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Published: Friday June 27, 2014 MYT 12:45:02 AM
Updated: Friday June 27, 2014 MYT 12:46:20 AM

Court summons India's defeated Gandhis for alleged fraud

NEW DELHI (Reuters) - An Indian court on Thursday summoned Sonia Gandhi and her son Rahul to answer allegations that they used their leadership of the Congress party to misuse about $15 million (8.82 million pounds) of party funds for personal profit.

The petitioner in the case against the Gandhis and two of their colleagues is Subramanian Swamy, a member of the Bharatiya Janata Party (BJP), which ousted a Congress-led coalition from power a month ago after a thumping election victory.

A spokesman for the Congress party said he could not comment as he had not seen the court papers. "When we receive that, we will give a fitting reply," said Ahmad Shakeel.

However, he questioned the credibility of Swamy, who has a history of attacking the Gandhi family.

"Swamy's credentials are known to everyone so we don't have anything to worry about," Shakeel said.

The Gandhis are the torchbearers of a dynasty that has led India for more than half of the 67 years since independence, but their party suffered its worst-ever defeat in the elections and the BJP's Narendra Modi became prime minister.

At the heart of the court case is Associated Journals Limited, publisher of three newspapers, including the National Herald, an English daily founded and edited by Jawaharlal Nehru before he became independent India's first prime minister.

In 2008, the company shut down with an unpaid debt of about$15 million, according to allegations in a copy of the court order.

Swamy accuses Rahul Gandhi, Nehru's great-grandson, and Sonia, of setting up a firm called the Young Indian Company to buy the debt using Congress party funds even though Associated Journals allegedly had real estate assets worth at least $335 million, which would have cleared the debt.

Motilal Vora, a Congress party member, was managing director of Associated Journals and later became a shareholder of the Young Indian Company, according to the allegations.

Swamy alleged that the Young Indian Company then owned all of the equity in Associated Journals and rented out its properties to profit its shareholders, including Rahul and Sonia Gandhi, who together controlled 76 percent.

"From the complaint and the evidence led so far it appears that (Young Indian Company) was in fact created as a sham or a cloak to convert public money to personal use or as a special purpose vehicle for acquiring control over 20 billion rupees ($335 million) worth of assets," the court order said.

(Reporting by Sruthi Gottipati and Suchitra Mohanty; Editing by John Chalmers and Andrew Roche)

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