The Congress finds itself in the dock over a damning revelation that Young Indian, the controversial company floated by Sonia Gandhi and Rahul Gandhi to acquire National Herald newspaper firm took ₹1 crore ($154,000) loan from a dubious Kolkata-based company to start its operations in the end of 2010. The Income Tax department’s Kolkata unit’s probe in connection with the National Herald case found that ₹1 crore ($154,000) loan originated from a company called Dotex Merchandise Private Limited. This company, linked to famous RPG Group, acted as a shell company and was promoted by a money launderer Uday Shankar Mahawar.

According to the Income Tax Department, during the interrogation, Mahawar confessed that he was only “entry operator” for this little-known firm. The term ‘entry operator’ in Income Tax refers to the shell company owners engaged in floating companies and money laundering.

“During the course of post Survey investigation Uday Shankar Mahawar voluntarily disclosed and offered to tax an additional income of ₹3 crores ($462,000) over and above his regular income… In his statement Uday Shankar Mahawar stated that he is an entry operator and he forms companies to provide accommodation entry in the form of share capital, bogus billing etc.

“He had formed more than 300 companies and sold them to various beneficiaries after raising bogus share capital. It appears that as of now most of the companies have been sold and the real funds have been infused in these companies. So the current directors/shareholders of these companies are the real beneficiaries. Uday Shankar Mahawar has provided bogus accommodation of share capital to various beneficiaries to the tune of Rs.500 crores,” said IT headquarters alert issued to its units across the country dated December 4, 2014.

Reacting to the media reports on the links with money launders of Kolkata, the RPG Group said that they did no wrong. The company Dotex Mercandize Private Limited, floated by Mahawar, which donated ₹1 crore ($154,000) is now linked with RPG Group. RPG Group’s senior executives Sunil Bhandari and Sunil Kumar Sanganeria are the current Directors of this controversial company. Bhandari is currently Director of more than 20 companies including RPG Group’s major such as including Spencer International Hotels Limited and Duncan Bros & Co Ltd.

In November 2012, Sonia Gandhi’s arch rival BJP leader Subramanian Swamy exposed this deal and went to trial court.

Sanganeria is also Director of several companies including RPG Groups’ major companies like Kolkata Metro Networks Limited and Music World Retail Limited. Interestingly Dotex Merchandize’s email id given in official documents are of RPG Group’s email id – rpsg.secretarial@rp-sg.in

Background: The Young Indian was floated by Sonia and Rahul with 38% stake each at the end of 2010. Congress Treasurer Motilal Vora and the party General Secretary Oscar Fernadez owned 12% shares in the company. Gandhi family loyalists Suman Dubey and Sam Pitroda are also Directors of this company.

Within weeks of its formation, the Young Indian declared that they had taken over the ₹90 crores ($13.83 million) worth debt of Associated Journal Limited(AJL), the publishers of the defunct National Herald newspaper. The AJL got ₹90 crores ($13.83 million) loan from Congress party. The move by the Young Indian to take over Rs 90 cr debts of AJL, which it owed to the Congress, at a paltry sum of ₹50 lakh ($77,000) created the entire controversy.

Another dubious action by the AJL was to allot fresh 9 lakh shares to Young Indian towards this debt also has kicked up a row. Through this dubious share allotment, Young Indian acquired 99.1% ownership in the AJL.

It must be noted Motilal Vora is Director of the Young Indian as well as Chairman and managing director of the AJL and treasurer of the Congress party.

AJL was a public limited company floated in 1937 by Pandit Jawaharlal Nehru and other leaders. After independence the AJL got lands from several governments across India for publishing newspaper. The lands in New Delhi, Lucknow, Mumbai, Bhopal, Indore, Panchkula are currently valued at around Rs.5000 crore and Young Indian is now the custodian of these huge assets.

In November 2012, Sonia Gandhi’s arch rival BJP leader Subramanian Swamy exposed this deal and went to trial court. The Metropolitan Magistrate, after 18 month long arguments issued summons to the Congress heavy weights in June 2014. Currently the trial court’s order is challenged in Delhi High Court for the past 15 months. The case shuttled between three judges and currently back to the second Judge Justice Sunil Gaur. Next hearing on this politically sensitive case is scheduled on November 6.

Note:

1. The conversion rate used in this article is 1 US Dollar = 65.08 Rupees.

2. Text in Bold points to additional data on the topic.