New Delhi: Six IAS officers who were on the Foreign Investment Promotion Board (FIPB) when the INX Media deal was cleared in 2007 are also under the CBI scanner for alleged irregularities in its passage.
The 12-year-old proposal jumped into headlines once again last week as the CBI arrested Congress leader P. Chidambaram, the finance minister at the time, for his alleged role in the case.
Chidambaram’s son Karti is also an accused, for allegedly striking a deal with Indrani and Peter Mukerjea of INX Media to settle the matter when authorities first smelled a rat.
While Chidambram’s defence lawyer Kapil Sibal told the court that none of the six government secretaries who gave the clearance had been arrested, the CBI told ThePrint that the officials were called in for questioning and cooperated in the investigation — something, the agency claims, Chidambaram didn’t do.
Where it all began
The case started in 2007, when INX Media moved the FIPB, overseen by the Union Finance Ministry, for clearance to seek foreign investment.
Disbanded in 2017, the FIPB, which functioned under the department of economic affairs, was headed by the economic affairs secretary. It was an inter-ministerial panel that served as the government portal for foreign investment permissions.
There were two things in the INX Media application: The firm needed permission to sell around 46 per cent of its shares to three Mauritius-based entities to channel foreign investment of Rs 4.6 crore, and also stated its intention to carry out ‘downstream investment’ in its subsidiary INX News Pvt Limited.
‘Downstream investment’ or indirect foreign investment is the money invested by an Indian company with foreign investors in another Indian company.
While INX Media was granted permission for the first request at a 2007 board meeting of the FIPB, the downstream investment plea was denied, the six IAS officers told the CBI.
But the Mukerjeas allegedly went ahead with their plans anyway, also securing Rs 305 crore in foreign investment — against the Rs 4.62 crore for which permission was granted — by selling shares at a premium (over their face value).
The alleged discrepancies were discovered by the finance ministry’s Financial Intelligence Unit, with the income tax department stepping in and subsequently referring the case to the Enforcement Directorate. In 2017, hints of payouts by INX Media to Karti brought the CBI into the picture.
With the case grabbing headlines again, ThePrint looks at the six officers who handled the clearance, and explores what they told the CBI about the controversial deal.
Dipak Kumar Singh
A Bihar cadre IAS officer of the 1992 batch, Singh served at FIPB from February 2006 to December 2010, first as deputy secretary and then director. He is currently the principal secretary in the Bihar labour resources department.
As his role came under the scanner of the CBI and ED, he was called in for questioning and gave a detailed statement regarding his role in the matter.
In his statement, he cited INX Media’s request for Rs 4.62 crore in FDI and said it was approved by the FIPB.
However, Singh added that the application suggested the shares were to be issued at par or face value — 46.2 lakh shares at Rs 10 each — since there was no mention of premium.
“The FDI inflow of Rs 4.62 crore as mentioned in the brief is based on par value on the basis of the numbers of shares to be issued,” he said in his statement, which has been accessed by ThePrint. “From the application of INX Media, it appears that the shares were to be issued at par, since it does not mention about premium,” he said.
“INX Media should have mentioned in their application about premium amount if it was already decided,” he stated.
He also stated that the applicant company had not sought approval for downstream investment but only stated its intention to do so.
The FIPB brief, he said, mentioned that the company would need a separate application for downstream investment.
Duvvuri Subbarao
A 1972-batch IAS officer of the Andhra Pradesh cadre, the former RBI governor is now retired.
He is a former secretary, department of economic affairs.
In his statement to the CBI, he admitted that there was a discrepancy at the end of the FIPB Unit — the secretariat that serves the board itself — and that the “violations” in the deal approving FDI for the company were not brought to the notice of the FIPB.
He said the FIPB approval for INX Media was for 46.216 per cent of its shareholding, amounting to Rs 4.62 crore only, adding that this was violated.
“This discrepancy should have been sorted out by the FIPB Unit. The FIPB Unit should have confirmed from the company if indeed downstream investment had been made in INX News Pvt Ltd,” he told the CBI.
He said the head of the FIPB Unit, normally a director or a deputy secretary, was responsible for ensuring compliance with SEBI/RBI guidelines and to bring violations, if any, to the notice of the board for a decision on how to deal with the violation.
“If the fact of downstream had been confirmed, it constituted a violation of the FIPB guidelines, the FIPB Unit should have reported the matter to FIPB for an appropriate decision,” he stated.
P.K. Bagga
In July 2006, Pradip Kumar Bagga joined the Ministry of Finance as officer on special duty (OSD). He retired in November 2012 and from then to March 2015, served as OSD (capital market & investment) in the ministry on a contractual basis.
In his statement to the CBI, he said that, in this case, if the FDI inflows were over and above the approved limit, the action in the normal course taken by FIPB would be to refer the matter to the RBI for reconciliation/suitable action.
Bagga said the matter of downstreaming by INX Media in INX News should have been checked first by the Ministry of Information & Broadcasting, since it oversees the activities of news channels.
Ashok Chawla
A former finance secretary, Chawla has also served as civil aviation secretary and chairperson of the Competition Commission of India (CCI), among other roles.
Chawla quit as Yes Bank chairman in November 2018.
He resigned as chairman of the National Stock Exchange in January 2019, after the CBI got sanction to prosecute him in the Aircel-Maxis case, another case where Karti is under the scanner.
Chawla was an additional secretary when the FIPB clearance was given to INX Media.
Sindhushree Khullar
The former Niti Aayog CEO was additional secretary in the department of economic affairs from 2004 to 2008.
According to the CBI, Khullar was involved in the conspiracy to ignore the irregularities in the INX Media case.
In June this year, the Central Vigilance Commission (CVC) sought sanction to prosecute her in the case.
Anup K. Pujari
A former secretary in the Ministry of Micro, Small and Medium Enterprises (MSME), Pujari also served as joint secretary between 2006 and 2010 under then finance minister Chidambaram. Although under the scanner, he has not been called in for questioning by the CBI yet. Along with Khullar, the CVC also sought sanction to prosecute Pujari.
Also read: Indrani Mukerjea allowed to turn approver in INX Media case involving Chidambarams
jumped walls as though all proofs ready to provide , now started abusing 72 yrs old citizen without any base without any evidences ,its total tamasha
True follower of Modi- Shah
Now its the turn of another Stalwart – ajit pawar. LoL. For years together, such guys are getting away with murder. The Nation is aware of their deeds but rhey still manage to wriggle out in the Courts. And The Print does not want to print a counter point of view. The roys of ndtv, Mr Gupta? Doodh ka dhula hai? LoL
Many years ago Telgi underwent a Lie Detector Test LIVE on TV. Telgi took 2 names LIVE on TV . If PC is so clean why not undergo a Lie Detector Test LIVE on TV. HE will sing the Truth and give account of every single Rupee/$. Let India know the Truth. My gut feeling is that PC will wriggle out of this just like sreesanth. Time has come to treat the Rich Powerful Famous with a different yardstick. You cannot treat a 30k chain snatcher similarly with a 300 crore scamster. Maybe the Lie Detector Test is not admissable in the Courts of India, but let such people be humiliated in full view of India.
My gut feeling is that these 6 senior officers are not involved in any hanky-panky. They were merely used by PC to make things look above board by fixing the Technical Specifications. Modus Operindi will almost be the same in other similar deals.
Yes
I am no slueth but i feel that chiddu orchestrated the scam by fixing the Technical Specifications of the deal itself to make everything look above board.
Not able to deduce anything from the article. Is it complete?