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archive: When Sonia violated Fera 'designing' road rollers - Part I

When Sonia violated Fera 'designing' road rollers - Part I

Surya Prakash, New Delhi
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
    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
    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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