India Said to Probe Sequoia's Role in Alleged Money Laundering

(Bloomberg) -- India is probing whether Sequoia Capital had any role in an alleged money laundering case involving a former minister's son, according to people with knowledge of the matter.

The Enforcement Directorate, which investigates foreign-exchange violations, is examining why the Silicon Valley venture firm bought shares of a health care start-up at a premium from a company allegedly controlled by Karti P. Chidambaram, the son of former Finance Minister P. Chidambaram, the people said, asking not to be identified as they aren't authorized to speak publicly. The agency on Wednesday informed a Delhi court of its continuing probe in a complaint that charges Karti with money laundering.

Sequoia Capital didn't respond to calls and emails seeking comment. Abhishek Manu Singhvi, a lawyer representing Karti in court, said his client has been granted bail in all ongoing cases and that there was a “complete lack of merits, evidence, urgency and necessity” on the part of the prosecution in taking the actions it has pursued. Enforcement Directorate Director Karnal Singh did not respond to calls or messages requesting comment.

Prime Minister Narendra Modi's fight against corruption in Asia's third-largest economy is ensnaring high-profile opposition politicians as well as overseas companies less than a year before India's general elections. Authorities in the court filing on Wednesday alleged that companies owned by Karti were paid 11.6 million rupees ($171,000) by Malaysian telecom operator Maxis group after the T. Ananda Krishnan-controlled company was allowed to buy stake in an Indian carrier, one of the people said.

The agency is probing several of Karti's financial transactions to check if they were linked to the alleged kickbacks for approval given to the Malaysian billionaire in 2006, the person said. Maxis bought 74 percent of Aircel Ltd. The latter has since filed for bankruptcy in India after raking up debt of about 500 billion rupees.

A trial court will consider the charges brought by the federal probe agency on July 4 to decide whether to reject them or proceed with the case.

Former minister and Karti's father P. Chidambaram said on Twitter on Wednesday that the agency's charges will be “vigorously contested” in court. “The complaint filed by ED against Karti Chidambaram and others is seriously flawed. Since the matter is in court, I shall not make a public comment.”

To contact the reporter on this story: Upmanyu Trivedi in New Delhi at utrivedi2@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Candice Zachariahs, Ruth Pollard

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