INX Media case: Why do CBI, ED need Chidambaram?

Central Bureau of Investigation (CBI) officers climbed over the walls of former finance minister P Chidambaram's residence in New Delhi's posh Jor Bagh area after a 27-hour chase and high drama and arrested him on Wednesday night. He was taken to Ram Manohar Lohia Hospital for a medical check-up and then to the CBI headquarters here for questioning in the INX Media case. He would be produced before a special CBI court on Thursday.

Before his arrest, Chidambaram briefly appeared at the AICC headquarters here to address the media on the charges levelled against him. He strongly defended himself and his family saying no chargesheet has been filed in the case as yet, asserting that none of them have been named in the INX Media case by any of the agencies.

So why do investigative agencies, CBI and ED, need Chidambaram? The agencies have plenty of holes to plug before they can implicate him in the scam that alleges bribes were paid to his son Karti in lieu of clearance for INX Media's foreign investment into INX News via owners Peter and Indrani Mukerjea.

The biggest question they needs to answer is: what - if at all -- was Chidambaram's role as finance minister in getting clearances from the Foreign Investment Promotion Board the second time round after the FIPB had already rejected the application in the first round. While FIPB had approved Rs 4.62 crore worth of foreign investment into INX Media, it did not approve the proposal of INX Media's downstream 26 per cent investment into INX News. However, INX Media not only received Rs 305.36 crore in violation of FIPB rules, it also invested in 26 per cent equity in INX News without FIPB approval.

Also read: What legal recourse Chidambaram has after his arrest

This is where CBI and ED will have to establish the second link: bribery allegations against Karti Chidambaram. The Mukerjeas allegedly approached Karti to get the approvals who -- Indrani says -- demanded $1 million in foreign accounts.

When the Mukerjeas expressed their inability to pay in foreign accounts, they say Karti suggested payment be made to Advance Strategic Consulting (ASC) where he has indirect control as opposed to Chess Management Services where he's a director and which was engaged as a consultancy firm.

ASC was paid Rs 10 lakh and Rs 3.5 crore in two separate transactions. Agencies have to unearth the link among Karti, ASC and CMS. CMS is allegedly owned by his chartered accountant.

Also read: P Chidambaram arrested in INX Media case, but what did he do wrong?

Thirdly, the agencies need to establish whether Chidambaram influenced any finance ministry officials to approve INX News application the second time. Earlier this year, the Central Vigilance Commission asked FinMin's Department of Economic Affairs to allow it to prosecute Sindhushree Khullar, Anup K Pujari, Prabodh Saxena among others in alleged corruption in the INX Media case. Khullar, Pujari and Saxena were in the Department of Economic Affairs during Chidambaram's tenure as the finance minister. FIPB functions under the Department of Economic Affairs.

Earlier on Wednesday, Chidambaram's legal team tried to get anticipatory bail for him from the Supreme Court. However, the apex court decided to hear the matter on Friday. Chidambaram had urged the probe agencies to wait till Friday till his bail plea is heard by the apex court.

The Delhi High Court had dismissed Chidambaram's anticipatory bail plea on Tuesday and declared him the kingpin in the INX Media case. Following this, the veteran Congress leader had fallen off the grid. CBI and Enforcement Directorate had issued separate look out circulars to prevent him from leaving the country.

The ED suspects Chidambaram's hand in granting alleged illegal FIPB clearances to at least six business deals, including INX Media and Aircel-Maxis, and receiving multi-crore kickbacks through multiple shell firms, the sources said. The CBI had lodged a case later based on the information provided by the ED.

Also read: Infographic: History of INX Media case that led to arrest of P Chidambaram  

The ED also claims evidence of alleged illegal deposits of over Rs 300 crore made in a single shell firm after purported kickbacks were received by Chidambaram and his son Karti in lieu of granting illegal FIPB and FDI approvals. All of the charges still need to stand scrutiny in the court of law.