Chidambaram under pressure

Chennai IT commissioner had appointed FM's wife as CBDT counsel.

P Chidambaram was under pressure today to explain how his lawyer wife Nalini was appointed counsel for the Central Board of Direct Taxes (CBDT) after he became the finance minister.

The appointment was described by ADMK Member of Parliament N Jothi, as a "conflict of interests" in his speech made in the Rajya Sabha yesterday. The BJP demanded the finance minister's resignation on grounds of "nepotism".

Party spokesperson Sushma Swaraj said, "During the NDA regime, when Rajiv Pratap Rudy became the civil aviation minister, his wife Neelam Rudy, who worked with Indian Airlines, went on a long leave. We expected the UPA government, too, to follow such standards of probity."

But Ambika Soni of the Congress said there was no impropriety in Nalini Chidambaram's appointment. "If she is a good lawyer, there is no reason why the government of India should not appoint her."

While the Congress appeared to present a united front on the matter, some leaders had reservations about the issue of propriety. Water Resources Minister Priyaranjan Dasmunshi said while "facts had to be ascertained", it "would look a bit odd if my wife began practising as a lawyer in the department of water resources".

"We are also lawyers. We know that if relatives of judges argue before them, they are expected to recuse themselves. ...This kind of thing is to be avoided."

Another senior minister in the government said, "You can't have double standards. If he (the finance minister) does not go, it will erode the Prime Minister's authority," he said.

In a statement, the CBDT accepted the blame that it was a lapse on its part to have hired Chidambaram's wife as a lawyer on the Income Tax Tribunal and not informed the minister of her appointment.

"CBDT's proposals for engagement of counsels are not submitted to the finance minister for approval. In this case too, the file was not put up to the finance minister. Nor was the finance minister informed of the matter. In retrospect, not informing the finance minister was a lapse on the part of the board," a statement issued by the board said, absolving P Chidambaram of any role in the matter.

Speaking to Business Standard, Nalini Chidambaram, a senior advocate with the Madras High Court, said her husband was unaware that she had taken on the case.

"I am a professional woman. My husband and I pursue our own professional goals and we don't meddle in each others' careers. I was persuaded to take up the case by senior standing counsel of the department Pushya Sitaraman, after my husband became a minister, as he was fighting the case earlier and could not do so once he joined government. I did not charge any fee for every hearing. I received a modest consolidated fee for settling the pleading and submissions, conference and hearings," she said.

"Perhaps, I should not have allowed myself to be persuaded by my colleague to appear for the department, but I am clear in my mind that there was no illegality or impropriety," she added.

She said since 1996, when her husband had first become the finance minister, she had voluntarily refrained from appearing for or against the income tax department. "This is the sole case in which the department had engaged me."

But political forces - in the Opposition and those supporting the ruling UPA - refused to accept this explanation. Barring Brinda Karat of the Communist Party of India Marxist, who said the party had not studied the matter and could not comment, both the CPI and the BJP said the finance minister owed an explanation to Parliament.

D Raja of the CPI blamed the CBDT and said its explanation was "admission of a mala fide deal".

"As a party, we believe that husbands and wives have separate independent entities. But once he became the finance minister, Mrs Chidambaram should not have accepted the brief that he (P Chidambaram) had refused. The CBDT statement says 'her long experience and familiarity with the subject' got her the brief. What does this mean?" said Raja.

However, the BJP made it clear it was going to make an issue of it. Swaraj said appointing a family member to a post of profit smacked of "favouritism, nepotism and corruption".

The BJP also said it would raise the matter in both Houses of Parliament "for sure".

"It is quite improper for such things to take place, and we do not accept the CBDT's explanation that the lapse was on their part, in not informing the minister," Swaraj said.