However, as alleged, INX Media had entered into a deal with the investors for issuance of shares at a premium of ₹862.15 a unit.
The CBI has alleged that invoices for payment of over ₹3.20 crore to four companies were raised for INX Media, after its proposal for the downstream of investments into INX News was cleared by the then Union Finance Minister, P. Chidambaram, in 2008.
On March 13, 2007, the company applied for investments from three Mauritius-based firms: Dunearn Investments, New Silk Route and New Vernon Private Equity Limited, by way of preferential allotment of about 14.99 lakh equity shares at ₹10 a unit.
However, as alleged, INX Media had entered into a deal with the investors for issuance of shares at a premium of ₹862.15 a unit. The quoted amount of the proposed influx was just ₹4.62 crore but the real figure turned out to be ₹403.07 crore.
The proposal was put up before the FIPB (Foreign Investment Promotion Board), which recommended it, clarifying that a separate approval was needed for downstreaming. Mr. Chidambaram cleared it, but the approval letter did not quantify the FDI in monetary terms, allegedly to conceal the exact amount of influx. It was showed only as 46.2% of the issued equity share capital of the company to the investors, the CBI said.
In February 2008, then Information and Broadcasting Minister received complaints about the source of funding to INX News from some media representatives. The matter was sent to the Department of Revenue (DoR). Some former MPs, besides former INX Media employee Vir Sanghvi, too approached the Finance Minister, who also referred the issue to the DoR.
The Income-Tax Department, which saw the influx from a “tax haven” with suspicion, initiated an inquiry and sought clarifications from the Finance Ministry’s FIPB unit on “excess” investment and 26% downstreaming in INX News. The FIPB unit officials, named in the CBI charge sheet filed on Friday, defended the decision on the FDI issue, the CBI said.
The agency alleged that the correspondences between the Income-Tax Department, the FIPB unit and INX Media were on when then INX Media director Peter Mukerjea allegedly contacted Mr. Chidambaram to resolve the issues. On his instructions, it is alleged, the company directors met Mr. Karti Chidambaram at Hotel Hyatt in mid-2008.
At the meeting, a demand for $1 million was made, of which ₹9.96 lakh was paid in advance to Mr. Karti-controlled Advantage Strategic Consulting Private Limited (ASCPL) in the guise of consultancy, the CBI said.
As advised by Mr. Karti’s company Chess Management Services, INX Media replied to the FIPB unit’s queries on the issues of “excess” investment and downstreaming. The official who received the response proposed to forward it to the Income-Tax Department for further action. However, the accused FIPB officials buried the matter, saying that INX News had been told to apply afresh for downstreaming.
When the new proposal came before the FIPB Board, as alleged, the officials concealed the fact that downstreaming has already been done. Accordingly, it was recommended and then cleared by Mr. Chidambaram on October 30, 2008.
Days later, four invoices worth about ₹3.2 crore were allegedly raised for payment to ASCPL, its Singapore wing, one North Star Software Private Limited and Greece-based Geben Trading Limited, the CBI said.
The agency has sent Letters Rogatory (judicial requests) seeking details from Singapore, Mauritius, Bermuda, the United Kingdom and Switzerland, on the alleged payments overseas. The responses are awaited, it said.