The decade-old case of INX Media

Written by Deeptiman Tiwary | Published: March 1, 2018

CBI arrested Karti Chidambaram in connection with the INX Media case Wednesday. It said Chidambaram had been resisting summons for questioning, and not cooperating with investigations. In the lone questioning session he attended, Karti was evasive and gave incorrect statements in the face of evidence — therefore, he had to be arrested, CBI said.

However, the grounds for the arrest were probably laid as early as in 2008, even before INX Media secured all clearances from the Foreign Investment Promotion Board (FIPB). In January 2008, the Financial Intelligence Unit (FIU-IND) flagged foreign direct investment of over Rs 305 crore by three Mauritius-based companies in INX Media Pvt Ltd (now called 9X Media Pvt Ltd), formerly owned by Peter and Indrani Mukerjea.

The FIU alert was picked up by the investigation wing of the Income-Tax (I-T) Department in Mumbai, which subsequently forwarded the case to the Enforcement Directorate (ED). In 2010, ED registered a case against INX Media for alleged violations of the Foreign Exchange Management Act (FEMA).

Last year, while investigating a company associated with Karti, ED found some documents related to the INX Media deal in the computer of Karti’s CA Bhaskarraman. The documents indicated payments made to Karti’s alleged company by INX Media at the time the Finance Ministry granted it FIPB approval. ED sent a reference in this regard to CBI, which registered a case of corruption in May 2017, and searched premises connected to both Karti and his father P Chidambaram. Following this, ED lodged a case of money laundering against Karti.

According to the CBI FIR, on March 13, 2007, INX Media approached the FIPB for permission to issue 14.98 lakh equity shares and 31.22 lakh convertible non-cumulative redeemable preference shares of Rs 10 a piece to three non-resident investors — Dunearn Investment (Mauritius) Pte Ltd, New Silk Route PE Mauritius LLC, and New Vernon Pvt Equity Ltd, under the FDI route. These shares represented 46.21% of the issued equity capital of INX Media.
INX Media, according to CBI sources, sought this approval to start a music channel, 9XM, a Hindi general entertainment channel (GEC), and multiple entertainment channels in other languages.

According to CBI, the media firm, in its application to FIPB in 2007, also mentioned its intention to “make a down stream financial investment to the extent of 26 per cent of the issued and outstanding equity share capital of INX News Pvt Ltd, a subsidiary of INX Media”.

While the FIPB granted permission to INX Media on May 30, 2007 to bring in FDI of Rs 4.62 crore, it rejected the proposal of downstream investment of INX Media in INX News. The CBI has alleged that INX Media flouted the conditional approval of FIPB, and brought in over Rs 305 crore of FDI in the firm against the approved inflow of Rs 4.62 crore. According to sources, the foreign entities bought shares of INX at Rs 862.31 a piece, which was 86.2 times more than their face value. The media organisation also made a downstream investment of 26% in its subsidiary, INX News.

CBI has alleged that on May 26, 2008, when FIPB sought clarification from INX Media after the I-T Department began its probe, the media firm engaged Karti Chidambaram, promoter director of Chess Management Service (P) Ltd, to “amicably” resolve the issue by “influencing the public servants of the FIPB unit of Ministry of Finance by virtue of his relationship with the then Finance Minister, P Chidambaram”.

Based on clarifications suggested by Chess Management, INX Media through its letter dated June 26, 2008, tried to justify its action on two counts: On the downstream investment issue, the company claimed that it was in accordance with the approval granted to it; on the excess foreign inflow, it said that was justified as premium received against shares issued.

However, CBI has alleged that Karti exercised influence over certain FIPB officials, and the department, instead of investigating the case, extended undue favours to the media firm by asking INX News to apply for fresh FIPB approval on the downstream investment already received by it.

At the same time, ED investigations have found, Advantage Strategic Consulting Pvt Ltd, a company that CBI has claimed is “indirectly controlled” by Karti, received a payment of Rs 10 lakh from INX Media on July 15, 2008. Although invoices issued by SPCL claimed that the service rendered was management consultancy, the ledger extract produced by INX Media to investigators showed that the payment had been made for “reply towards FIPB notification and clarification”.

ED has also claimed to have found four invoices, dated in September 2008, raised by ACPL, its Singapore subsidiary and two other companies for US $ 700,000. According to CBI, INX Media was later granted FIPB permission for the investment in violation of norms.

In 2008, the media firm launched NewsX, an English news channel. Within a year of the launch, the channel was sold to Indi Media Network, a joint venture between Nai Duniya owner Vinay Chhajlani and journalist Jehangir Pocha.

In March 2009, Peter and Indrani Mukerjea exited the company after selling their 30% stake in the loss-making INX Media. In April 2010, the Hindi GEC of the company was sold to Zee Network for Rs 64 crore. The same year, INX Media was renamed as 9X Media. Subsequently, in 2011, New Silk Route increased its stake in the company to 80% by buying out all the other private equity investors in the company. Both Peter and his wife Indrani, founders of INX Media, are accused in the Sheena Bora murder case and are lodged in jail in Mumbai.

Reference

Comments

Post a Comment

Popular posts from this blog

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav
Read more

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017 arrested his
Read more