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Last Updated : Aug 23, 2019 09:06 PM IST | Source: Moneycontrol.com

Digging Deeper podcast | India's corruption problem goes beyond Chidambaram

In this Money Control Deep Dive, we will try to capture all the frenetic events leading up to Chidambaram’s arrest

Moneycontrol Contributor @moneycontrolcom

The Supreme Court today granted interim protection to former finance minister P Chidambaram in the INX Media money laundering case filed by the Enforcement Directorate but he will have to remain in custody as the apex court did not intervene in the CBI case.

That’s the latest twist in the Chidambaram drama that began earlier this week.

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On Wednesday, nearly 140 Supreme Court lawyers urged the Supreme Court Bar Association to pass a resolution against the top court’s refusal to urgently hear his petition in the INX Media case the previous day.

In this Money Control Deep Dive, we will try to capture all the frenetic events leading up to Chidambaram’s arrest but let us first begin with the headline making proceedings on Wednesday.

The dramatic arrest

Media channels reported on August 22 that former Union Minister P Chidambaram had been arrested the night before and would be produced before the Rouse Avenue court  at 2 pm.  According to PTI, the senior Congress leader had already spent a night at suite No. 5 of the CBI Guest House on the ground floor of the agency headquarters in the national capital.

Chidambaram's  very dramatic arrest unfolded late on Wednesday night at his residence amid large-scale drama under the gaze of the media. This was almost immediately after he had appeared on camera at the Congress party headquarters to make a statement to the press. As Indian Express put it, he was then arrested for his alleged role in two cases of corruption and money laundering linked to INX Media.

Much was made about the fact that the agency had been on the lookout for the former finance minister after his anticipatory bail application was rejected by the Delhi High Court on Tuesday. With the Delhi High Court dismissing his “pre-arrest bail application” after referring to the "magnitude and enormity" of the charges and calling him the "kingpin", Chidambaram's lawyers advised him to move the Supreme Court but he failed to stall his arrest.

The CBI and the ED went on to issue two separate lookout notices meant to stop a person from leaving the country. This was done with the claim that Chidambaram could not be traced. After the former Union Minister's press conference, at about 9.45 pm, CBI officials scaled the wall of Chidambaram's residence and entered the premises. Besides the CBI, a team of the Enforcement Directorate also showed up as Chidambaram was taken away in a CBI vehicle.

The fallout

Congress spokesperson Randeep Singh Surjewala reacted predictably and we quote, "Over the last two days, India witnessed the broad daylight murder of democracy as also the rule of law, by the government hell bent upon using CBI and ED as personal revenge-seeking departments for the party in power as also those ruling the country.”

He claimed the case was made on the basis of one approver, who he said was in prison and has been accused of murdering her daughter (he was, of course, referring to Indrani Mukerjea). We quote him again, " Except for the blatant attempt to humiliate Chidambaram, there was no hurry to arrest him by sending CBI officials at his residence at night. He has always cooperated with the agencies and has the highest regard of the Constitution." Unquote. He added that neither Chidambaram nor his son had been accused of any offence in the INX Media case and that no charge sheet had been filed till Wednesday.

Senior lawyer and Congress stalwart Kapil Sibal told ANI and we quote, "It's a matter of great concern to us as members of the legal fraternity, also it should be a matter of concern as citizens. All we wanted was a hearing, the presiding judge chose instead to say that I am sending the file to the Chief Justice of India. Isn't a citizen entitled to be heard?" Unquote.

Chidambaram’s son Karti Chidambaram said he would protest at Jantar Mantar against his father's arrest. He said, "This is nothing but theatrics for television. It is not only targeting of my father but of the Congress partyOutrageous 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…I have been raided four 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 charge sheet for alleged events which apparently took place in 2008 and a FIR in 2017. There is no case." Unquote.

He also claimed that the arrest of his father was an attempt to distract from the prevailing situation in Jammu and Kashmir over Article 370!

Leader of the Congress in Lok Sabha, Adhir Ranjan Chowdhury was also pointed out that the former Union Minister's name was not there in the charge sheet of the INX media corruption case, and that he had always cooperated with CBI during the investigation.

Congress leaders Rahul Gandhi, Abhishek Singhvi, Anand Sharma, Shashi Tharoor, and Salman Khurshid also voiced support for Chidambaram as the party sought the support of various opposition parties to protest the arrest. West Bengal Chief Minister Mamata Banerjee chipped in, saying, "The manner in which he has been arrested is depressing. There are four pillars of democracy: democratic institutions, Election Commission, media and judicial system. The democratic system of our country is crying, yet the judiciary is not coming to its aid." Unquote.

Satya Pal Singh, a BJP MP from Baghpat, countered, "Chidambaram ji is a former Union finance and home minister…and knows the law. He should not have behaved like this after the court's order…had he surrendered earlier, his dignity would have remained intact." Unquote.

In his press conference before the arrest, Chidamabaram had stated that he was neither “hiding from the law” nor “running away from justice.” He added and we quote, "I believe that the foundation of a democracy is liberty. The most precious Article of the Constitution of India is Article 21 that guarantees life and liberty. If I am asked to choose between life and liberty, I shall unhesitatingly choose liberty. Why are the years up to 1947 called the years of freedom struggle? Because, to win freedom, we must struggle. To preserve freedom too, we must struggle." Unquote.

What happened next

As we mentioned earlier, Chidambaram will remain in CBI custody till August 26. His family and lawyers have been permitted to visit him for 30 minutes every day.

According to Business Today, Kapil Sibal and Abhishek Manu Singhvi  appeared on behalf of P Chidambaram at the court, insisting there was no basis for the remand. Sibal argued that the CBI was not even ready with the questions and managed to ask only twelve. He added that the FIPB (The Foreign Investment Promotion Board) approval, which is at the heart of the matter,  was given by six government secretaries, out of whom none have been arrested. Singhvi repeated that  the entire CBI case is based on Indrani Mukherjea's evidence and case diary. He also said that Chidambaram has been co-operative throughout the probe.

Business Today reported that Solicitor General Tushar Mehta, who appeared on behalf of the CBI, said that Chidambaram is being non-cooperative and that the INX Media case is a "classic case of money laundering". Mehta said $5 million and $45,000 were paid to companies linked to his son Karti Chidambaram.

The whole case, in a way, hinges on Indrani Mukerjea's statement. According to PTI, she told investigators probing the money laundering and corruption case related to INX Media that  P Chidambaram had asked for help for his son Karti's business, and made overseas remittances in lieu of granting FIPB approval to her company. Mukerjea recorded her statement under the Prevention of Money Laundering Act (PMLA), saying she and her husband Peter Mukerjea met Chidambaram at his office in Delhi's North Block. Both Chidambaram and his son Karti denied the allegations.

To refresh your memory once again, the arrest and the CBI case against Chidambaram is based on the accusation that INX Media flouted the conditional approval of FIPB, and brought over Rs 305 crore of FDI into the firm against the approved inflow of Rs 4.62 crore. According to multiple news sources, CBI sources have alleged that the foreign entities bought shares of INX at Rs 862.31 a piece, which was 86.2 times their face value. The media organisation also supposedly made a downstream investment of 26% in its subsidiary INX News.

A game of optics that could have been avoided?

Prabhash K Dutta wrote in India Today on August 22, 2019 that P Chidambaram's lawyers made some technical errors in the petition leading to rejection of the same on Wednesday.

The piece states that the conventional arrangement of law is such that the appellate courts don't interfere with the investigation after an accused has been arrested. Strangely, CBI officers were present in the Supreme Court and also inside the Congress headquarters when Chidambaram addressed the press. But they did not arrest him for the agency did not have an arrest warrant but had only issued the summons for questioning.

We quote, "Once the CBI was sure that the Supreme Court was not going to interfere on Wednesday evening, and Chidambaram continued to evade the officers from the agency, the move for his arrest was made. Delhi Police personnel were called as back up at Chidambaram's home. He was taken to the CBI headquarters through exit gates making sure that Chidambaram spent the night in the agency lock-up." Unquote.

Case History

The Express web desk reports that it all began in May 2017 when the CBI registered an FIR   alleging irregularities in the Foreign Investment Promotion Board (FIPB) clearance given to the INX group for receiving overseas funds of Rs 305 crore in 2007. Chidambaram, you will recall, was the Union Finance Minister at the time.

On August 28, 2018,  according to a Money Control report, Chidambaram moved a Delhi court alleging that the CBI was not interested in a fair trial in the court of law and only wanted a trial by media.

He, of course, was referring to the fact  that even before the court was to take cognisance of the charge sheet, the CBI apparently provided a copy of the same to the newspaper which published the same in instalments. That, according to Chidambaram, only sensationalized the issue and prejudiced the accused named therein.

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. In 2018,  as you may well know, the Enforcement Directorate (ED) had also registered a case of money laundering, and Chidambaram was summoned by CBI for questioning. Earlier this year, Chidambaram moved the Delhi High Court to seek anticipatory bail in both the cases as the CBI had been seeking Chidambaram's "custodial interrogation".

Karti Chidambaram too has been in the eye of the legal and media storm for a while, and we reproduce here a few keynotes of his CBI imbroglio from last year to establish a context.

Who is Karti Chidambram?

Karti Chidambaram, the son of the former Home and Finance minister, has become prominent ever since the corruption charges against Chidambaram became a matter of media debate.

In a series of articles published in September and October 2015, the New Indian Express claimed Karti Chidambaram was the secret owner, or perhaps co-owner along with his father, of a large international network of companies. In February 2016, the Pioneer newspaper reported that Karti Chidambaram was involved in extensive international business activities, many of them involving various tax havens. After a raid on Sequoia, 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 the ED had sought information from UK, UAE, South Africa, USA, Greece, Spain, Switzerland, France, Malaysia, Singapore, Thailand, Sri Lanka, and the 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 with a case involving FIPB approval of INX Media. In February 2018, as is well reported, Karti was arrested by the CBI. In March 2018, the Delhi High Court granted him bail. India Today reported on 10 September that the ED had sought cancellation of the bail granted to Karti in the Aircel-Maxis case. The agency told the Patiala House Court that it wanted custodial interrogation of Karti Chidambaram as he was evading summons and not cooperating with the investigation.

It 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.

The Aircel-Maxis case

We can’t really talk about Chidambaram and his son Karti without touching upon the Aircel-Maxis case. As we know Aircel, an Indian network operator, was founded by Tamil entrepreneur C Sivasankaran. In 2006, Aircel was taken over by Malaysian firm Maxis with the acquisition of 74% shares. The controversy revolves around the fact that Karti Chidambaram owned 94% shares in Ausbridge Holdings & Investments. Ausbrdige owned 67% shares in another company called Advantage Strategic Consulting Private Limited. Advantage, before March 31, 2006, had loaned Rs 26 Lakh to Aircel. According to the petitioner, BJP leader Subramanian Swamy, Advantage, which is owned by Karti Chidambaram, converted this loaned money into shares. The accusation was that Karti became a five percent shareholder in Aircel. Later, when Maxis acquired Aircel, Karti continued to be a shareholder.

The scam came to 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, he ensured that the FIPB clearance on the Aircel- Maxis deal would come through only if the Karti Chidambaram-controlled company got a share in Sivakumar's Aircel Televenture Ltd.

Chidambaram denied any wrongdoing, and the Enforcement Directorate and the Income Tax Department on Dec 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 in February 2016 as accused by a special court in a Aircel-Maxis deal. Karti  was arrested  on February 28. While seeking relief, Karti had said the CBI's conduct was "mala fide" in the INX Media case. The Supreme Court then directed investigating agencies to complete their probe into the 2G spectrum allocation cases in six months.

First in June, and then in August this year, the ED  questioned Chidambaram to record his statement under the Prevention of Money Laundering Act (PMLA). The official stand has been that the 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. Beyond that amount, FIPB clearances required the approval of the Cabinet Committee on Economic Affairs (CCEA). According to the ED, and we quote various news sources, "the approval for FDI of USD 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.

Chidambaram has described the ED action as a "crazy mixture of falsehoods and conjectures", and claimed that the charge sheet 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 his son Karti's assets worth Rs 1.16 crore and that of a firm allegedly linked to him in connection with this case. Chidambaram has consistently accused the ED of abusing its power, just as he did In January when the it carried out raids and searches at 10 premises linked to his son. He termed the raids and we quote, "a comedy of errors" and claimed the officers could not find anything. On September 10,  the ED moved a Delhi court seeking to cancel the interim relief from arrest granted to Karti Chidambaram.

The bigger questions

Corruption has been a part of everyday life in India even before unheard of amounts of siphoned money and blatant  embezzlements became normalised.

In the eighties, journalist Arun Shourie relentlessly used the front page of a national daily to hurl questions about the Bofors deal at then Prime Minister Rajiv Gandhi. More recently, the Supreme Court had to step in to resolve the ongoing tussle between Home Minister Amit Shah's son Jay Shah and news portal The Wire over a claim that the turnover of Jay’s firm grew exponentially after BJP came to power in 2014. 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.

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.

A March 2018 article in Forbes India cited Transparency International as saying, "The international corruption watchdog released its closely watched Corruption Perception Index (CPI)…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…this likely indicates that other countries improved their performance relative to India." Unquote.

The Forbes article also says, "Many Indian laws…lack genuine enforcement authority and deterrence power. The implementation of others, like the Lokpal Bill, which calls for the creation of state and federal anticorruption watchdogs with true investigative and prosecutorial powers, remains unfulfilled." Unquote.

With the Chidambaram drama unfolding, it is anyone’s guess what direction we are headed in. If nothing else, these promise to be exciting times!

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First Published on Aug 23, 2019 09:06 pm
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