INX Media case: A bogey that has been haunting former FM Chidambaram

  • The CBI’s case is that the INX Media allegedly flouted the conditional FIPB approval, and brought in over 305 crore of FDI against the approved inflow
  • CBI alleges that INX Media engaged Karti Chidambaram, the promoter director of Chess Management, to resolve the issue

Gireesh Chandra Prasad
Updated22 Aug 2019
CBI officials arrest Congress leader P. Chidambaram from his Jor Bagh residence in New Delhi on 21 Aug 2019
CBI officials arrest Congress leader P. Chidambaram from his Jor Bagh residence in New Delhi on 21 Aug 2019(Photo: PTI)

New Delhi: Alleged violations of conditions attached to foreign direct investments into INX Media Pvt. Ltd, which were cleared by the Foreign Investment Promotion Board (FIPB) when P. Chidambaram was the finance minister, is one of the cases that has come back to haunt the Congress party leader.

In 2008, the Financial Intelligence Unit of the finance ministry red-flagged foreign direct investments (FDI) of over 305 crore by three Mauritius-based entities in INX Media. The case eventually ended up with the Central Bureau of Investigation (CBI). The agency claims that INX Media had approached the FIPB in 2007 for clearance to issue equity shares and preference shares to three non-resident investors under the FDI route, representing about 46% of the issued equity capital of INX Media.

Watch: INX Media case: 'Was not hiding,' says Chidambaram at Congress HQ

According to the Central Bureau of Investigation, in 2007, the FIPB cleared FDI of over 4 crore for INX Media, but rejected a proposal for downstream investment of INX Media in INX News.

The CBI’s case is that the company allegedly flouted the conditional FIPB approval, and brought in over 305 crore of foreign direct investments against the approved inflow.

The Central Bureau of Investigation alleges that INX Media engaged Karti Chidambaram, the promoter director of Chess Management Services Pvt. Ltd, to resolve the issue after FIPB sought clarifications. Karti, son of the former finance minister, is now the Congress Lok Sabha member of parliament from Sivaganga after the former finance minister chose not to contest elections in 2019.

Chidambaram maintains that in the INX Media case, neither he, nor any of his family members, has been accused of any offence. “In fact, there is no charge-sheet filed by either the CBI or the Enforcement Directorate before a competent court. Moreover, the FIR recorded by the CBI does not impute to me any wrongdoing. Yet, there is a widespread impression that grave offences have been committed and my son and I have committed those offences. Nothing can be further from the truth,” the former finance minister told reporters on Wednesday at the Congress party office. He was arrested soon after from his house.

For a long time, foreign investments into Indian companies have been viewed with suspicion by the financial regulators, as India regulates foreign ownership of Indian companies in strategic sectors including media tightly.

FIPB, the inter-ministerial panel that was set up after India kicked off economic liberalization in the 1990s, has always faced different pulls and pressures while reviewing applications for FDI approvals. While the commerce and industry ministry wanted more FDI to come into the country and boost economic growth rate, the revenue authorities were keen to verify whether the funds making their way into Indian shores in the form of FDI were in any way tax-evaded funds that had gone out of India. FIPB has been dismantled now.

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