Chidambaram's Custody Needed To Unravel Layers Of Money Laundering In INX Media Case, ED Tells SC [Read Affidavit]

Stating that there existed prima facie 'reasons to believe' that former Union Finance Minister P Chidambaram has indulged in money laundering, the Enforcement Directorate has filed a counter-affidavit in the Supreme Court, opposing his plea for pre-arrest bail.

The ED has claimed that it has 'substantial evidence' to believe that Chidambaram and his aides created a web of shell companies to route and launder the kickbacks  received for granting approval to Foreign Direct Investment by INX Media in 2007.

The affidavit sworn to by Sandeep Thapliyal, Assistant Director of ED, stated at the outset that the agency cannot place details of evidence in the Court at the present stage as it may affect the probe. Therefore, the ED said that it will place facts which are sufficient for the Court to conclude that Chidambaram's arrest is necessary.

It is alleged in the 13-page affidavit that Chidambaram and his co-conspirators created complex layers of money transactions between the shell companies to make it difficult for the law enforcement agencies to track the money trail.

Two individuals, whom the ED has chosen not to name in the affidavit citing pendency of probe, are stated to have acted as agents of Chidambaram in the whole transaction. 

The ED claims that it has sufficient evidence to justify his arrest, but his custodial interrogation is needed to fully unravel the truth.

The investigation conducted so far has revealed that the proceeds of the crime deposited in the shell companies were laundered by investing in movable and immovable properties in and outside India. The money has been deposited in 17 benami foreign bank accounts directly referable to Chidambaram and his aides and also in properties. Ten such highly expensive properties are situated outside India. The materials so far collected by the agency and the "completely evasive and non-cooperative" response given by him when he appeared before the investigative agency on December 12, 2018, January 7, 2019 and January 21, 2019, give the ED strong reasons to believe that his custodial interrogation is necessary for investigation.

It is further stated that Chidambaram is highly influential and can cause the tampering of evidence. During the course of investigation, Chidambaram and his aides were found to have changed the share holding pattern of several companies, alleged the ED.

As per Section 19 of the Prevention of Money Laundering Act, the ED can proceed to arrest a person if it has "reasons to believe" that he is involved in the offence. Citing this provision, the ED has urged the Court to  merely examine if there are enough materials for the purpose of Section 19, refraining from evaluating the adequacy of the materials to establish the crime.

With respect to the reliance placed by Chidambaram on the protection granted to Karti from ED arrest, it is stated that it was an interim order passed by the Delhi HC in a writ petition filed by Karti challenging the constitutionality of certain provisions of PMLA.

The other accused were granted bail after several days of custody.

The SC bench of Justice R Bhanumati and A S Bopanna on Monday heard Senior Advocate Kapil Sibal, who appeared for Chidambaram, in the case, and granted interim protection for him till August 27. The rest of the arguments will continue on Tuesday.

The allegation is that as Union Finance Minister in 2007,  Chidambaram took kickbacks for FIPB clearance for the FDI of INX media, and the money was routed through the companies linked with his son Karti Chidambaram.

The CBI has registered a separate case under Prevention of Corruption Act in respect of the corruption allegations. He was arrested from his Jor Bagh residence on August 21 by the CBI and is at present under custody till August 30

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