The CBI today carried out searches at several places linked to former Union minister P Chidambaram and his son Karti over alleged favours granted in foreign investment clearance to a firm, INX Media, in 2007.
Official sources in Delhi said the searches are spread across Mumbai, Delhi, Chennai, and Gurugram.
The raids are taking place at the Nungambakkam residence of P Chidambaram in Chennai, a senior police official said in Chennai.
The agency yesterday registered a case regarding alleged irregularities in granting the Foreign Investment Promotion Board (FIPB) clearance to INX Media, run by its directors Indrani Mukerjea and Peter Mukerjea, in 2007 when P Chidambaram was the Finance Minister.
The agency registered the case against INX Media through its director Indrani, Peter, Karti, Chess Management Services (a company of Karti), Advantage Strategic Consulting Limited through its director Padma Vishwanathan.
It has levelled the charges of criminal conspiracy, cheating, taking gratification by corrupt or illegal means, to influence public servant and criminal misconduct.
Reacting to the raids, the former finance minister alleged that the government was using the CBI and other agencies to target his son.
He said FIPB approval was granted in "hundreds of cases."
"The government, using the CBI and other agencies, is targeting my son and his friends...The government's aim is to silence my voice and stop me from writing, as it has tried to do in the cases of leaders of opposition parties, journalists, columnists, NGOs and civil society organisations," the senior Congress leader said in a statement in Chennai.
"All I will say is, I shall continue to speak and write," he said.
The five secretaries who constitute the FIPB, the officials of the FIPB secretariat and the competent authority in each case are the public officials, he said, adding there was no allegation against any of them.
"There is no allegation against me," he added.
Every case was processed according to law and approval was granted or refused in accordance with the recommendations of the FIBP comprising five secretaries to Government of India, he maintained.
The CBI has alleged that Karti used his influence in the Finance Ministry to help the company scuttlethe probe against it.
INX Media had sought the FIPB clearance on March 13, 2007 for permission to issue, by way of preferential allotment upto 14.98 equity shares to three non-resident entities--Dunearn, NSR PE and New Veron Pvt Equity Ltd.
The company sought this approval for engaging in the business of creating, operating managing, and broadcasting bouquet of TV channels.
The FIPB unit, while sending the brief of the proposal which was to be put to the FIP board for its meeting scheduled on May 18, 2007 had clearly mentioned that Foreign Direct Investment of Rs 4.62 crore proposed issue at the face value could be allowed and for investment in INX News a separate FIPB approval would be required.
The board recommended the proposal of INX Media for consideration of the Finance Minister but not that of INX News.
The recommendations were cleared by the then Finance Minister, the FIR alleged.
The company in violation of the recommendations made investment to the tune of 26 per cent in the capital of INX News which included foreign investment and generated more than Rs 305 crore of FDI in INX Media against the approved inflow of Rs 4.62 crore by issuing shares to foreign investors at a premium of more than 800 per share, it alleged.
The Investigation wing of the IT Department sought clarification from the company in 2008. The company in its response said the investment was in accordance of the recommendation.
The company "in order to wriggle out of the situation without any punitive action entered into criminal conspiracy with Karti P Chidambaram, son of P Chidambaram, the then Finance Minister or India and Promoter Director of Chess Management Services, Chennai so as to get the issues resolved and addressed amicably by influencing the public servants of the FIPB Unit of Finance Ministry by virtue of his relationship with the then Finance Minister," the FIR alleged.
It alleged that the officials by virtue of influence exercised over them by Karti, not only ignored the serious illegality on the part of INX Media on both the counts but also deliberately showed undue favours to INX Group by abusing their official position and advised the company to file for fresh clearance,.
The officials of the FIPB unit ignored the request of Revenue Department to investigate the matter as to how investment was made by the company without the FIPB approval.
The company, on the advise of FIPB officials, filed fresh request which was cleared by the Finance Ministry and the Finance Minister.
"Such deceitful and fallacious proposal was favourably considered by the officials of Finance Ministry and approved by the then Finance Minister," it alleged.
The concurrence to the 'proposed investment' which had already been made without the approval of the Finance Ministry shows the malafide and dishonest intention on the part of Finance Ministry officials.
"By such partisan and malafide acts done pursuant to the criminal conspiracy with the beneficiary company and the intermediaries, the senior officials of the Finance Ministry not only granted the illegal approval but also misinformed the investigation...By Income Tax department," it alleged,
The CBI has alleged that for the services rendered by Karti through his company Chess Management Services consideration in the form of payment were received against invoice raised on INX Media by Advantage Strategic Consulting (P) Limited (ASCPL), the FIR alleged,
"The source informs that the very reason for getting the invoices raised in the name of ASCPL for the services rendered by Chess Management Service Limited was with a view to conceal the identity of Karti Chidambaram...," it alleged.
The FIR filed on source information alleged that Karti was indirectly handling ASCPL.
Invoices for approximately Rs 3.5 crore were also raised in favour of INX group in the name of other companies in which Karti was having "substantial interests" directly or indirectly, the agency alleged in the FIR.
"Such invoices were falsely raised for creation, acquisition of media content, consultancy, in respect of market research. However INX group in its record has clearly mentioned the purpose of payment of Rs 10 lakh to ASCPL as towards management consultancy charged towards FIP notification and clarification," the FIR alleged.