Chidambaram's firm allegedly indulged in illegal share transactions of the Chennai-based Vasan Healthcare Private Ltd with overseas investors
The money trail
ED investigated financial dealings between the firm owned by Karti and V Dwarakanathan, a stakeholder in the Vasan Healthcare
Case relates to forex violations to the tune of Rs 45 crore
The ED sought information from Dwarakanathan on I-T returns, details of assets, bank accounts and transactions done with companies in which Karti has stakes.
The Enforcement Directorate (ED) has issued a show-cause notice to Karti Chidambaram, son of former finance minister P Chidambaram and a firm, Advantage Strategic Consulting Pvt Ltd, purportedly linked to him for alleged violations of Foreign Exchange Management Act (FEMA) laws.
Chidambaram's firm allegedly indulged in illegal share transactions of the Chennai-based Vasan Healthcare Private Ltd with overseas investors. Chidambaram and his firm "appears to be the controller and ultimate beneficiary in these transactions," the ED said.
ED has investigated the financial dealings between the firm owned by Chidambaram and Dwarakanathan, father-in-law of AM Arun, founder of Vasan.
Overseas investors picked up equity shares from the secondary market. These shares were acquired from Arun, AMA Associates (a partnership firm belonging to promoter Arun and Dwarakanathan) and the Chidambaram-controlled Advantage Strategic Consulting Pvt Limited.
In 2010, the first lot of share sale took place for Rs 7,500 per share. The next transaction, between March and May 2012, took place for Rs 5,242 per share. Foreign investors have pumped in Rs 357.72 crore, which ultimately benefited existing shareholders, including Advantage Consulting.
Arun had transferred 3 lakh equity shares to Dwarakanathan without any consideration. After that, half of the shares were transferred by Dwarakanathan to Advantage Strategic. Chidambaram was never connected with the activities of the company till then.
Advantage paid Dwarakanathan Rs 50 lakh more than a year after the date of transfer of shares. The shares had a total face value of Rs 1.50 crore and was acquired by the original allottee for Rs 3 crore, which included a premium of Rs 1.50 crore. During the negotiation with overseas investors, Arun ensured the sale of Advantage's stake as well.
Out of the 1.5 lakh shares, Advantage sold 30,000 shares for Rs 22.50 crore to Sequoia Group. Advantage transferred Rs 1 crore to Dwarakanathan.
ED had also issued a similar notice, after over two years of investigations, to Vasan Healthcare, for alleged forex violations of Rs 2,262 crore.
"Investigations have revealed that the company had received investments from Sequoia and WestBridge, based at Mauritius, and also from GIC, Singapore," the ED said in a statement.
In August 2015, ED had summoned four directors of Advantage Strategic Consulting and Vasan in connection with the Aircel-Maxis probe money trail. Only one director did turn up, but he too evaded summons. According to ED officials, none of the four directors cooperated with the investigations.
The ED, sources revealed, had posed simple questions to these directors. Some of the questions were the names and addresses of companies, firms and trusts in and outside India, in which promoters, directors and shareholders of the Vasan Healthcare held positions from 2007 to 2012. The ED also sought details about those who exited or entered the company between 2007 and 2012, along with the number of shares issued, the amount paid, premium and details of shares and debentures issued by VHCPL.
Sources say that Advantage is the nodal company having shares in Vasan Eye Care. The investigators are suspecting a transaction between the two companies, which took place around the time when the Foreign Investment Promotion Board (FIPB) had cleared the Aircel-Maxis merger. DNA had earlier reported that P Chidambaram had violated FIPB while clearing the Rs 3,514 crore-Aircel-Maxis deal.
The ED is also investigating FIPB approval to Aircel Maxis by then finance minister which led to the inflow of about Rs 3,500 crore.
Sources say that Advantage is the nodal company with shares in Vasan Eye Care. Investigators are suspecting a transaction of Rs 200 crore between the two companies, which took place around the time when the Foreign Investment Promotion Board (FIPB) cleared the Aircel-Maxis merger.
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