Fourth case against Karti Chidambaram: CBI registers case for alleged relief to Diageo Scotland

The Central Bureau of Investigation (CBI) has registered a case of corruption against Karti Chidambaram, son of former finance minister and Congress leader, P Chidambaram, for allegedly giving relief to alcoholic beverage company Diageo Scotland. 

The CBI FIR said that the case pertains to alleged suspicious payment made to Advantage Strategic Consulting Pvt. Ltd (ASCPL), controlled by Karti Chidambaram and his close aide S Bhaskararaman by Diageo Scotland and Sequoia Capital. 

This is the fourth case against Karti Chidambaram, apart from three other corruption cases of Aircel Maxis, Visa for Chinese employees and INX Media. This particular case stemmed from a Preliminary Enquiry – against Katra Holdings, ASCPL, Karti Chidambaram and others – that was registered by the CBI in 2018 to look into alleged irregularities in granting Foreign Investment Promotion Board (FIPB) clearance when P Chidambaram was the finance minister. 

ASCPL, Diageo Scotland, Mauritius-based Sequoia Capital, Vasan Healthcare Pvt Ltd have also been named by CBI along with Chidambaram and Bhaskararaman. The case has been registered under IPC sections 120-B (criminal conspiracy), 420 (cheating) and provisions of the Prevention of Corruption Act. 

CBI stated that the enquiry found that Diageo Scotland, UK used to import duty-free Johnnie Walker whisky. But in April 2005, the India Tourism Development Corporation (ITDC) which had monopoly over the sale of imported duty-free liquor in India put an embargo on the sale of Diageo’s duty-free products in India. 

This embargo impacted the company’s revenues. The CBI stated that 70 per cent of the company’s business came from the sale of Johnnie Walker whisky. Diageo Scotland then approached Karti Chidambaram to seek the lifting of the ban and made payments of $15,000 to ASCPL, which it accepted as “consultation fee”. 

The agency is also looking into suspicious share transactions involving Sequoia Capital and Vasan Healthcare when they were awaiting foreign investment in India. According to the agency, Sequoia paid Rs 86.80 crore to ASCPL and Arun, the late founder of Vasan Healthcare, at Rs 7,500 per share, whereas the actual market rate was Rs 1.27 crore.

The CBI further alleged that Meera Arun, the wife of Vasan Healthcare’s founder, subscribed to 5.80 lakh shares of Vasan at Rs 200 per share on October 28, 2008. She then gifted 3 lakh shares to her father, Dwarkanathan, who has since passed away. The following day, on October 29, 2008, Dwarkanathan sold half of these shares to ASCPL at Rs 100 per share, according to the FIR.

The agency claims that ASCPL’s account does not show any entry for the payment of Rs 1.50 crore to Dwarkanathan for this share purchase. On October 26, 2010, ASCPL allegedly sold 30,000 out of the total 1.5 lakh shares to Sequoia Capital India Growth Investment Mauritius, a sister concern of Sequoia, at Rs 7,500 per share, totaling Rs 22.50 crore, as stated in the FIR.

On the same day, Arun, the CMD of Vasan Health, also sold 52,133 shares to Sequoia Capital India Growth Investment Mauritius at Rs 7,500 per share, amounting to Rs 39.09 crore. Additionally, 33,600 shares were sold to Sequoia Capital India Growth Investment-II Mauritius at Rs 7,500 per share, amounting to Rs 25.20 crore, the FIR alleged.

The CBI also alleged that Dwarkanathan received Rs 1 crore from ASCPL on October 27, 2010, which does not appear in ASCPL’s accounts. The FIR claims that the share transactions at such high prices were not conducted in the ordinary course of business but were part of a conspiracy to benefit Karti P Chidambaram, who could influence public servants.