archive: When Sonia violated Fera 'designing' road rollers - Part I
When Sonia violated Fera 'designing' road rollers - Part I
Surya Prakash, New Delhi
Newstime
May 10, 1999
Title: When Sonia violated Fera 'designing' road rollers - Part I
Author: Surya Prakash, New Delhi
Publication: Newstime
Date: May 10, 1999
But for Mulayam Singh Yadav and fate in that order Sonia Gandhi would
have realised her dream of becoming the Prime Minister of India a few
weeks ago. Though Congressmen have been fuelling her ambitions, they
know very little about her and are often irritated even with benign,
legitimate and fundamental questions pertaining to her citizenship.
For example, senior leaders of the Congress do not know as to when she
became a citizen of India or why she retained her Italian citizenship
for almost 15 years after her marriage. Nor are they aware of her
tryst with motor cars and road rollers or the impunity with which she
flouted Indian law while retaining her Italian citizenship.
Some events of the past, however shed light on the kind of ambitions
that Indira Gandhi's "Innocent" and "reticent" bahu has nurtured for
long and of how she had no qualms about breaking laws which put the
fear of God even among natural-born Indians. The first of these
relates to the launch of a company called the Maruti technical
services private limited (MTSPL) on November 16, 1970.
This private limited company was set up by her along with Sanjay
Gandhi to provide technical know-how for the design, manufacture and
assembly of "a wholly indigenous motor car". The story of this company
provides one some valuable insights into the mind of Sonia Gandhi, who
is often credited with much innocence and gullibility by those around
her.
The birth of MTSPL preceded that of another company, the Maruti
limited, which was to avail of this company's "know-how" to produce
cars. The articles of association of MTSPL named Sanjay and Sonia as
the first and permanent directors of the company, who between them
held 20 shares of Rs 10 each. In other words, its paid-up capital was
Rs 200 at the time of its launch.
On November 21, 1970, just days after its incorporation, the MTSPL
entered into an agreement with Sanjay Gandhi, who owned 50 per cent of
it. Under this agreement, Sanjay agreed to render "technical
know-how" to the company for a consideration of Rs 3 lakh.
Months later, in June, 1971, the Maruti limited was incorporated under
the Companies Act and Sanjay Gandhi became its managing director.
On December 15, 1971, the MTSPL, the "know-how" company, allotted 1500
equity shares of Rs 10 each to Sanjay Gandhi. On June 2, 1972, the
MTSPL entered into an agreement with Maruti limited according to which
the MTSPL was to be paid Rs 5 lakh in lumpsum by the latter for
providing the technical know-how to Maruti limited. This document
described the MTSPL of which Sanjay and Sonia were the only directors,
as a technical company "which has the capability of impacting
technical know-how for the design, manufacture and assembly in India
of a wholly indigenous motor car." It was also entitled to an annual
technical fee of 2 per cent of the net sales of the motor cars. Six
weeks after this agreement, the Maruti limited paid the promised Rs 5
lakh to the MTSPL.
Later, the MTSPL kept its word and paid Sanjay Gandhi, its half owner,
Rs 3 lakh in order to purchase "technical know-how" from him!
The next move came about a year later. The MTSPL appointed the owner
of its other half, Sonia Gandhi, its managing director. This happened
at an "extraordinary general meeting of the share holders" held on
January 25, 1973. Suffice it to say that Sanjay and Sonia, the two
directors, were also the only share-holders of the company at that
time. Soon thereafter. the MTSPL signed an agreement with Sonia
Gandhi as per which she was to remain the managing director of the
company for five years. She was to get a salary of Rs 2000 per month
and one per cent commission on the net profits of the company subject
to a limit of 50 per cent of her annual salary plus perquisites.
Sometime later the company allotted 2000 shares to Sonia Gandhi, but
for some reason this was later subdivided into two share certificates
of 1900 and 100 shares respectively and 1900 shares were allotted to
Sonia on February 4, 1974. On the same day 4000 shares each were
allotted to Priyanka and Rahul, the two minor children of Sonia and
Rajiv. Even more fascinating was the decision of the Nehru-Gandhi
family to launch yet another company, to make among other things, road
rollers, and to appoint Sonia Gandhi as managing director of this firm
as well.
This company, called the Maruti heavy vehicles private limited, had 13
share-holders but the Nehru-Gandhis had the controlling shares.
It was incorporated on February 22, 1974 and Sonia Gandhi acquired
5000 shares in it. She entered into an agreement with this company on
September 28, 1974 in regard to her appointment as its MD.
But this agreement was not implemented and she did not draw any salary
as MD of this company.
In 1975, this "road roller company" too sought out the Maruti
technical services Company, the "know-how" company, in search of
know-how to make road rollers.
An agreement was signed on April 1, 1975 between the two companies as
per which the road roller company was to pay the know-how company two
per cent of net sales of road rollers and spare parts.
Did Sonia Gandhi, who was then a citizen of Italy, violate any Indian
laws by becoming the managing director of an Indian company and by
acquiring shares in Indian companies? Was the MTSPL, which was
floated by Sanjay and Sonia, ever competent, to provide technical
know-how to make "a wholly indigenous motor car" and road rollers?
Was Sonia Gandhi competent to be the managing director of such
companies?
A commission of inquiry headed by justice A C Gupta, which probed the
Maruti scandal and submitted its report in 1978, provides the answers
to all these questions. The commission's report says S M Rege, who
was secretary of the Maruti limited, told the commission that it was
known to all concerned that Shrimati Sonia Gandhi was a foreign
national and not a citizen of India. S Kumar, registrar of companies,
Delhi and Haryana, said the allotment of shares of the MTSPL and MHVPL
to Gandhi in 1974 was in contravention of the Foreign Exchange
Regulation act, 1973 "and therefore ab initio void".
The commission concluded thus: "It was a fact known to all concerned
that Shrimati Sonia Gandhi was a foreign national. In view of the
provisions of the Foreign Exchange Regulation Act, 1973, which came
into force on January 1, 1974, she could neither hold shares of any
Indian company nor hold any office of profit in such company from the
date the act came into force without the prior approval of the Reserve
Bank of India. Ultimately, she tendered her resignation on January.
21, 1975.
It is surprising that Shrimati Sonia Gandhi who did not have any
technical qualification should be appointed managing director of a
technical company. Quite a large sum of money was paid to her on
account of her salary and perquisites during the period she remained
the managing director of the company".
The Gupta commission report further records that A Banerjee,
income-tax officer, disallowed part of the remuneration paid to
Shrimati Sonia Gandhi as excessive "because she had no qualifications
to be able to render any technical service to the company."
The commission also examined the question as to whether the MTSPL
floated by Sanjay and Sonia was competent to provide the know-how to
make cars and road rollers.
W H F Muller, a German technician on the staff of the MTSPL told the
commission that all that the Maruti limited produced were 10 to 12
prototypes which were "hand-made", "fabricated/purchased in parts" and
not of the same design. They were different from one another. Yet
another witness said the MTSPL had no qualified graduate engineer for
design on their rolls. There was no fixed and finalised design for
the vehicles and no research and development facility.
Yet, dealers were recruited and asked to set up show-rooms "to create
an impression that the appearance of the Maruti car in the market was
imminent". Two such dealers, who were given cars to exhibit in their
show-room, narrated their experience to the commission. "One had to
push the car to his show-room, and the other who returned the car to
the Maruti garage for repairs following a brake failure while he was
driving, did not get back either the car or the money (Rs 22,000) he
had paid for it."
The commission also spoke about the rough and ready methods used by
the Maruti limited against dealers who wanted to back out. "One of
the dealers, S C Agarwal, who terminated his agency, was threatened by
Sanjay Gandhi that he would be sent. to jail and Agarwal had to
apologise to him by touching his feet. Om Prakash Gupta of Hapur who
had asked for payment of interest due to him on his security deposit,
was arrested under the Maintenance of internal Security Act".
Witnesses also told the commission that the MTSPL did not have any
technically qualified person or specialist on road-rollers.
The commission, therefore, concluded that the " Maruti Technical
Services was not competent to render technical know-how in respect of
motor cars. There is no evidence that it had the know-how in respect
of road rollers."
The Maruti cars that one sees on the road today came to be produced
after the central government took over the Maruti limited and brought
in genuine "know-how" from Japan.
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