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PC’s Karti versus Modi’s ED: Aircel Maxis

What happens when a country’s arguably best investigation agencies want to pin some powerful people down and yet are unable to? And when these powerful people happen to be the Chidambarams – with clout in the country’s main Opposition party, close to the Gandhi family, well connected lawyers themselves and with the might of other top lawyers behind them?

Faced with the dire situation of battling such might, the investigation agencies are likely to resort to some tactics of their own. After all, a war must be won, in their eyes. And so come the selective leaks, the whisperings of details of alleged corruption and irregularities, the feeding of monstrous sums of alleged black money to the press.

The press, again, is a hungry beast, eager for any tidbit that it can headline as “exclusive” or “first on”. And so it goes into the public domain. Leaks, allegations, counter allegations and claims of victimhood – all uncontested, unchecked and without having been analysed or questioned.

It is time for an inane disclaimer here, for the sake of the times we live in – an age of boxing media houses into pro-right or pro-liberal or pro-left. Inane, because journalists did not have to do this thus far – this report is not about defending the Chidambarams or hailing the investigating agencies. This report is also not about defaming the Chidambarams or shredding the investigating agencies. This report is about facts. As all journalistic reports should be.

There is no need to introduce the Chidambarams to the Indian reader. Father P Chidambaram is a former Finance Minister and Home Minister under the UPA government. Son Karti P Chidambaram is a businessman. Both hail from the quaint Karaikudi in Sivaganga district of Tamil Nadu and are largely based in Chennai. The elder Chidambaram is also one of the most strident voices against the present dispensation at the Centre.

The Chidambarams are far from defenceless. They have the means to launch a legal attack that could trample most. They have the connections to ensure that justice is sped up for them. Take for instance the dramatic midnight anticipatory bail given to Karti Chidambaram on 09 June – he knocked on the doors of the Chief Justice of the Madras High Court at around 11.30pm as the Income Tax Department had issued an arrest warrant against him for not appearing when summoned for questioning. The Chief Justice directed him to go to the relevant judge and he, woken up, signed off on anticipatory bail until June 28. The ordinary citizen, if unfortunate enough to be caught in such a case, would not have been able to get all of this done. P Chidambaram too managed to get anticipatory bail until 10 July, just before the Enforcement Directorate summoned him for questioning.

Are the Chidambarams guilty of corruption, money laundering, illegal possession of undeclared assets and hoarding black money? Maybe they are and maybe they are not. As of now, a section of India is firmly convinced of their guilt and another section, of their innocence.

But investigating agencies and courts cannot go by belief or prejudice. They cannot rely on circumstantial evidence. Their job is to find hard proof. Do the investigating agencies have that hard proof in the cases against Karti and P Chidambaram? That is what this report seeks to do – to clear the cobwebs around the insinuations and the bits and pieces of information selectively leaked by the CBI, the ED and the IT Department.

In the second and final of this 2-part series, we look into the long and convoluted case of Aircel Maxis and the Don Bosco Friends.

By Sandhya Ravishankar

While the INX Media investigations plod on, the ED has dug up one more case from the graves of acquittal.

The Aircel-Maxis case, as it has come to be called, was begun in 2011 when Aircel Televentures owner C Sivasankaran lodged a complaint with the CBI stating that he had been pressurised by the UPA government and its ministers, mainly the DMK’s Dayanidhi Maran, to sell his stakes in his venture to Malaysian telecom giant Maxis in 2006. The CBI filed a chargesheet in October 2011 over the same.

The case was one of alleged quid pro quo – Sivasankaran’s alleged pressurised sale of stakes in Aircel to Maxis resulted in an investment by Maxis in Sun Direct, the DTH business owned by Dayanidhi’s brother Kalanithi Maran. In August 2014 both Maran brothers were chargesheeted by the CBI. The ED too began investigations into money laundering charges.

The Aircel-Maxis case eventually became part of the 2G spectrum case and was heard by the CBI court in Patiala House. The court finally exonerated all accused in the case on 02 February 2017.

As part of the case, Finance Minister P Chidambaram’s role in granting FIPB (Foreign Investment Promotion Board) clearance to the 74 per cent stake buy in Aircel by Maxis was probed in detail by the ED and CBI. He and five senior bureaucrats from various departments who form the FIPB were also questioned. Chidambaram’s assertion that he gave “approval in the normal course of business” was accepted by the court.

“I am satisfied that the entire case is based on the misreading of the official files, contradictory statements of the witnesses as well as speculations and surmises of Sh. C. Sivasankaran. I have no hesitation in recording no prima facie case warranting framing of charge against any of the accused is made out. Accordingly, all accused stand discharged” – read the order by Justice OP Saini on the Aircel Maxis case.

“FIPB consists of five secretaries to the Government of India,” reiterated P Chidambaram in a statement in April 2017. “They examine the cases and recommend approval or rejection. They apply the rules/guidelines and submit each case to the CCEA or the Finance Minister depending on the value of the investment. As FM, I granted the approval in the normal course of business.”

But trouble lingered and arrived a year later. The ED filed an affidavit in Supreme Court in March 2018, alleging that the father-son Chidambaram duo were part of a conspiracy to conceal the actual size of the Maxis investment and passed it through FIPB whereas it actually had to get CCEA (Cabinet Committee on Economic Affairs) approval. Projects over Rs 600 crore cannot be approved by the FIPB and need to go to the CCEA. The ED has alleged that senior Chidambaram manipulated the size of the deal to Rs 180 crore when in reality it was worth Rs 3500 crore and that junior Chidambaram received the kickbacks through a Chennai-based company called Advantage Strategic Consulting Ltd. On June 13, the ED filed a 4500 page chargesheet against Karti Chidambaram, Advantage Strategic Consulting and others before the courts.

 

What The ED Says

The ED has based its investigation upon the 2011 chargesheet by the CBI that names as the accused the Maran brothers – Dayanidhi and Kalanithi Maran – as well as the chiefs of Malaysian telecom giant Maxis Group, among others. The chargesheet by the CBI does not name either P Chidambaram or Karti Chidambaram.

In its Provisional Attachment Order (PAO) of 2017, (which the 4500 page chargesheet is based on) attaching some assets of Karti Chidambaram, the ED has referred to one paragraph in the 2011 CBI chargesheet – “As discussed above, M/s Global Communication Services Holdings Ltd, Mauritius had sought FIPB approval for USD 800 million for which Cabinet Committee on Economic Affairs (CCEA) was competent to grant approval. However, the approval was granted by the then Finance Minister. Further investigation is being carried out in the circumstances of said FIPB approval granted by the then Finance Minister. The related issues are also being investigated.”

The Enforcement Directorate is an agency which, by itself, cannot file an FIR or a chargesheet. It can only do so on the basis of what is called a predicate offence – a case that is filed by its sister agency, the CBI. The CBI first has to file an FIR and a chargesheet detailing the nature of the offence and it is only then that the ED’s powers to investigate kick in.

In this case though, the ED has taken as its predicate offence the CBI chargesheet of 2011 – and this case has been dismissed with the accused acquitted in 2017.

Karti Chidambaram’s appeal in court points to this fact – “Even though the File No.ECIR/05/DZ/2012 and the complaint registered by the Enforcement Directorate in the Aircel Maxis Case had been found to be groundless by the Learned Special Judge in his order dated 02-02-2017 and no permission was sought before the Special Judge for further investigation in the matter of FIPB approval, the Enforcement Directorate, without authority of law, continued with the investigation which was only a reinvestigation.” This excerpt is from an appeal filed before the Apellate Authority of the ED by Karti Chidambaram last week.

Junior Chidambaram argues, in his appeal, that the ED has no case and that it does not even have the power to investigate the case under the Prevention of Money Laundering Act (PMLA) as the CBI had neither filed an additional chargesheet in the Aircel Maxis case, nor had a new FIR or chargesheet been filed.

“It is relevant to state that, as on date, CBI which is the investigating agency into a predicate offence has not registered any FIR or Charge Sheet in relation to the circumstances leading to the grant of FIPB approval to M/s .Global Communications Holdings Services Ltd, Mauritius. In particular, there is no document — FIR or charge sheet— in which the Petitioner herein has been named as an accused or even as a suspect.

In the absence of registration of a predicate offence in relation to the circumstances leading to the grant of FIPB approval to M/s Global Communications Holdings Services Ltd, Mauritius, the Complaint filed by the 1st Respondent before the Adjudicating Authority, New Delhi dated 18-10-2017 in the Aircel Maxis case relating to FIPB approval on the basis on an unauthorised investigation carried by the 1st Respondent is totally without jurisdiction,” reads Karti’s appeal. The petitioner is Karti Chidambaram and the 1st Respondent is the Deputy Director, ED.

An earlier petition filed by Karti in 2016 before the Adjudicating Authority of the ED, challenging the authority of the ED in carrying out investigations under PMLA were dismissed by the Appellate Authority without hearing Karti – an ex-parte order, in legalese. This, argues Karti, is contrary to the principles of natural justice.

What evidence does the ED have to launch an investigation under PMLA? The PAO states that a sum of Rs 26 lakhs was paid by ATVL (Aircel Tele Ventures Ltd) to Advantage Strategic Consulting on 11 April 2006. Advantage is alleged to be a benami firm for Karti Chidambaram. “The payment by ATVL to ASCPL was in close proximity to the FIPB approval on 20.03.2006 and investigation revealed that ASCPL was controlled by Shri Karti P. Chidambaram S/o Shri P. Chidambaram, the then Finance Minister who had accorded FIPB approval to the Aircel-Maxis FDI, even though it was not within his power & was in the competence of CCEA. Hence, further investigation was initiated in respect of the financial transactions by ATVL to ASCPL,” says the PAO.

Speaking out for the first time, exclusively to The Lede, current Director of Advantage Strategic Consulting and a childhood friend of Karti Chidambaram, Mohanan Rajesh, asks why a company that was allegedly reluctant to sell its stakes would have given any money to get FIPB approval. “The transaction between ASCPL and ATVL has been explained in great detail to all the agencies. It should be noted that ATVL was at that time owned by Mr C Sivasankaran who was the complainant in the Aircel-Maxis case. Why would he have paid ASCPL any quid pro quo for FIPB approval given to the Maxis Group?” asked Rajesh.

The ED, having examined witnesses, goes on to point out that Advantage had sold software called eLCM worth Rs 90 lakh to the Maxis group in Malaysia. They further point out that the software was for use in India only as it tracked a company’s compliance with Indian laws. The ED asks why a Malaysian firm would need to buy software that could be of use only in India. “The payment by a Malaysian company for procuring the software that is only meant for use in India, from a company controlled by the son of the Finance Minister who has approved their FDI proposal in an irregular manner and without having the competence to do so does not appear to be bonafide,” says the PAO.

“ASCPL was not connected with Chess Management in any manner. We are therefore unable to comment on the same, although we are led to believe that Chess Management has made detailed submissions to the CBI & ED on the applications of its software and scope of work,” said Rajesh. Chess Management Services could not be reached for comment.

As for evidence that Karti Chidambaram was indeed the controlling power behind Advantage, the ED, amongst other evidence, points to digital traces of “wills” recovered from computers seized from the company. The shareholders of Advantage namely Ravi Vishvanathan, Bhaskararaman, CBN Reddy and Padma Vishvanathan “had made identical Wills bequeathing their shares in ASCPL to Ms Aditi Nalini Chidambaram daughter of Shri Karti P. Chidambaram and also appointing Shri Karti P. Chidambaram as the executor of the Will,” according to the PAO. These ‘wills’ were witnessed by the shareholders and one V Murli, a secretary of Karti Chidambaram.

But the original copies of these wills have never been found despite multiple raids and searches. Without the originals, the ED does not have much of a leg to stand upon in court.

“The allegations are denied. ASCPL was and continues to be governed by an independent Board of Directors who are all professionally qualified and competent. The only owners of the Company are the declared shareholders,” said Rajesh, Director of ASCPL.

Karti was questioned by the CBI on the Aircel Maxis case once on 19 November 2014 as part of the initial investigation into the role of the Maran brothers. A year after the verdict was delivered exonerating all accused, the Enforcement Directorate has now begun raiding and questioning him. His home and office was raided four times in two months – on 10, 17 and 25 April and then on 04 May this year.

On 29 November 2016, P Chidambaram filed an affidavit in the Delhi High Court in a case filed by his son against the ED. In this affidavit, he stated – “I submit that the CBI had investigated the said FIPB approval fully, even after the filing of the charge-sheet in the Aircel-Maxis case, and has submitted status reports to the Supreme Court which fact is recorded in the order of the Supreme Court dated 9th September 2015. The CBI had recorded statements of all the FIPB officials including Shri Ashok Chawla IAS, then Additional Secretary and Shri Ashok Jha IAS, then Secretary and Chairman FIPB (in the Department of Economic Affairs). In addition, CBI recorded my statement on 6th December 2014. All the persons who gave statements to the CBI affirmed and demonstrated that the approval was granted by FIPB and recommended to the competent authority, namely, the Finance Minister for his approval with the Extant Guidelines.”

Senior Chidambaram goes on to add – “The CBI has not found or reported any offence under any law in respect of the said FIPB approval.”

In effect, the Chidambarams say that there is no offence and therefore no question of illegal proceeds of an offence. “Firstly, there must be a scheduled offence. Secondly, the agency investigating the scheduled offence must identify the proceeds of crime, as defined in PMLA. It is only at that stage will the question of money laundering arise. No material has been placed by the Enforcement Directorate to show that the Appellant directly or indirectly attempted to indulge or knowingly assisted or knowingly was a party or was actually involved in any process or activity connected with the “proceeds of crime” including its concealment, possession, acquisition or use and projecting or claiming it as untainted property. If there is no FIR or charge sheet relating to a scheduled/predicate offence and proceeds of crime have not been identified, the question of the Appellant indulging in money laundering does not arise,” argued Karti Chidambaram in his appeal.

Officials of the Enforcement Directorate who are investigating the cases refused to speak to this reporter. But the investigating officer in the Aircel Maxis case Rajeshwar Singh is facing trouble at the courts. The officer himself filed a contempt petition against one Rajneesh Kapur, Managing Editor of Kaalchakra News Bureau in New Delhi last month, alleging that he is a “proxy” for “vested interests”.

“It is a matter of record that continuous attempts are being made to derail the progress of the investigation in the 2G Spectrum case and Aircel Maxis case by levelling false, baseless and frivolous allegations of personal nature i.e. alleging accumulation of disproportionate assets and wealth by the Petitioner. This has been notwithstanding the fact that all such allegations are same which have been duly considered and examined by this Hon’ble Court and found to be false and fabricated and the Petitioner has been cleared by this Hon’ble Court. Needless to add that in fact CBI and CVC have also examined these false complaints and found it to be frivolous and they have also found the complaint to be false and have cleared the Petitioner from these false allegations” – reads his contempt petition before the Supreme Court.

Subsequently though, the bureaucracy appears to have turned on Singh. The Supreme Court has given the nod for a probe into complaints of disproportionate assets against Singh who is also a Joint Director of the ED. With this a storm has been kicked up between the ED and the Revenue Ministry with each attacking the other.

Black Money and IT Irregularities

The Income Tax Department too has stepped into the fray by filing a chargesheet against Karti Chidambaram, his mother Nalini Chidambaram and wife Srinidhi Chidambaram for possessing undisclosed assets in Cambridge, UK and one in the US. The total value of these properties are close to Rs 10 crore. They have been charged under Section 50 of the Black Money Act of 2015.

As for the allegations on black money and Income Tax irregularities, Team Karti maintains that the whole case is “cooked up”. “There is no case because a court has to be mandated to look into black money related issues. That has not been done. Although the IT Department says that a case has been filed on 11 May itself, there is no case of this nature which has been numbered,” said a source close to Karti Chidambaram. His friends say that Karti and family have already disclosed the details of all the properties referred to by the Income Tax Department.

This reporter contacted three senior Income Tax department officers who are investigating the case relating to the Chidambarams. All three refused to divulge any details, stating that they do not speak to the press.

Another curious aspect is the role of a little-known website www.pgurus.com. The site itself is owned by an NRI Sree Iyer who resides in the San Francisco Bay Area in the United States. The site regularly puts out “source-based” reports and updates about the PC and Karti cases and they appear to be validated in reality shortly post publication. “It is almost as if the investigating agencies give pgurus the copy of the FIRs or documents even before it is filed and we get to see it,” said a source close to Karti Chidambaram. Sree Iyer regularly interacts in a familiar manner with BJP MP Subramanian Swamy as well as RSS ideologue and Tughlaq editor S Gurumurthy on Twitter.

The Don Bosco Friends

Even a cursory look into the intricate web of companies created and owned by Karti Chidambaram and his friends shows a confusing array of companies, each linked with common directors or shareholders, giving loans to each other and doing business with one another.

For instance the firms Advantage Strategic Consulting, Chess Management Services, Chess Global Advisory Services, Kwaliteit Floritech, NorthStar Software, Kriya FMCG, Ausbridge Holdings and Investments and Kayce Foods, amongst others, pop up all over the web of companies surrounding Karti Chidambaram.

Chess Management Services was incorporated in May 1998 with Karti Chidambaram as one of four directors. Over time the directors were whittled down to two – Karti Chidambaram and Annamalai Palaniappan (Karti’s cousin) who owned 50% stake each in the company.

But in the returns filed upto 31 March 2014, Karti Chidambaram ceased to hold stake in or be a director of Chess Management Services.

As of 31 March 2017, according to latest filings available with the Registrar of Companies, Karti is director of and majority shareholder (80.2%) in another company founded by him in 2005, Chess Global Advisory Services. The remaining 19.8% stake in the firm is owned by Chess Management Services. Chess Global has as its fully owned subsidiary, a UK-based firm Totus Tennis. Its directors are Karti Chidambaram, Annamalai Palaniappan and Gautam Tharanath Maroli.

As for Advantage Strategic Consulting, the company has made investments in a large number of firms, most of which are related to Karti and friends.

Friends of Karti include Mohanan Rajesh, present director of Advantage Strategic Consulting. “I have been friends with Mr Karti Chidambaram since I was 4 years old. ASCPL was promoted by Bhaskar with his wife Padma and brother-in-law Ravi. We are all business acquaintances and some of us were introduced to each other by Mr Karti Chidambaram,” explained Mohanan Rajesh.

“ASCPL has 2 wholly owned subsidiaries – one in India and other in Singapore. These are reported in all its annual filings with various government agencies. A bare perusal of our publicly available documents will show that there is no “web” of companies as has been alleged. ASCPL is just a small private limited company managed by professionally competent and independent Board of Directors who have known each other for many years. Our private business, conducted with our own hard earned, tax-paid money has no bearing on our personal friendship with Mr. Karti Chidambaram who has many, many friends all over the world.

The income tax department has been scrutinizing the income tax returns of ASCPL almost every year for the past 10 years. They have not found any income or assets that have not been declared. Whatever incomes/gains we have earned are from completely legal sources and we are confident that our Company will prove its credibility and credence even before the highest court of law,” he added.

Gautam Tharanath Maroli is a director of a number of firms including that of Chess Global. CBN Reddy is another friend, an IIM-A graduate, who is a director of a number of firms including Advantage Strategic Consulting and Kriya FMCG. CBN Reddy also owns 50% stake in Advantage Strategic, while the other director Mohanan Rajesh owns 40% stake through Ausbridge Holdings. Other friends of Karti include Ravi Vishvanathan and his sister Padma Vishvanathan, both of whom were the initial directors of Advantage Strategic Consulting. Padma Vishvanathan is married to Bhaskararaman, the chartered accountant who was arrested along with Karti earlier this year.

Karti, Ravi Vishvanathan, Gautam, Mohanan Rajesh all studied together at Don Bosco school in Chennai. They are childhood friends and now, they say, business friends as well.

The companies invest in each other, according to their balance sheets, give loans to each other and do business with each other. Their foreign subsidiaries – like Advantage Strategic Consulting in Singapore and Totus Tennis in London share the same registered addresses as their respective auditors’. Some of the firms in Chennai too share the same registered addresses as their auditors’. “A company is free to occupy any premises as its registered office, as long due intimation is given to the agencies like ROC, Income Tax etc., so that any official communication may be served in the registered office. The address does not have anything to do with a company and its legal compliance,” argued Rajesh when queried about this. All of the companies have grown in leaps and bounds – business appears to have been booming especially in the consultancy sector.

Business may be good but now anyone close to the Chidambarams is on tenterhooks. “It has been a very bad experience and has been especially traumatic to my children, who had to witness 3 different raids by the ED, IT and CBI in my home. Both of them are school going children. On all 3 occasions, both of them were rudely woken up from their sleep and asked to get out of their rooms. My son was even taken away separately and asked if he knew about his father’s business and where I usually hide “cash.” I know my co-directors and employees mirror the same sentiments. We are all just middle class people who have always been law abiding and sincere. Our names are being unnecessarily dragged through the mud. However, we are confident that we have done no wrong and we look forward to the day when truth will prevail before a Court of law,” said Mohanan Rajesh.

But now, with father P Chidambaram himself getting anticipatory bail fearing imminent arrest, the cat and mouse game is on in earnest between one of the most powerful politicians in India and his rival regime’s investigating agencies.

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