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How GMCSL basketed depositors? cash

india Updated: Jan 14, 2007 17:09 IST

EVEN AS managing director of the defunct Gujarat Mercantile Credit Sahkarita Limited (GMCSL) and former managing trustee of Corporation (Area) Basketball Trust (CABT) Janak Gandhi awaits release from jail in cheque bounce cases, documents accessed at various government departments reveal that he had formed a social club in 1997-98 to attract money in the form of donations.

The Basketball Club was formed as a corollary of CABT, which is a public trust, without seeking the latter’s approval. Gandhi even applied for FL 4A licence from district excise department to set up a bar at the three-acre Basketball Complex
valued at Rs 42.75 crore on Race Course Road.

In the application submitted to excise department on September 15, 2005, the Club was named as OTG (Janak’s family concern) Basketball Club.

The name - OTG Basketball Club - was used for limited purpose of obtaining bar licence whereas funding invitation for the Basketball Club specifically mentioned that gambling, alcohol and other activities would not be introduced because it was a family club that provided indoor, outdoor sports facilities, restaurant, 2000-capacity auditorium and free basketball coaching to the donors and their children.

“Do you have a Basket, which is assured, full and at hand?” Read the Club’s four-page glossy folder printed in Vadodara (Gujarat). The folder defined it as the country’s first charitable trust that would use money received as donation for social causes. The Club members were promised loans up to 75 per cent of their total deposit from GMCSL.

The donors’ money was put in accounts that were called Basket promising an interest (which varied from 18 per cent to 21 per cent annually), which could be converted into tax-free donation on its maturity.

People holding 35 or more Baskets were promised a joyride of Indore through the Club’s aircraft. The Club offered to keep the Basket money as security with OTG Group of companies. The folder projects OTG Global Finance as a trustee of CABT.

When CABT trustees objected to the formation of the Club or any unauthorised activity he launched using the Trust’s name, Janak retaliated by asking them to pay back the loan they had taken from GMCSL. Since most CABT trustees who belonged to City’s elite class were defaulters and were accommodated as loan guarantors for their kith and kin, they did not protest much. Incidentally, the chartered accountant of CABT and GMCSL was same (Dahia & Nagori Company).

“It’s financial sleaze and a case of money laundering. Because it’s the GMCSL depositors’ money that was siphoned to OTG companies and fictitious commercial ventures including Basketball Club,” GMCSL Peedit Amanatdar Sangh convener D K Chaturvedi told Hindustan Times. About 2,200 GMCSL depositors, shareholders from Indore and Ujjain, who invested over Rs 10 crore in the defunct co-operative, are running from pillar to post to get their money back since January 2005.

The modus operandi had been simple. These commercial ventures (most didn’t have PAN from income tax department) through fictitious and fake office-bearers opened account in GMCSL. Their accounts were opened under the same identity in private sector banks (Centurion, ICICI, HSBC, UTI Bank etc). The GMCSL depositors’ money was transferred to commercial entities that were then transferred to their accounts in private banks.

Although family members of Janak Gandhi refused to comment on the issue, Assistant Excise Commissioner Vinod Raghuvanshi said that OTG Basketball Club had applied for the FL 4A. “But it was not granted, as proposal wasn’t convincing.” he remarked.

A three-member subcommittee in its report dated June 10, 2006, submitted to former CABT chairman S S Garha (HT has a copy) confessed to have obtained incriminating documents from government departments, “which throw light on Mr (Janak) Gandhi and his family’s secret plans to usurp the Basketball Club and run it as a Gandhi family club.”

The subcommittee added that Gandhi misused his position to cheat the Trust and went for illegal transactions to earn revenue for himself rather than for the sports body whose managing trustee he was appointed in full faith and with hope to help propagate the game of basketball in Indore.