Misappropriation suit against the Gandhis risks wrecking Indian tax reform

A self-proclaimed anti-corruption crusader in the India’s ruling BJP has vowed to send opposition leaders Sonia and Rahul Gandhi to jail, denting already faint hopes of political compromise on a key tax reform.

Fresh developments in a three-year-old fraud case brought by Subramanian Swamy have overshadowed attempts to bridge the political divide in search of an elusive deal that would create a tax union in Asia’s third-largest economy.

For Swamy, taking down a dynasty synonymous with the founding of modern India is a bigger immediate priority than passing a Goods and Services Tax (GST) that has in any case been years in the making, he asserted in an interview.

He claims that he has the tacit support of Modi, and the powerful finance minister has also voiced his approval.

Swamy said the GST would not help the economy. Fighting corruption, which he says has drained $1.5tn out of India, would.

The 76-year-old Harvard-trained economist and ex-cabinet minister met Modi on Thursday and said the prime minister voiced no objections to his case against the Gandhis.

In the case statement, Swamy accuses the Gandhis of fraud, cheating, misappropriation and criminal breach of trust in acquiring the assets of a company that had published a newspaper founded by Jawaharlal Nehru.

He alleges that, through a series of debt and equity deals, a shell company that Sonia and Rahul controlled acquired property worth about $300m after paying just $75,000.

The Gandhis deny wrongdoing and allies say the deals caused no financial harm to the Congress party.

Irked by Swamy, Congress lawmakers have accused Modi’s government of waging a “political vendetta” against the Gandhis. Rajya Sabha has been disrupted over this all week. 

A judge had first summoned the Gandhis last year. They appealed to the Delhi High Court, which this week quashed their plea seeking exemption from a personal appearance. The judge hearing the case has opined that it “smacked of criminality”.

They have been summoned to appear on December 19, at which they would either face detention or have to post bail, unless India’s Supreme Court intervenes. Parliament’s winter session ends four days later.