ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Circumventing Institutions: Did Chidambaram Subvert the Foreign Investment Promotion Board?

The raids on premises connected to former Union Finance Minister Palaniappan Chidambaram and his son Karti Chidambaram have attracted attention because of the allegations by the Central Bureau of Investigation, the Enforcement Directorate and Bharatiya Janata Party Member of Parliament Subramanian Swamy that the functioning of the soon-to-be defunct Foreign Investment Promotion Board was sought to be subverted. One major accusation against Chidambaram is that he manipulated the working of the FIPB to help the former Communications Minister Dayanidhi Maran in the Aircel–Maxis case. The EPW presents for the first time how this unusual deal was structured in a convoluted manner using preference shares.

The authors acknowledge receipt of an unpublished draft report of the Comptroller and Auditor General of India that was provided by a whistleblower to the editor of the EPW.

By World Economic Forum [CC BY-SA 2.0], via Wikimedia Commons

On 16 May, the Central Bureau of Investigation (CBI) conducted search and seizure raids in four cities on the homes and offices of former Finance Minister Palaniappan Chidambarams son Karti Chidambaram. These raids were related to a probe by the CBI on a foreign investment approval granted to the Peter and Indrani Mukherjee owned INX Media by the Foreign Investment Promotion Board (FIPB). This clearance, it has been alleged by the CBI and others, was illegally obtained by the company. Comparable allegations have also been made about the clearance that was given by the FIPB for the acquisition of Indias Aircel by Malaysias Maxis in 2006. In both cases the principal allegation is that Chidambaram misused the power of his office as union finance minister while granting FIPB approvals for foreign investments in Indian companies. It has further been alleged that Chidamabarams son Karti benefited from these companies, allegedly for his ability to facilitate the grants of FIPB clearances. An unpublished report drafted in the office of the Comptroller and Auditor General, (CAG) available with the EPW, traces the corporate structure of Maxis acquisition of Aircel in 2006, and details how existing rules and procedures were allegedly violated by the finance ministry while approving that investment. Chidambaram has repeatedly denied these allegations in the media.

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Published On : 23rd Feb, 2024

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