Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Originally Posted by realacres
    Published: Tuesday, May 17, 2011, 0:48 IST
    By Kishore Rathod | Place: Mumbai
    3dsyndication

    Mumbai’s cash-strapped developers are raising loans from Private Equity (PE) investors and individual lenders at interest rates as high as 36% per annum to stay afloat.

    Despite this, developers will not be dropping their rates as it would be the beginning of a downslide. “If the consumer decides to hold on for the prices to fall further, the builders would bleed beyond redemption. The builders are holding on to the prices but it’s a question of who blinks first,” said an industry observer.

    The high rate of interest apart, the terms of the loans are pinching the developers. “The high net worth money-lenders are not only deducting the interest component upfront, but also drastically re-valuing the under-construction properties they are keeping as guarantee for the loans,” says a finance-broker who spees in real-estate deals. He added that barring a handful of cash-rich developers who weren’t affected by the rebound in 2009, most builders are facing a severe funds crunch. This has resulted in disrupted payment schedules.

    The builders are also sourcing funds to meet the ‘extra’ expenses involved in real-estate projects, as institutions give funding only for construction costs.

    “60% of the project cost goes towards taxes:D:D,” revealed Kruti Jain, director, Kumar Builders, adding that since real-estate doesn’t enjoy industry status, it does not have access to low-cost funds.

    Many developers went overboard with their expansion plans during the bounce-back after the slump in 2008, and those loans taken for 18-24 months are now due. “With the cash flow drying up, the builders are now choking. The worst affected are large townships, thanks to uncertainty due to FSI and the regulatory environment,” says RK Narayan, Director, Infinite India Investment Management.

    Even the foreign investments have reduced to a trickle as interest rates have shot up and emerging markets are no longer attractive for foreign investors. “The PE investors from abroad came with their cheque books four years back and many of them did not even get their principal amount back,” said Parry Singh, MD, Red Fort Capital, a PE firm that spees in real-estate sector.

    Mumbai’s cash-strapped developers are raising loans from Private Equity (PE) investors and individual lenders at interest rates as high as 36% per annum to stay afloat.

    This kind of lending rates cannot survive - anyone paying beyond 4% about BPLR may default - as they may be in desparte need of cash and their assets does not meet the required collatoral as set by normal banking codes and practices.

    Kotak wealth management is pushing me hard to switch from normal debt funds to PE for real estates - I have denied it - they are offering 18% pa - mouth watering - But no gurantee of capital.

    my god what an euphoria in yields -

    this too will crash like silver ;) or Euro ;)

    Rohit
    CommentQuote
  • The more they hold on the worse will be the crash .

    Originally Posted by realacres
    Published: Tuesday, May 17, 2011, 0:48 IST
    By Kishore Rathod | Place: Mumbai
    3dsyndication

    Mumbai’s cash-strapped developers are raising loans from Private Equity (PE) investors and individual lenders at interest rates as high as 36% per annum to stay afloat.

    Despite this, developers will not be dropping their rates as it would be the beginning of a downslide. “If the consumer decides to hold on for the prices to fall further, the builders would bleed beyond redemption. The builders are holding on to the prices but it’s a question of who blinks first,” said an industry observer.

    The high rate of interest apart, the terms of the loans are pinching the developers. “The high net worth money-lenders are not only deducting the interest component upfront, but also drastically re-valuing the under-construction properties they are keeping as guarantee for the loans,” says a finance-broker who spees in real-estate deals. He added that barring a handful of cash-rich developers who weren’t affected by the rebound in 2009, most builders are facing a severe funds crunch. This has resulted in disrupted payment schedules.

    The builders are also sourcing funds to meet the ‘extra’ expenses involved in real-estate projects, as institutions give funding only for construction costs.

    “60% of the project cost goes towards taxes:D:D,” revealed Kruti Jain, director, Kumar Builders, adding that since real-estate doesn’t enjoy industry status, it does not have access to low-cost funds.

    Many developers went overboard with their expansion plans during the bounce-back after the slump in 2008, and those loans taken for 18-24 months are now due. “With the cash flow drying up, the builders are now choking. The worst affected are large townships, thanks to uncertainty due to FSI and the regulatory environment,” says RK Narayan, Director, Infinite India Investment Management.

    Even the foreign investments have reduced to a trickle as interest rates have shot up and emerging markets are no longer attractive for foreign investors. “The PE investors from abroad came with their cheque books four years back and many of them did not even get their principal amount back,” said Parry Singh, MD, Red Fort Capital, a PE firm that spees in real-estate sector.



    Real,

    The factor that people are not accounting for in all this analysis of RE in India is the "foreign hand".

    Things are going out of hand very rapidly in the EU, Japan and US as I have been talking about for a long time. Add Australia to the pot as of last month. China is on the edge but not definitely onto the slide, though it is going to be inevitable.

    Spain is seeing Egypt-style protests and their Municipal Elections is just round the corner. The fear and anger is HUGE as their youth workforce (which has gone deeply into debt to educate themselves) are now facing a 43% unemployment rate!!! I have some Spanish friends from business we used to do with Spain and Latin America and according to them, things have gone beyond the point of no return out there. They will soon by in the same mood as the Greeks.

    This has spread to Italy too. We are seeing the crisis not only building up rapidly but also moving towards core Europe from the fringes quickly. It looks to be quick but its only that their Govts have been fooling their people with rosy picture for such a long time.

    Japan is officially gone into recession for the second quarter running. This is not just from the disaster since they were already headed that way before the quake and tsunami.

    US has reached their debt ceiling and have till 2 Aug to do something more concrete and long lasting. At this rate, Obama is not going to make any capital from Osama and may lose the election.

    If our RE holds prices for next 6-8 months, a possible relapse of 2008, in more virulent form, will put our own consumers into deep distress. If all of this synchronise, we will surely see some seriously deep correction / crash in RE prices due to distress.

    This distress will not only be builders, it will also take along lenders who will see their collateral go well below their loan amounts due to severity of the decline.

    Builders still have a chance like the golden chance in 2009/10, but they are very late in the day for it!

    Let us see.

    cheers
    CommentQuote
  • Wise

    the crash in real estate may not come for a long time in India -

    The stock market of India moves with global markets - thanks to the online trading.

    The day we are able to buy real estate online - the crash will come.

    Until then - enjoy the appreciation

    rohit
    CommentQuote
  • Originally Posted by rohit_warren
    Wise

    the crash in real estate may not come for a long time in India -

    The stock market of India moves with global markets - thanks to the online trading.

    The day we are able to buy real estate online - the crash will come.

    Until then - enjoy the appreciation

    rohit


    i think the 'crash' may not come but honestly the salaried class buyers will be declining.. basically they have a fixed budget and if they cannot afford, they wont buy... they may buy at remote places but it simply means high cost projects will remain vacant .. just like Mumbai..
    CommentQuote
  • Originally Posted by punerebuyer
    i think the 'crash' may not come but honestly the salaried class buyers will be declining.. basically they have a fixed budget and if they cannot afford, they wont buy... they may buy at remote places but it simply means high cost projects will remain vacant .. just like Mumbai..

    right, have you ever seen any of my posts targeting high cost projects ?

    My target has always been affordable housing - and believe me that is one sector which will keep on growing - and as of salaried class - wo to bechare hai bhai - when I was salaried I felt the heat of budget -

    Salaried class is like "trishanku" hope most of us know the story about that story of trishanku -

    with the salary they get they cannot afford anything which suites their "class" and they are not ready to adjust to the "real class" of the real estate - thus they are in a debt trap from day one -

    If they buy in a little undeveloped or downward locality - poora pariwaar naaraj - because it will put their family nose down "

    if they buy what they think they really deserve - they will keep on paying the debt for the whole life

    The only remedy I see is - and I have done when I was salaried

    Buy something which you can afford "upfront" - ofcourse it won't be developed - but it will develop in due course

    sell when it reaches it optimum appreciation - use that money along with more savings to put down maximum payment for something you think is right for your class.

    magar make sure don't overleverage warna underwater aa jaaoge in 10 years aur fir - doobna hoga

    aanken kholo bhai - get something ready to move or buy something without any external funding - agar kuch aur kiya to bas "band baj jaayegi"

    rohit
    CommentQuote
  • Originally Posted by rohit_warren
    right, have you ever seen any of my posts targeting high cost projects ?

    My target has always been affordable housing - and believe me that is one sector which will keep on growing - and as of salaried class - wo to bechare hai bhai - when I was salaried I felt the heat of budget -

    Salaried class is like "trishanku" hope most of us know the story about that story of trishanku -

    with the salary they get they cannot afford anything which suites their "class" and they are not ready to adjust to the "real class" of the real estate - thus they are in a debt trap from day one -

    If they buy in a little undeveloped or downward locality - poora pariwaar naaraj - because it will put their family nose down "

    if they buy what they think they really deserve - they will keep on paying the debt for the whole life

    The only remedy I see is - and I have done when I was salaried

    Buy something which you can afford "upfront" - ofcourse it won't be developed - but it will develop in due course

    sell when it reaches it optimum appreciation - use that money along with more savings to put down maximum payment for something you think is right for your class.

    magar make sure don't overleverage warna underwater aa jaaoge in 10 years aur fir - doobna hoga

    aanken kholo bhai - get something ready to move or buy something without any external funding - agar kuch aur kiya to bas "band baj jaayegi"

    rohit


    cannot agree more...
    CommentQuote
  • Hi Wisey,

    I was around reading your posts. I was also busy as we were shifting our office back to Chennai from Coimbatore. With my experience with people in Tier 2 city I just wanna tell you one thing. As a country (or as a state) we are not going to go anywhere because

    1. The youngsters in Tier 2 towns lack serious professionalism (starts from being not regular to office)

    2. They don't understand or don't want to refresh their knowledge or learn new things

    3. Thanks to our governments, they feel their basic necessities are covered and due to this they lack serious motivation.

    Also, I was speaking to one of relative (he is a principal of a respected school in Trichy) and he is so worried that they have GO that they should not fail students who are regular to school till 9th standard, he is saying like we will have fools around in a 10 years time.

    Where are these lousy govt policies going to lead us? And what are going to do with millions of unemployable youths? Are we going to be a superpower of fools?

    Originally Posted by wiseman
    Sridhar,

    Long time no see.

    It would be very interesting to know which sector is facing repayment ot bad debt difficulty. I have this feeling it will be the RE sector.

    The giveaway was the sudden withdrawal of the Teaser Rate scheme. Banks would not pull such marketing tools unless they see an uncomfortable situation building up.

    And this fall was serious enough for them to pull the plan for fresh issue of capital.

    Anyone with "inside" dope or market rumors on SBI?

    cheers
    CommentQuote
  • Significant correction.............

    At long last, India's overpriced real estate market could come back to earth with a thud. Developers trying to sell costly property cannot find buyers, who in turn find themselves squeezed out of the market by rising mortgage costs and inflated property prices.

    Inventory, jargon for built-up homes that haven't been sold, is piling up. Fittingly, a full 25% of total units remain unsold in Mumbai , where real estate rates are the least realistic; Chennai and Pune follow with 19% units unsold, 16% of units can't be sold in Delhi and its surroundings, followed by Bangalore and Kolkata.


    Real estate headed for a significant correction - The Economic Times
    CommentQuote
  • Originally Posted by rohit_warren
    Wise

    the crash in real estate may not come for a long time in India -

    The stock market of India moves with global markets - thanks to the online trading.

    The day we are able to buy real estate online - the crash will come.

    Until then - enjoy the appreciation

    rohit


    Even by making real estate online crash will not happen, its guaranty.

    To make market efficient, it require short sellers, by creating RE derivative market will become more efficient & prices will correct immediately without time lag.

    In past prices has corrected significantly but with time lag, market data reveals the fact.
    CommentQuote
  • Crash OR Correction ?????

    Lot of peoples are looking for some external event which could trigger RE crash. But for a significant correction it’s not necessary. Based on various factors, a correction has to happen, that’s how market work. In case of crash, market will recover quickly, in case of correction it will take 2 years.

    It’s known fact that RE is cyclical industry, which will show its cyclical effect.
    CommentQuote
  • I don't think that Crash is even a possibility. Over enthusiastic people generally over-exaggerate. Yes, correction is on cards, but nothing like 50% which somebody mentioned. Just a 15% can be expected.
    CommentQuote
  • Originally Posted by harshalx
    I don't think that Crash is even a possibility. Over enthusiastic people generally over-exaggerate. Yes, correction is on cards, but nothing like 50% which somebody mentioned. Just a 15% can be expected.


    Even 15% will be very good. Means 40L should be in 34L. It's quite good fall :)
    CommentQuote
  • Sanction of PM sought to prosecute Sonia Gandhi: Dr. Subramania​n Swamy

    April 15,2011
    PRESS RELEASE
    Dr.Subramanian Swamy, Janata Party President and former Union Cabinet Minister for Law &Justice, today submitted a Petition of 206 pages, seeking from the Prime Minister Dr.Manmohan Singh the required Sanction to prosecute Ms. Sonia Gandhi under Sections 11 & 13 of the Prevention of Corruption Act. Sanction is required under Section 19 of the Act because she is Chairperson of the National Advisory Council with Cabinet rank.
    In his Petition to the PM, Dr.Swamy has made out a prima facie case on documentary circumstantial evidence that Ms.Gandhi abetted Italian businessman and close family friend Ottavio Quattrocchi to obtain an illegal commission in the Bofors Gun Purchase deal, and then influenced the government of Prime Minister Narasimha Rao to enable Mr. Quattrocchi to escape from the country in July 1993. Thereafter she directed the Union Law Minister in 2005 to enable Mr. Quattrocchi to get his London accounts de-frozen and decamp scot free with over $ 200 million .
    Dr.Swamy has also made out a prima facie case that Mr. Gandhi has illegally held in Swiss bank accounts illegal monies of about Rs. 10,000 crores received as a legatee in 1991 following Rajiv Gandhi’s assassination.
    He also produced an admission on record of the spokesperson of the Russian government that KGB had provided funds to Ms. Gandhi and her family, as also evidence that she had received commissions on Indo-Soviet trade, which were illegal under Indian law.
    In his Petition, Dr.Swamy has also catalogued a list of offences prima facie committed by Ms.Sonia Gandhi since 1974 which shows that she is an habitual offender who deserves to be prosecuted and punished.
    For Janata Party
    (Pran Nath Mago)
    PA to Dr.Swamy
    ————————————————————————————–
    15, April 2011
    Dr.Manmohan Singh
    Prime Minister as Sanctioning Authority
    u/s 19 of the Prevention of Corruption Act (1988)
    South Block, New Delhi.
    Re: Sanction to prosecute Ms.Sonia Gandhi, Chairperson (in Cabinet Rank), NAC, under Prevention of Corruption Act (1988).
    Dear Sir:
    1. Ms.Sonia Gandhi MP, wife of the deceased Rajiv Gandhi, was first appointed as Chairperson National Advisory Council in May 2004. She resigned in 2006 but was re-appointed by an Order of the Cabinet Secretariat dated March 29, 2010, read with Order dated October 8, 2010 .
    2. As per Order of May 31, 2004 the Prime Minister’s Office will provide Central Government funds to meet the expenditure of the NAC, and service the NAC for its secretarial needs. Hence she is a public servant as defined in Section 2 ( c ) of the Prevention of Corruption Act (1988).
    3. You, in your capacity as deemed appointing authority are therefore the Designated Authority under Section 19 of the Prevention of Corruption Act for granting Sanction to prosecute the said Ms. Sonia Gandhi. As you know, there are no laches or statute of limitations for prosecuting offences of corruption.
    4. Your Sanction is required by me for prosecuting Ms. Sonia Gandhi on a private complaint proposed to be filed by me in the criminal court under Prevention of Corruption Act (1988), based on the materials available to me (and enclosed with this letter/application) with reference to two issues:
    FIRST ISSUE:
    5. Ms.Sonia Gandhi holds office which enables her to give direction to Government departments and Ministries and also call for confidential reports from CBI, and according to the then Union Law Minister, she can even call for files . She has been as Chairperson of NAC giving directions to several ministries and departments.
    6. It is charged that she obtained for, and colluded with family friend, Mr. Ottavio Quattrocchi—an Interpol Red-Corner Noticee & a proclaimed offender under Indian criminal law, to obtain for him the pecuniary advantage from defreezing of his CBI-frozen account, thus committing offence u/s 13 (1)(d) of the PCA, and also conspired with Quattrocchi to enable him to escape prosecution in Bofors Gun Purchase scam.
    7. Bofors scam that occurred in 1986 represents corruption in very high places and the key figure in the scam is Mr. Ottavio Quattrocchi, the Italian family friend and fixer. The then Prime Minister, Rajiv Gandhi was manipulated by Ms.Sonia Gandhi, his Italian born wife, to abet the crime in Bofors gun purchase committed by Quattrocchi against the nation.
    8. Ms.Sonia Gandhi stationed Mr.Walter Vinci, her brother-in-law, in Sweden to influence her husband and then Prime Minister, when on a visit to Sweden to finalize the Bofors Deal. Also present in the same hotel was the Italian fixer, small arms supplier, and Snam Progetti agent, Mr. Ottavio Quattrocchi, , and who had in return for a hefty commission prevailed on the Prime Minister to sign the deal before March 31, 1986.
    9. Thereafter when the arm of the law began reaching near him, he escaped from India in 1993, then from Malaysia in 2002 via a rigged court judgment obtained by collusion with as yet unnamed parties and from Argentina— by the CBI fudging the records – all achieved under the influence exerted by Ms. Sonia Gandhi under three different and consenting Prime Ministers.

    CommentQuote
  • 10. This is further confirmed in the interview conducted by Ranjit Bhushan of Outlook magazine in 1998 with Mr.Sten Lindstorm, the Chief of the Investigation Division of Swedish National Bureau of Investigation and Special Prosecutor of the Swedish Government into the Bofors payoffs. The Swedish National Audit Bureau which he assisted concluded after an independent probe that bribes had indeed been paid in the Bofors deal.
    11. Lindstorm states in the interview, which has not been contradicted by anyone including Ms. Sonia Gandhi, that: “The Bofors Papers all point to the Gandhi family” and further that Ms.Sonia Gandhi should “explain how Quattrocchi-owned companies got such fat sums as payoffs from the Bofors deal.”
    12. This report is corroborated by another interview given by Lindstorm to Chitra Subramanian wherein he stated; “All information we had at that time pointed to the Gandhi link—Sonia Gandhi should place her cards on the table. The bribes have been traced to her friend and this is not something out of the blue. This is no coincidence.”
    13. Headlines Today is in possession of the written statement of then Intelligence Bureau officer Naresh Chandra Gosain made before CBI Inspector Ghanshyam Rai on March 29 1997. Between 1984 and 1987, Gosain was posted in the Special Protection Group of the then Prime Minister Rajiv Gandhi. He was part of the escort team. Between 1987 and 1989, Gosain served as the Personal Security Officer or the PSO of Sonia Gandhi.
    14. During the tenure of Prime Minister Deve Gowda in 1997, Gosain deposed before the CBI. This deposition has so far never been made public. Headlines Today dug out this deposition, in which Gosain talks at length about the close family ties between the Gandhis and the Quattrocchis.
    15. In his testimony Gosain says, “Mr.Ottavio Quattrocchi and his wife Ms Maria Quattrocchi were very close to Mr Rajiv Gandhi and Mrs Sonia Gandhi. When Shri Rajiv Gandhi became Prime Minister, Mr. Quattrocchi and his family members used to visit PM house and the family members of Shri Rajiv Gandhi also used to visit the house of Mr.Quattrocchi.”
    16. He adds: “In the initial period of Prime Ministership of Shri Rajiv Gandhi, the children of Shri Rajiv Gandhi used to stay at Mr.Quattrocchi’s house during the foreign visits/domestic visits of the Prime Minister. We used to perform our shift duties at the residence of Mr.Quattrocchi on such occasions. Sometimes, Mrs Sonia Gandhi has also stayed in the house of Mr.Quattrocchi and at that time we used to perform our duties there.”
    Gosain goes on to add that Mr.Quattrocchi and his wife Maria enjoyed free access to the Prime Minister’s house. “At No. 5 & 7 Race Course Road, private cars were not allowed to enter inside the bungalow. Only the ferry cars of SPG, after severe security checks, used to carry such visitors from reception to porch and back. Mr. Quattrocchi and Mrs Maria Quattrocchi were very close to Shri Rajiv Gandhi’s family and they got free access to the PM’s House.”
    He further added: “All visitors to No 5 & 7 Race Course Road were issued passes at the reception near the alighting point. Every time, a card was kept ready for Mr. Quattrocchi and his family members as and when they visited the PM’s house. Everybody in SPG posted at PM house knew Mr Quattrocchi and his family members. Hence, there was no question of identifying them.”
    17. Ottavio Quattrocchi’s proximity to the Gandhis is well known. What is also known is this proximity continued even after Quattrocchi began to be linked to the Bofors scandal. What documents show is that despite the cloud of suspicion surrounding Quattrocchi’s involvment in the Bofors paybacks, he continued to have unfettered access to 10 Janpath, the residence officially assigned to Ms.Sonia Gandhi, which in itself makes her a public servant under the Prevention of Corruption Act.
    18. It is important to recollect that by January 25, 1990, a team of CBI officials was already in Switzerland with a list of suspected recipients of the Bofors payback. According to a Frontline magazine story of the time, Ottavio Quattrocchi was the first name on that list. Between 1988 and 1990, the media too carried many stories about the involvement of Quattrocchi as a middleman in the Bofors deal.
    19. It is clear from records that Mr.Quattrocchi was the direct beneficiary of bribe payments in the Bofors scam. It is now confirmed by the ITAT Report of the Hon’ble Tolani & Sharma Bench .
    The testimony of Mr. Sasi Dharan is crucial in further unravelling the proximity of Quattrocchi to Ms. Sonia Gandhi.. Sasi Dharan worked as a driver in Snam Progetti. Snam Progetti was an Italian public sector giant that was represented in India by Ottavio Quattrocchi. Sasi was Quattrocchi’s personal driver. He drove Mercedes No.DIA 6253. In his testimony before the CBI, Sasi details the frequent meetings between the Gandhis with the Quattrocchis.
    20. In his testimony Sasi says: “Shri Quattrocchi and Mrs Maria Quattrocchi were very close to Shri Rajiv Gandhi, Sonia Gandhi and his family. I do not know what type of relation they had but Quattrocchi and his wife Maria used to frequently visit the house of Rajiv Gandhi and Sonia Gandhi. I knew it since 1985 when I joined service. At that time they used to visit the house of Rajiv Gandhi twice or thrice in a day. Whenever Sonia Gandhi’s mother or father visited India, I used to drive them to the house of Quattrocchi. They used to remain there for the whole day and Mrs Maria Quattrocchi would take them for shopping. They used to come to India four or five times in the year.”
    21. What is clinching is the car log maintained by driver Sasi Dharan. In this log, Sasi details the exact dates when Ottavio Quattrocchi came to meet Rajiv and Sonia Gandhi at 5 and 7 Race Course Road or 10 Janpath. These logs are for the period 1989 to 1993. In this log book, Sasi Dharan has mentioned 41 occasions when Quattrocchi came to meet the Gandhis.
    22. It is important to note that the meetings between Ottavio Quattrochi and Sonia Gandhi continued even after the death of Rajiv Gandhi in 1991 even as Ms.Sonia Gandhi remained as a public servant under the Prevention of Corruption Act.

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  • 23. According to Sasi Dharan, Quattrocchi came to 10 Janpath 21 times after May 1991. Considering the long financial dealings of Mr.Quattrocchi since 1976 with LTTE (the assassins of Rajiv Gandhi), this fact is a subject of a future application for sanction as well.
    24. Sasi concludes by saying: “Shri Quattrocchi left India on the night of July 29, 1993 and on this day also I had driven him to the airport. At that time he did not have any luggage except one briefcase and he told me he was going for an urgent meeting. Usually, whenever Mr. Quattrocchi wanted the car, he would tell me in advance, but the day he left, he did not tell me (in advance)”. Obviously he had notice of his impending arrest by CBI in advance.
    25. As a consequence of the misuse of her office and position, Ms. Sonia Gandhi helped Ottavio Quattrocchi not only escape from the country, and in 2005 even to withdraw $ 29 million from his de-frozen accounts and thus let off scot free.
    26. Hence, it is prima facie obvious that Ms.Sonia Gandhi had misused her office and thus a public servant with considerable influence in government to enable Mr. Quattrocchi to escape from India in 1993 and later in 2005 to benefit Mr.Quattrocchi to illegally gain monetarily at the expense of the Consolidated Fund of India, by defreezing his London accounts.
    SECOND ISSUE:,
    27. This complaint against Sonia Gandhi also includes the corrupt monies held under her control in the tax haven of Switzerland as a legatee of the corrupt money which was banked in the name of her late husband or deposited by her of funds obtained from the erstwhile KGB, the Soviet Union’s Intelligence Agency, or by sale of illegally exported antiques in the country. I retain the right to submit details of other illegal accounts in other havens such as Macao at a later stage in another application to you or before the court.
    28. It is well-reported that Sonia Gandhi is the beneficiary of Rajiv Gandhi’s estate which includes the corrupt monies continued even now to be held in a tax havens. Why this money is held abroad (even if held as a trust to benefit family members) instead of its being held in India within the Indian financial system to benefit the nation is a question which Ms.Sonia Gandhi must answer.
    29. Violations of FEMA have occurred as also under Prevention of Money Laundering Act. In case any transaction on this account which is not reported in the Income Tax Returns, and FCRA is also a violation. There may also be an issue of obtaining RBI prior permission for holding such large sums abroad if it is claimed to be a legitimate account.
    30. It is clear that this wealth was not reported in Election Affidavits of Sonia Gandhi & Rahul Gandhi as a beneficiary of the monies so held . The total wealth of both Gandhis, as per their election returns, is just Rs 363 lakh, Sonia owns no car. “
    31. When Schweizer Illustrierte a prestigious German language Swiss magazine alleged that Rajiv Gandhi held an illegal account in Swiss banks of about US $ 2 billion, neither she nor her son, protested, or sued the magazine, then or later .
    32. When major papers, The Hindu and The Times of India included, had carried in the year 1992 the official confirmation of KGB payments to the Rajiv Gandhi family, adding that the Russian government owned the payments in the disclosures, neither of the two Gandhis challenged or sued them .
    33. Nor did they sue Dr. Yevgenia Albats, a member of the official Commission on KGB Operations set up by President Yeltsin, when she wrote about KGB payments to Rajiv Gandhi and family in her book: The State within State
    34. More than $ 2 billion in 1991 was being held by Ms. Sonia Gandhi as a legatee, or otherwise obtained by receiving stolen movable and immovable properties, monies and securities, kept illegally in tax haven banks of Switzerland and elsewhere, and which is disproportionate to her known sources of income. She thus has also committed offence u/s 13(1)(e) of PCA. It also attracts the IPC Sections for receiving stolen property.
    35. The recent deposition of Hasan Ali, alleged to have sid money of the nation to Switzerland secret accounts admits to his close association not only with her but with Mr.Ahmed Patel MP and political adviser to Ms.Sonia Gandhi .
    36. Ms. Sonia Gandhi is also obviously culpable under Indian criminal law such as FCRA for the pay offs in the Iraqi Oil-for-Food scam of 2002. The United Nations had set up an independent inquiry committee under Dr. F. Volcker which found that the “Congress Party” headed by Ms. Sonia Gandhi as a beneficiary of a free oil quota from the now deposed and deceased dictator Saddam Hussein, which the beneficiary sold at market price through Marc Rich, the notorious swindler who had been convicted by a US Court for 350 years and several million dollars as fine. He was pardoned by US President Clinton in 2000 on Israeli Prime Minister’s intervention. He lives in Switzerland.
    37. No one in Congress Party but Ms. Sonia Gandhi as party President could have been this beneficiary. The other beneficiary listed in Volcker’s Report was by name: Natwar Singh, who got much less .
    38. I reserve the right to further petition you to enlarge the scope of this sanction at a future date to include other violations and offences committed by Ms.Sonia Gandhi under Prevention of Corruption Act (1988), for which I will file with you a separate application if necessary..
    39. But, in this application alone there is substantive prima facie evidence for an appropriate court to take cognizance of the offence committed by Ms.Sonia Gandhi under the Prevention of Corruption Act, and thus I seek your sanction to initiate the criminal law to prosecute her under the Act
    40. Ms. Sonia Gandhi is habitually committing acts of corruption since 1972. On November 19, 1974, I brought it to the attention of the Rajya Sabha that Ms. Sonia Gandhi, then an Italian citizen had functioned as a benami insurance agent of public sector insurance companies, and giving her address as 1, Safdarjung Road, New Delhi which was then the official residence of the Prime Minister of India. She thus committed an offence under FERA. The then Prime Minister Mrs.Indira Gandhi subsequently informed the Rajya Sabha that following my disclosure, Ms. Sonia Gandhi had resigned from this agency earning commissions.
    41. Between January 25, 1973 and January 21, 1975 she held a post of Managing Director of Maruti Technical Services on a salary despite it being an offence under FERA. But then she had become Managing Director of Maruti Heavy Vehicles Pvt Ltd with an even bigger remuneration. For neither post she had the necessary qualifications having never passed even High School.The Justice A.C. Gupta Commission appointed in 1977 by the Janata Party Government found her guilty of multiple offences under FERA and IPC.
    42. In 1980 and January 1983 Ms. Sonia Gandhi then still an Italian citizen enrolled herself as a voter in the New Delhi constituency despite having been struck off the list in 1982 upon the ERO receiving a complaint from a citizen. She thus committed an offence under Section 31 of the Representation of the People’s Act read with Form 4 of the Registration of Electors Rules(1960).
    43. Ms.Sonia Gandhi’s Indian citizenship acquired in record speed in April 1983 is vitiated by her incomplete answers to mandatory questions in the citizenship forms. She did not submit documents from the Italian government of relinquishing her Italian citizenship required for Indian citizenship, stating in the Form that it was ‘not applicable” . Italian Embassy in New Delhi simply affirmed what she told them and hence that cannot be taken as a valid document of relinquishment for the purposes of citizenship. She also retrieved her Italian passport in 1992 after citizenship laws in Italy were amended which under Section 10 of the Citizenship Act (1955) means cancellation of her Indian citizenship.
    44. All these facts stated above were put together and published in USA in a full page advertisement in the New York Times in 2008 by NRIs N. Kataria and others. The Congress Party unit in USA thereafter engaged the most expensive law firm and filed a $200 million defamation suit. However Ms.Sonia Gandhi refused to appear in the witness box and be cross examination. Therefore, Justice Emily Goodman of the New York State Supreme Court dismissed the suit since defamation suits in law have to be filed by the person claiming to be defamed, and therefore cannot be assigned to others . Ms. Sonia Gandhi had a case to rebut these facts, then why she failed to turn up in court?
    (SUBRAMANIAN SWAMY)

    Welcome to www.Janata Party.org

    I think when Sonia Gandhi will be arrest that day will consider historic day of india on corruption front.
    I am sure congress will not allow to happen that. When lokpal bill activated then if somebody files cases against Sonia then congress will try hard to save Sonia.
    Kanimozhi arrest helped congress to divide DMK party.
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