Karti Chidambaram and INX Media - What transpired?

March 1, 2018

Corruption in the form of usage of public office for private gains has been a common phenomenon for every nation. The great philosopher Kautilya had also commented on corruption and compared it to honey on tongue. As it is impossible to not taste the honey on tongue, similarly, it is impossible to believe that public officials with money will not use for their own benefits. One similar case, which has been in news recently is of Karti Chidambaram who has been recently arrested by CBI.

What actually transpired?

 

Indrani and Peter Mukherjee founded INX Media which went on to launch channels like 9XM. INX Media requested Foreign Investment Promotion board  permission for issuing equity to three NRI under FDI route and to make downstream financial investment to the extent of 26% of the issued and outstanding  equity capital. 

 

However, FIPB Board approved FDI/NRI flow worth 4.62 crore only and rejected downstream investment. INX media in clear violation of FIPB approval, went on to make downstream investment and instead of the 4.62 crore limit, it generated 305 crore by issuing shares to foreign investors at a premium of Rs. 800 per share.

 

 

Role of Karti Chidambaram:

When this violation came into light, FIPB shot a letter to INX media for its violation and another letter to Income tax department. INX media instead of giving clarification, sought help of Karti Chidambaram who is the son of then Finance minister, P. Chidambaram. As per CBI report, Karti used his influence on Finance ministry due to his fathers position due to which Finance ministry clearly overlooked the violation of FIPB approvals and even went ahead to give sanction for downstream investment. For this service, Karti Chidambaram was paid a sum of 10 lakh rupees through a firm called "Chess Management services" in which Karti was the director. On 1st March 2018, Mukherjee's accepted that they paid bribe to Karti worth 1 million dollar.FIR states, that “The concurrence to the proposed investment which had already been made without the approval of the Finance Ministry show the malafide and dishonest intention on the parts of officials of the ministry….".

 

 

Opposition parties have alleged it to be use of CBI for fulfilling political motives. It is clear that the payments have been opaque leading to raising of questions on the motives of payment made to Karti Chidambaram. Also, overlooking of violations of FIPB guidelines sets a wrong precedent and needs to be dealt seriously. 

 

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