the shares at a huge profit. Karti Chidambaram's name was mentioned in connection with these transactions. P Chidambaram denied any association between anyone in his family and Vasan and threatened to sue the newspaper.

The Express then produced a tax affidavit supporting its claims. In February 2017,  Judge OP Saini quashed the Aircel-Maxis case saying and we quote him, "The court has no hesitation in recording no prima facie case warranting framing of charges against any of the accused in Aircel Maxis case." Unquote.

But before this, multiple reports about the Chidambarams were filed and actions initiated against them.

On 1 December 2015, the Income Tax Department and ED raided Vasan's and Chidambaram's offices.

The next day,  P Chidambaram  said and we quote, "We have made it clear, repeatedly, that no member of my family has any equity or economic interest in any of the firms that are being targeted...I condemn the attempt to link them to my son and harass them on that ground. If the government wants to target me, it should do so directly. My family and I are quite prepared to face the ‘malicious onslaught’ launched by government." Unquote.

On 16 December 2015, the ED seized Karti Chidambaram's laptop and files though Karti repeated  his father's defense and  ED attributed this step to the fact that it was probing a transaction between Karti Chidambaram and Aircel that had taken place immediately prior to the latter company's approval by the Foreign Investment Promotion Board (FIPB).

On 29 February 2016, the Pioneer newspaper reported that Karti Chidambaram was involved in extensive international business activities, many of them involving various tax havens.

It was further revealed and we quote from sources, "Advantage Singapore, a subsidiary of Advantage, owned the following: 88 acres at Surridge Farm, Somerset; Cambridge-based Artevea Digital Ltd.; a majority stake in Lanka Fortune Residencies, which in turn owned several hotels; three farms and vineyards in South Africa; land in Thailand; part of BVI-based Full Innovations, Ltd.; a residential flat in Malaysia; franchises of Café Coffee Day in Malaysia; a Barcelona-based subsidiary, Advantage Estrategia Esportiva SLU; and a substantial percentage of the Pampelonn Organisation in France." Unquote.

On  19 April 2016, as we know already,  the ED raided Sequoia.

On 26 April 2016, the Express claimed that the Chidambarams owned Advantage through what is known as "benami," or front-men, arrangements.

It was reported on 23 May 2016, that ED had sought information from the UK, UAE, South Africa, US, Greece, Spain, Switzerland, France, Malaysia, Singapore, Thailand, Sri Lanka and British Virgin Islands about properties and transactions of Advantage, Sequoia, WestBridge, and other firms purportedly linked to Karti Chidambaram.

In August 2017, Karti Chidambaram appeared before the CBI in connection to a case involving FIPB approval of INX Media.

In February 2018, as is well reported , Karti Chidambaram was arrested by the CBI.

In March 2018, The Delhi High Court  granted bail to Karti.

India Today reported on 10 September, 2018 that the Enforcement Directorate (ED) has sought cancellation of bail granted to Karti Chidambaram in the Aircel-Maxis case. The agency, told the Patiala House Court that it wants custodial interrogation of Karti Chidambaram as the alleged is evading summons and not cooperating with the investigation.

The agency also told the court and we quote, "Karti was granted interim bail on the basis of which he will cooperate with the investigations, which is not fulfilled by him." Unquote.

In the India today report, the  agency also alleged to the court, that during investigation Karti gets angry and irritated when he is asked questions regarding Aircel-Maxis case. The ED further alleged that Karti has been giving 'tailored response' and that he is trying to derail the investigation.

On August 7, as has been reported, the court had extended interim jail relief to the former Finance Minister P Chidambaram and his son Karti Chidambaram till October 8. The Court has also asked Karti Chidambaram to file his reply by September 18.

The case will unfold as time goes by but it is symptomatic of a wide spread rot in our system that as we said in the beginning of our podcast, taints powerful players across party lines.

In the wake of the  2G spectrum scam , there were multiple accusations as to how the government then had failed to address the corruption despite being allegedly aware of it  and similar accusations are now being levelled against the current government in the wake of the departure of the likes of Nirav Modi from the country.

The root of the problem

The rot does not begin or end with one case study and is indicative of a widespread malaise.  A March 2018 article in Forbes India cited Transparency International, a leading non political, independent, non-governmental anti-corruption organisation to  inform that India continues to be among the most corrupt countries in the world.

We quote, "The international corruption watchdog released its closely watched Corruption Perception Index (CPI), which ranks 180 countries based upon institutional perceptions of public sector corruption on a scale of 0-100. A score of zero indicates a “highly corrupt” nation while 100 indicates a “very clean” one. The CPI has emerged as one of the leading barometers of public sector corruption in the world.

The CPI awarded India a score of 40, rendering it the 81st most corrupt country in the world. Ghana, Morocco and Turkey achieved the same score. While India fell two places in the rankings compared to last year, its score remained the same. Rather than demonstrating that the country’s corruption worsened over the past year, this likely indicates that other countries improved their performance relative to India." Unquote.

The articles cites the cases of Nirav Modi and Vijay Mallya  and the critics who have wondered how the government could have permitted two such high-profile figures to leave the country given the circumstances.

We quote, "The Nirav Modi scandal has once again propelled the country’s corruption problem to the top of the national agenda. Transparency International released its rankings just days after the bank fraud was first unearthed, further fueling public debate and discourse over whether India was making any real progress in fighting corruption. The recent arrest of the former Indian Finance Minister’s son on corruption charges—which many have denounced as a brazenly partisan move—has only further heightened the perception that a cascade of corruption has suddenly flooded corporate India." Unquote.

The article says that these scandals underscore the need to strengthen India’s primary anti-corruption mechanisms. We quote, "Many Indian laws currently on the books lack genuine enforcement authority and deterrence power. The implementation of others, like the Lokpal Bill, which calls for the creation of state and federal anti-corruption watchdogs with true investigative and prosecutorial powers, remains unfulfilled." Unquote.

The article adds that the most recent CPI rankings serve as important reminders that corruption in the world's largest democracy continues to be a formidable challenge for both everyday Indians as well as those seeking to conduct business in India.

This is a challenge that must be taken seriously by the media, law enforcement agencies, policy makers, the political players at the helm and even citizens so that we can as a nation live up to the idealism that birthed the Indian republic over seventy years ago.
First Published on Sep 17, 2018 09:47 pm
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