Author: Swarajya Staff
Publication: Swarajyamag.com
Date: April 26, 2016
URL:   http://swarajyamag.com/politics/not-just-ishrat-p-chidambaram-in-hot-water-over-son-kartis-benami-empire#.Vx862YyWm3A.twitter

Palaniappan Chidambaram’s reputation is under water. The former UPA Finance Minister, who as Home Minister messed around with the Ishrat Jahan affidavit by removing references to her links to the Lashkar-e-Toiba, is now in deeper trouble over his son Karti Chidambaram’s suspicious deals. Karti, it seems owns hundreds of crores worth of assets held through benamdars, and it is difficult to believe that his father knew nothing about them. Last month, Chidambaram alleged that Karti was being targeted because he was his son.

But this is being disingenuous, for the needle of suspicion has been pointing in Karti’s direction for more than four years. It wasn’t something that began under Narendra Modi’s watch.

Four years ago, when The Economic Times unveiled Karti’s ownership (or indirect links) to as many as eight companies, there was plausible deniability. But the indefatigable S Gurumurthy has now taken away that figleaf. In an investigative report published by The New Indian Express, Guru has suggested that Karti owns assets worth several hundred crores – apparently held under benami names. The faded dotted lines connecting the legal owners of many assets and Karti are now visible in bold, making it difficult for Chidambaram & Son to deny it with straight faces.

The earlier Economic Times report merely mentioned the connections of Karti (direct or indirect) to eight companies – Ausbridge Holdings, Advantage Strategic Consulting (ASC), Chess Management Services, Chess Health Care, Halidon Marketing, Kriya FMCG Distributors, Kaiser Luxury Hotels and Kaiser Surya Samudra Resorts. Gurumurthy then wrote a couple of stories linking the Chidambarams to indirect ownership in Vasan Eye Care, that included an allegation about black money bribes of Rs 223 crore (read here).

In The New Indian Express today (26 April), Gurumurthy claims to have cracked the veil that separated Karti Chidambaram’s benami assets from Karti by providing the link between the two. Normally benami ownership is difficult to prove, for properties are held legally by individuals on behalf of the real owner on the basis of trust. In theory, the benami owner can take actual control of the property/asset, if he wants to, since he is the legal owner. Real owners thus use some forms of leverage to ensure this does not happen. In Karti Chidambaram’s case, he seems to have goofed up by getting wills written in the name of his daughter from the benami owner. This was obviously a form of leverage to ensure that the benami holder does not get funny ideas like actually claiming the properties as his. (Read the full story here)

The Gurumurthy story (read it here in full) is based on the wills allegedly discovered in income-tax raids on Karti Chidambaram a few months back. And the company at the centre of the controversy is Advantage Strategic Consulting (ASC), owned two-thirds by Karti Chidambaram in 2011, after which it went to other hands – alleged benamdars of Karti.

In one will, one S Bhaskararaman, wills 17,400 shares of ASC to Aditi Nalini Chidambaram, Karti’s daughter, after his death, apparently out of regard for her maternal grandfather. Karti himself is the executor of this will. In another will, one Padma, daughter of S Visvanathan, wills another 31,600 shares in ASC to Karti’s daughter.

ASC has assets valued at many crores. According to Gurumurthy, Advantage India sold 60,000 of the 90,000 shares it held in Vasan Eye Care in two tranches, for a price of around Rs 7,500 a share – even though it had paid only Rs 100 for those shares. The shares were sold to Sequoia Capital, which was raided two weeks ago by the taxman. Gurumurthy estimates that Vasan Eye Care shares held (and now partially sold) by Advantage would be worth around Rs 112.5 crore, assuming the entire valuation at Rs 7,500 a share.

Gurumurthy also unearthed a global empire of assets allegedly indirectly owned by Karti. He writes that Advantage India, through its Singapore subsidiary ASC Pte Singapore, had assets worth “several hundred crores” in “London, Dubai, South Africa, Philippines, Thailand, Singapore, Malaysia, Sri Lanka, British Virgin Island, France, USA, Switzerland, Greece and Spain.”

The benami links are established this way: Karti owned 95 percent of Ausbridge till 2011, and Ausbridge owned two-thirds of ASC. Karti shifted his shares in Ausbridge, when the going got hot in 2011, to one Mohanan Rajesh, the same person from who he bought Ausbridge. The balance 60 percent shares held in Advantage went to “four benamis, CBN Reddy, known as Karti’s sidekick (2,11,430 shares), Padma Viswanathan and Ravi Viswanathan (32,600 shares) and Bhaskararaman (17,400 shares), Karti’s other nominees. The four have executed Wills bequeathing - that is giving - the full 60 percent ownership of Advantage India to Chidambaram’s grand-daughter and Karti’s daughter, Aditi Nalini Chidambaram. As Advantage India fully owns Advantage Singapore, the bequest to Aditi implicitly includes the global wealth held by the latter.”