A SENIOR OFFICER OF the Enforcement Directorate (ED) who was part of its raid on the posh 115-A Jor Bagh residence of Palaniappan Chidambaram in Delhi was about to leave empty-handed when he spotted a few documents that the former Finance Minister said were his parliamentary papers. The officer was on the verge of giving up the search, but changed his mind and walked into a bathroom inside the house to make an urgent call to one of his superiors in the agency that specialises in financial probes. The senior officer instructed him to collect those documents by all means. When he returned from the bathroom, instead of parliamentary documents, what he found was a 2013 draft report prepared by the country’s premier investigative agency, the Central Board of Investigation (CBI), on the controversial Aircel-Maxis deal.
On the day of that raid, the ED also searched a number of other premises in Delhi and Chennai linked to the Congress leader’s 46-year-old son Karti Chidambaram, who is currently facing an inquiry over serious charges of money laundering and acceptance of bribes.
The CBI had started investigating the high-value Aircel-Maxis transaction after Aircel owner C Sivasankaran lodged a complaint with it in 2011 alleging that he was coerced into selling his stake in the telecom firm to the Malaysian company Maxis, owned by business tycoon T Ananda Krishnan, in 2006. Sivasankaran had earlier applied for a spectrum licence.
In August 2014, the CBI, which had registered the case in 2011, filed a chargesheet against former Union Telecom Minister Dayanidhi Maran, his brother Kalanithi Maran, Maxis chief Ananda Krishnan and his key aide Ralph Marshall, among others. The agency then said that the Foreign Investment Promotion Board (FIPB) approval for the Rs 3,500-crore Aircel-Maxis deal was granted in March 2006 by the then Finance Minister, P Chidambaram, although he could give a nod only for project proposals with foreign direct investment (FDI) of up to Rs 600 crore. Any transaction of higher value required the approval of the Cabinet Committee on Economic Affairs (CCEA). The matter was, however, never placed before the Committee.
This is where the ED entered the picture. As part of the Department of Revenue under the Ministry of Finance, the ED’s job is to enforce laws enacted by the Foreign Exchange Management Act of 1999 and Prevention of Money Laundering Act of 2002. During its money laundering investigation, the ED figured that following FIPB approvals to Aircel—in which the deal was allegedly undervalued by grandees in power in 2006—Aircel Televenture Ltd, the holding company of Aircel, paid Rs 26 lakh to a company named Advantage Strategic Consulting Pvt Ltd. Also, Maxis Berhard, one of Krishnan’s many business entities, paid Rs 90.09 lakh in tranches to a company called Chess Management Services Pvt Ltd.
‘Investigations revealed that both [Advantage] and [Chess] are owned and controlled by Karti P. Chidambaram,’ says the ED affidavit filed at the Supreme Court on December 28th, 2017, by ED Joint Director Rajeshwar Singh. The document notes that on the same day that an FIPB nod was granted to the Aircel-Maxis deal (March 7th, 2006), approvals were given by the CCEA for two other deals of which the total investment was upwards of Rs 600 crore. According to the ED, the CCEA clearance needed for the Aircel-Maxis transaction was sidestepped by falsely portraying Rs 180 crore as the FDI amount involved.
Besides, says Singh’s affidavit, two deposits made by Aircel (done on April 11th, 2006) and Maxis were not bona fide business transactions because the individuals who received the ‘suspected funds’ were Karti Chidambaram, Ravi Visvanathan, Mohanan Rajesh, CBN Reddy, S Bhaskararaman and Padma Visvanathan. An ED probe says that Advantage India and Chess Management are controlled by Karti currently through his associates (the five aforenamed), and that at the time of the transactions with Aircel and Maxis, he had direct ownership of these companies.
In 2011, according to reports by federal agencies and articles that appeared in The New Indian Express written by S Gurumurthy, Karti transferred 40 per cent of Advantage’s total capital of 500,000 equity shares to his neighbour Mohanan Rajesh after some of the irregularities surfaced. Karti owned almost the whole company from 2006 to 2011. According to Gurumurthy, ‘The balance three lakh shares (or 60 per cent ownership) of Advantage is held in the names of four benamis—CBN Reddy, known as Karti’s sidekick (2,11,430 shares), Padma Viswanathan and Ravi Viswanathan (32,600 shares) and Bhaskararaman (17,400 shares), Karti’s other nominees.’
The ED adds that ‘digital evidences recovered from the searches ... show that all four shareholders of [Advantage] had made identical wills bequeathing their shares in [Advantage] to Aditi Nalini Chidambaram, daughter of Karti Chidambaram.’ The wills state that all of them would transfer their shares in companies (that are under the scanner for being alleged benami businesses of Karti) to Aditi because of their deep gratitude to her maternal grandfather Dr B Rangarajan, father of Srinidhi Rangarajan, Karti’s wife who is a dancer and a doctor. All the wills were prepared on the same day, June 19th, 2013. Some of those companies in which they held shares, besides Advantage, are Kriya FMCG and Rochester Technology Solutions Pvt Ltd.
The ED also shared with the CBI details of suspected quid pro quo transactions between Karti’s reported benami businesses and some companies. The ED says that it was following the receipt of such information that the CBI launched an investigation in a case related to INX Media Ltd, which is under the scanner over charges that Karti Chidambaram had received kickbacks from the media house in exchange for ‘settling’ a probe of an FIPB-norm violation in 2007. According to both the CBI and ED probing the case, INX Media has shared invoices of payments to foreign entities for this purpose.
The senior Chidambaram has called the raids ‘a comedy of errors’. Like his son, he also appears unfazed by the case. But people close to the matter say he is worried that the next stage of inquiry would lead towards him
Meanwhile, the ED had told the courts that Karti and his associates had repeatedly ignored its summons to appear for questioning in money-laundering cases. It also said that Karti had ‘closed certain bank accounts and attempted to close other bank accounts in order to frustrate the process of attachment [of his assets]’ under the Money Laundering law. The ED also alleged that Karti has ‘disposed of’ a property in Gurgaon which he had allegedly rented out to a multinational company ‘to whom FDI approval had been granted in 2013’. Federal agencies also suggest that Karti—either alone or perhaps in collusion with his father—secretly owns a network of companies and assets worldwide. The ED, especially, is of the view that Karti is at the centre of various financial transactions that have made the family very rich through deceit and deception. Two years ago, the Directorate had raided the offices of Sequoia Capital, which bought shares of Vasan Healthcare from Advantage for several times the price the latter had paid for them, resulting in a huge windfall for the firm said to be owned indirectly by Karti.
FOR HIS PART, P Chidambaram, currently a Rajya Sabha member from Maharashtra, has played down the raids and mounting evidence against his son. He has said that since the ED had to justify its search, its officers took some “background papers related to a statement made by the government in Parliament in 2012-13” in Delhi, and that they seized nothing in Chennai. But the latest developments suggest that the dragnet could turn towards him. After all, Karti, as an investigating officer says, is just the “son of a father who was very powerful in the Congress Government and nothing else”.
Despite his lineage, Karti hasn’t yet made much headway as a political leader, though in 2014 his father had vacated his traditional Lok Sabha seat in Sivaganga to launch his son in the rough and rumble world of Tamil Nadu politics. Junior Chidambaram contested that seat but lost. Prior to that, Karti was not a Congressman who had endeared himself to grassroot-level workers of the party in the state. Even so, the alumnus of Texas and Cambridge universities, where he had studied business management and law respectively, was known in party circles as a sports aficionado who was good at tennis.
In 2014, he had incurred the wrath of party workers for a reported preposterous remark on the late Congress icon and former Tamil Nadu Chief Minister K Kamaraj. At a youth party meeting in the state, Karti had said that the slogan of bringing back ‘the rule of Kamaraj’ wasn’t enough to connect with voters and that the party also needed to put forth development plans for the state. Some leaders protested, saying he’d tried to denigrate the late leader. “What I can tell you is that he hasn’t made a name for himself as a leader to reckon with. He doesn’t have the fire in the belly that his father has,” says a senior Congress leader from Tamil Nadu. Many party leaders also say that Karti is largely apolitical and has very little understanding of the dynamics of Tamil politics.
Karti, however, claims to have started reading newspapers at a very young age to keep himself abreast of local as well as global political developments. Around 2005, he had launched a blog and a discussion forum, Karuthu.com, along with DMK patriarch K Karunanidhi’s daughter Kanimozhi. The platform, which doesn’t exist anymore, was aimed at promoting discussions across a wide range of subjects. Kanimozhi herself was embroiled in corruption charges related to the 2G spectrum scandal during the UPA’s second term in power at the Centre. Late last year, a Delhi court had acquitted all the accused, including former Telecom Minister A Raja and Kanimozhi, of corruption and money-laundering charges in 2G spectrum allocation cases.
Such luck may elude Karti, with the current Government confirming that the case against him is watertight, backed by a raft of incriminating evidence. Notwithstanding the gravity of the charges against him, he appears to have a defiant air about him as the case proceeds. To Gurumuthy, such a display of chutzpah is proof of a ‘wrong upbringing’.
On March 4th, while Karti was being taken to Mumbai’s Byculla prison to ‘confront’ Indrani Mukerjea, he stepped onto the footboard of a CBI vehicle and waved a fist in the air for cameras. A six-member team of the CBI brought Karti and Mukerjea face-to-face to question them. The session lasted four hours. Karti had wanted Mukerjea to be brought to him instead of him being flown to Mumbai, where Mukerjea is lodged in prison in connection with the murder of her daughter Sheena Bora. Her husband Peter Mukerjea is serving a life sentence in the same case in Mumbai’s Arthur Road jail.
It was after a statement by Indrani Mukerjea before a magistrate that Karti was arrested on his return from the UK at Chennai airport (on February 28th). The CBI has been questioning him over irregularities in the FIPB clearance given to INX Media for receiving overseas funds of close to Rs 305 crore when his father was Finance Minister.
The senior Chidambaram has called the raids ‘a comedy of errors’. He also appears unfazed by federal agencies tightening their grip over the case involving his son and associates. But people close to the matter say he is worried that the next stage of inquiry would lead towards him. According to an ED official, this is a foregone conclusion because investigative agencies will have to probe how a CBI draft report on the Aircel-Maxis deal case, which was submitted to the Supreme Court in a sealed cover in 2013, landed up at his home. Chidambaram has told reporters that he does not want to comment on the cases in question. The Congress party had alleged that the charges against Karti are a form of vendetta politics pursued by the ruling BJP, and that he is being victimised for being his father’s son. Karti too has said that he is being pursued in these cases only to tarnish the image of his father. But with more information surfacing by the day, several Congress leaders are either crestfallen or agitated. “If the charges are proved, then nobody can save anyone,” says a Congress leader from Kerala.
The son continues to make spirited public appearances. In Rajeshwar Singh’s view, Karti is a “non-serious person” who “probably doesn’t understand law”. For someone born into a family of learned men and women, even legal luminaries, Karti Chidambaram seems to have a big disadvantage: he pales in comparison.
Of course, this is not the first time that sons of powerful politicians are being accused of making hay while their parents are in positions of power. Other such fathers and sons would do well to remember that time and tide wait for none; governments change and the law eventually catches up.