INX Media case: CBI detains Karti Chidambaram for manipulating tax probe

INX Media allegedly violated norms by making a downstream investment of 26% in INX News without FIPB approval

Former finance minister P Chidambaram's son and businessman Karti Chidambaram was detained by the Central Bureau of Investigation (CBI) in Chennai on Wednesday in connection with the INX money laundering case. It was alleged that he violated the Foreign Exchange Management Act. 

Chidambaram was detained at Chennai Airport while he was returning from a foreign trip, according to his public relations officer. A few weeks ago, Karti's chartered accountant S Bhaskararaman had been arrested from a hotel in Delhi. 

The Enforcement Directorate (ED) had earlier claimed that during the course of investigation, it was revealed that Bhaskararaman had been assisting Karti Chidambaram to manage his "ill-gotten wealth" in India and abroad.

The case relates to the approval granted by Foreign Investment Promotion Board (FIPB) in 2007 for receipt of funds by INX Media during P Chidambaram's tenure as the Union finance minister.

CBI alleged Karti Chidambaram received money from INX Media for using his influence to manipulate a tax probe against the firm for violating FEMA by receiving investments from Mauritius. CBI also seized vouchers of Rs 1 million (Rs 10 lakh) allegedly paid for the services.

The central probe agency had registered the case against Karti Chidambaram and others in May last year.

Last week, Karti Chidambaram moved the Supreme Court (SC) seeking a stay on ED summons against him in the INX Media case. However, the apex court did not grant a stay.

He was also questioned by the ED, which had summoned him on February 2. Karti had, however, said he would be unable to depose as he had an interlocutory application pending in the SC, say reports.

ED had alleged that INX Media violated norms by making a downstream investment of 26 per cent in INX News Private Limited's capital without specific approval of FIPB. These included indirect investment by foreign investors, besides generating Rs 3 billion (Rs 305 crore) foreign direct investment in INX Media against the approved foreign inflow of Rs 46 million (Rs 4.62 crore).

To wriggle out of the situation without any punitive action, INX Media entered into a criminal conspiracy with Karti Chidambaram, the ED said.

The FIPB unit of the finance ministry had not only granted illegal approval but also misinformed the investigation wing of Income Tax Department, ED added.