National Herald Case- Accusations against Rahul Gandhi and Sonia Gandhi

28 Jul 2022  Read 2188 Views

Congress President Sonia Gandhi and former party Chief Rahul Gandhi have been summoned by the Enforcement Directorate in the National Herald Case. The whole scam is alleged to have been planned by the Gandhi family of Congress, while some are referring to it as an act of blasphemy against the family who had an illustrious lineage starting from Jawaharlal Nehru, the first PM of the country. 

The National Herald was a newspaper founded by Jawaharlal Nehru and other freedom fighters in 1938. The paper was aimed at voicing the concerns of the Indian National Congress. It was published by Associated Journals Limited (AJL), after which it became a mouthpiece of the Congress party after Independence. AJL even published two other newspapers, one each in Hindi and Urdu.

In this article, we will discuss the National Herald Scam, how it began, and who were involved. So, let’s get started.

National Herald Newspaper

National Herald newspaper was published by Associated Journals Limited (AJL), a brainchild of PM Jawaharlal Nehru, who started this company in 1937 with 5,000 freedom fighters as its shareholders. The company didn’t belong to any individual rather, in 2010, the company had 1,057 shareholders. 

The Storyline of the National Herald Scam

In 2008, AJL closed printing the National Herald newspaper. It was left with no money and owed a debt of ₹90 crore to Congress. This debt that we are talking about was a total of interest-free loans provided by Congress to AJL from time to time so that the newspaper could pay salaries to its employees & run its operations. So, due to this, an allegation was made that the Gandhis had no actual interest in the newspaper; rather, they were greedy for AJL's real assets. 

  • In 2010, the Gandhis floated a company called Young Indian Pvt. Ltd. (YIL) and purchased the outstanding loan (payable loan amount by AJL to Congress) of ₹90 crore from AICC (All India Congress Committee) by merely paying ₹50 lakh to AICC. 

  • Now, the debt that AJL owed to Congress was transferred to Young Indian. So, AJL now had to pay ₹90 crore to Young Indian. From this, you can imagine how Young Indian played and bought the debt of ninety crores from AICC only for fifty lakhs.

The same year after a month, AJL expanded its equity pool & allotted a large piece of shares to Young Indian, making it (Young Indian), a majority shareholder. But did you know that even Young Indian had no funds, so in order to acquire AJL, it borrowed ₹1 crore from a Kolkata-based company called Dotex? It was this 1 crore from which ₹50 lakh was paid to the (AICC) Congress to purchase the ₹90 crore debt.

When did the National Herald Controversy begin?

Finally, In 2011, when AJL incurred losses. So, the holdings of the company were transferred to Young India. Many other shareholders of AJL, including former law minister Shanti Bhushan and former chief justice of Allahabad & Madras High Courts Markandey Katju, alleged that they were not served any notice when Young Indian 'took over' AJL and that the shares actually held by their fathers were transferred to AJL in 2010 without their consent. 

  • In 2012, BJP and Advocate Subramanian Swamy filed a complaint before the trial court that Congress was involved in cheating & claimed that YIL “took over” the assets of the company in a “malicious” manner to gain the profits and assets of the company worth over Rs 2,000 crore.

  • He also stated that YIL paid just Rs 50 lakh to obtain the rights to recover Rs 90.25 crore, which AJL owed the Congress party; it was given the amount earlier as a loan to start the newspaper. He also alleged that the loan given to AJL was “illegal”, as it had been taken from party funds.

  • In 2014, the Enforcement Directorate (ED) initiated a probe to see if there was any money laundering in this case. 

  • Then in the year 2015, it was reported that the Enforcement Directorate had reopened its investigation in the National Herald case.

How Congress responded to the scam?

The Congress party has claimed that Young Indian was created “with an aim of charity” and not for making a profit. The transactions had “no illegality” because; it was “merely a commercial transaction” for transferring shares of the company, and the complaint filed by Swamy was “politically motivated”, so they raised an objection against this. 

What was considered illegal here is that according to Section 29A to C of Representation of the People Act, 1951 & Section 13A of Tncome Tax Act, 1961, it is illegal for any political party to lend money for any commercial purposes. Both Rahul Gandhi and Sonia Gandhi have been summoned by the ED in a probe related to the National Herald case. The ED is currently probing the shareholding pattern, the financial transactions of AJL and YIL, and the role of party functionaries in the functioning of the two entities.

ED questions Sonia Gandhi

Recently in 2022, Sonia Gandhi was questioned by the Enforcement Directorate in connection to a money laundering case in the National Herald newspaper. Questioning Sonia Gandhi, currently recovering from Covid, lasted for about two hours, and the session ended at her request.

She will also be called for another round of questioning in a few days. The session was conducted keeping in mind Covid protocol. Sonia Gandhi's summons came days after her son Rahul Gandhi was interrogated in this case, reportedly by the same assistant director-level investigation officer who grilled the Congress chief.

Conclusion

As we know, the Enforcement Directorate served a summons to Sonia Gandhi and Rahul Gandhi in this money-laundering probe is linked to the over a decade-old National Herald case, which is an amalgamation of a sensitive, complex and intricate case of share transfer or acquisition of shares of the Associated Journals Ltd. (AJL) in 2011, awaits lots of twists and turns. This seems a culmination of a complex and intricate case of company law and shares transfer. So stay tuned!

About the Author: Kakoli Nath | 110 Post(s)

Kakoli Nath is a legal Content Curator at Finology Legal who pursued BBA.LL.B (5 years integrated course) & she is a patent analyst. She has pursued advanced certification in Forensics Psychology and Criminal Profiling from IFS, Pune.

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