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Explained: The National Herald case and involvement of Gandhi family

The case dates back to 2012 when a first complaint was filed by BJP leader Subramanian Swamy in a trial court alleging financial irregularities by Sonia Gandhi, Rahul Gandhi, and others, during the acquisition of Associated Journals Limited (AJL) – the publisher of National Herald newspaper – by the Gandhi family-owned Young Indian Pvt Ltd (YIL) in 2010

June 13, 2022 / 11:27 AM IST
Sonia Gandhi and Rahul Gandhi

Sonia Gandhi and Rahul Gandhi

Congress workers were detained on June 13 ahead of their march to protest the Enforcement Directorate (ED) summons to party's interim president Sonia Gandhi and her son Rahul Gandhi in the National Herald newspaper case

The probe agency had earlier this month issued fresh summons to record the two Congress leaders’ statements under criminal sections of the Prevention of Money Laundering Act (PMLA) in the case, the officials said.

Read: Congress says govt scared of Rahul Gandhi, 'undeclared emergency' in Delhi

Both leaders were supposed to appear before the agency on June 13 but Sonia Gandhi asked for more time on account of COVID-19 and now she has been asked to appear on June 23. Rahul, however, is appearing before ED today.

On June 12, the Congress announced a protest march on Jun 13 to ED office but Delhi Police refused  the permission citing the "communal and law and order situation" and VVIP movements.

"No one can oppress us, neither could the English nor can these new oppressors. We will march till the ED's office, we will choose Gandhi's path, we will fight for the rights of the poor. The Congress is the voice of the common man for 136 years," Congress leader Randeep Singh Surjewala said in a press conference on June 13.

The case dates back to 2012, when a complaint was filed by BJP leader Subramanian Swamy in a trial court alleging financial irregularities by Sonia Gandhi, Rahul Gandhi and others during the acquisition of Associated Journals Limited (AJL) — publisher of the National Herald newspaper — by the Gandhi family-owned Young Indian Pvt Limited (YIL) in 2010. Swamy also informed about the notice in social media.

Here is a primer on the case and the Gandhi family’s alleged involvement in it :

What is the National Herald?

The National Herald newspaper was founded by Jawaharlal Nehru in 1938 in Lucknow as part of the independence movement against the British. The newspaper, published by Associated Journals Limited (AJL), became a mouthpiece of the Congress party after Independence. AJL also published two other newspapers, Navjeevan in Hindi and Qaumi Awaz in Urdu.

What is Associated Journals Limited (AJL)? 

Associated Journals Limited (AJL), which published the National Herald and other two newspapers, was founded in 1937 with at least 5,000 freedom fighters, including Nehru, as its shareholders. In 2010, the number of AJL shareholders had reduced to 1,057.

AJL’s registered office was in ITO, New Delhi. The company published the National Herald newspaper in English, Qaumi Awaz in Urdu and Navjeevan in Hindi till 2008, when it was shut after racking up debt of over Rs 90 crore, according to a report in Business Standard.

Also read | ED examines Congress leader Mallikarjun Kharge in National Herald case

On January 21, 2016, AJL decided to relaunch the three newspapers.

What is Young Indian Pvt Ltd?

Young Indian Pvt Ltd (YIL) is a private company that was set up in November 2010. Rahul Gandhi, then a general secretary of the Congress party, was director of the company. While Rahul Gandhi and his mother Sonia Gandhi hold 76 per cent of the company's shares, the remaining 24 per cent was in the names of late Congress leaders Motilal Vora and Oscar Fernandes.

How is the Congress involved?

When the National Herald suspended operations in 2008 due to heavy losses, it is estimated that the newspaper had properties worth Rs 2,000 Crore in Delhi, Lucknow and Mumbai.

In his private complaint before a trial court in 2012, BJP leader Subramanian Swamy alleged that Congress leaders were involved in cheating and breach of trust in the acquisition of AJL by YIL, as assets worth crores of rupees had been transferred to YIL. He alleged that YIL took over the assets of National Herald, the defunct print media outlet, in a malicious manner to gain profit and assets worth Rs 2,000 crore. Under the Income Tax Act, no political outfit can have financial transactions with a third party.

In the revival plan for the newspaper, the Congress extended a Rs 90.2 crore interest-free loan from the party fund. Swamy alleged that in 2010, YIL had paid just Rs 50 lakh to obtain the rights to recover the Rs 90.2 crore AJL owed the Congress party. The BJP leader also alleged that the loan given to AJL was illegal since it was taken from party funds.

Also read | Hardik Patel to switch parties | Why Congress's loss is BJP's gain in poll-bound Gujarat

Some AJL shareholders, including former law minister Shanti Bhushan and former Allahabad High Court Chief Justice Markanday Katju, said, according to reports, that their shares in AJL were transferred to YIL without their knowledge.

The I-T department had claimed that the shares owned by Rahul Gandhi in YIL would lead him to have an income of Rs 154 crore and not about Rs 68 lakh, as was assessed earlier, according to a report in The Indian Express. The department has already issued a demand notice for Rs 249.15 crore to YIL for the assessment year 2011-12, the report said.

Who are the accused in the case?

Late Congress leaders Motilal Vora and Oscar Fernandes, journalist Suman Dubey and technocrat Sam Pitroda were also named in the case, apart from Sonia and Rahul Gandhi.  Former Haryana chief minister Bhupinder Singh Hooda is also an accused in the money laundering case registered by the ED in the National Herald case.

What have the courts said so far? 

In 2014, Metropolitan Magistrate Gomati Manocha summoned all the accused, including the Gandhis, in the case. The court said that from the complaint and the evidence so far it appeared that YIL was created as a “sham or a cloak” to convert public money for personal use, according to reports.

The court said that the complainant had established a prima facie case against the accused under Section 403 (Dishonest Misappropriation of Property), Section 406 (Criminal Breach of Trust) and Section 420 (Cheating) read with Section 120B (Criminal Conspiracy) of the Indian Penal Code (IPC).

Also read | Explained: ED arrests Delhi minister Satyendar Jain in hawala case: 5 key points on PMLA Act

The court, however, noted that this was only “the stage of summoning” and the accused had the right to refute the allegations and defend themselves. In August 2014, the Delhi High Court stayed the summons.

In February 2016, the Supreme Court directed Sonia Gandhi, Rahul Gandhi and the other accused to face criminal proceedings in the case. However, the top court exempted the Gandhis from appearing in court personally as they were “prominent persons” and not a flight risk.

What has the ED probe revealed?

The Enforcement Directorate  launched its probe in  August 2014 to find out if there was any money laundering. The case was closed by ED in January 2015 citing technical reasons. Swamy wrote to Prime Minister Narendra Modi casting aspersions on ED Director Rajan Kotoch. In August 2015, Katoch was removed and ED reopened the case in September 2015.

In December 2015, the Patiala house court granted bail to Sonia and Rahul Gandhi in the case. In 2019, the ED attached National Herald properties worth Rs 16.38 crore in Mumbai.

The ED had also initiated a money laundering probe against AJL in 2018 in connection with a plot allotted to it in Haryana’s Panchkula by then chief minister and Congress leader Bhupinder Singh Hooda.

At present, the probe agency is investigating the shareholding pattern, financial transactions and role of the promoters YIL and AJL. The agency has also registered a fresh case under the criminal provisions of the Prevention of Money Laundering Act after a trial court took cognisance of an Income Tax Department probe against YIL on the basis of Swamy's complaint.

The probe agency recently questioned senior Congress leaders Mallikarjun Kharge and Pawan Bansal as part of the investigation. In a fresh development, the ED has now issued summons to Sonia Gandhi and Rahul Gandhi.

What is the Congress party’s response?

The Congress party has been claiming that YIL was created with the aim of being a charity and not for any profit. The Opposition party hit out at the BJP-led Central government, accusing it of indulging in cheap vendetta politics to divert attention from issues such as inflation, falling GDP growth and the social divisions in the country today.

Also read | Manish Sisodia will soon be arrested in 'fake' case: Delhi CM Arvind Kejriwal

“This is a strange case of money laundering, where no money is involved… We are not intimidated. This reeks of vendetta, pettiness, fear and cheap politics,” Congress MP and senior lawyer Abhishek Manu Singhvi told reporters on June 1.
Gulam Jeelani is a journalist with over 12 years of reporting experience. Based in New Delhi, he covers politics and governance for Moneycontrol.