Explained: National Herald, the Gandhi connection, and the money laundering case

The Enforcement Directorate on Wednesday summoned Congress interim president Sonia Gandhi and her son and member of Parliament (MP) Rahul Gandhi to appear before it in June in connection with a money laundering case relating to the newspaper National Herald, which is owned and run by the party.

Rahul Gandhi has been summoned on 2 June and Sonia Gandhi on 8 June, ED sources said, according to a report in NDTV. The Congress MP has asked for time to appear after 5 June, as he is not in India.

According to the news channel, both Congress leaders will honour the summons and not seek an adjournment.

What is the National Herald case?

Bharatiya Janata Party (BJP) leader Subramanian Swamy filed a private complaint before a trial court in Delhi in 2012, alleging cheating and misappropriation of funds by the Gandhi family during the acquisition of the newspaper. He alleged that the Gandhis had acquired properties owned by National Herald by buying over the newspaper’s erstwhile publishers through Young Indian Pvt Limited (YIL), in which they have an 86 per cent stake.

In the complaint, Sonia Gandhi, Rahul Gandhi and others have been accused of misappropriating funds by paying just Rs 50 lakh, through which Young Indian had obtained the right to recover Rs 90.25 crore that The Associated Journals (AJL), the publisher of the paper, owed to the Congress. The loan given to AJL was “illegal”, as it had been taken from party funds, according to the complaint.

Swamy has alleged that Young Indian, which has the mother-son duo on its board of directors, had “taken over” the defunct media organisation in a “malicious” to make profits and gain assets to the tune of Rs 2000 crore.

Congress treasurer Motilal Vora, general secretary Oscar Fernandes, journalist Suman Dubey and technocrat Sam Pitroda were also named in the case.

What are The Associated Journals and Young Indian?

The Associated Journals was the publisher of the National Herald, a newspaper launched by India’s first prime minister Jawaharlal Nehru. It was founded by him in 1937.

Apart from Nehru, 5000 freedom fighters were stakeholders in the AJL. This number came down to 1000 by 2010, according to a report in The Financial Express. In 2008, The National Herald shut down with a debt of over Rs 90 crore.

Young Indian was set up by the Congress in November 2010 with Rahul and Sonia Gandhi holding a majority stake of 76 per cent. The remaining 24 per cent was shared between Vora and Fernandes.

The offices of both AJL and YIL were registered at Herald House in New Delhi’s ITO.

How did the Congress get involved?

The National Herald was not printing issues because of the losses it incurred. However, the Congress party decided to revive it because of the role it played in India’s struggle for independence.

The party granted a Rs 90-crore interest-free loan to the publisher, AJL, which it failed to repay.

What’s the alleged scam?

In 2010, the Congress assigned the debt to Young Indians, which meant that AJL had to now pay the Rs 90-crore sum to the company.

Since the publishers were unable to pay the loan, they transferred all the money to YIL, which was owned by the Gandhis. For this, they furnished Rs 50 lakh.

The allegations against the Gandhis are that they took over a publicly held company with real estate properties worth Rs 2000 crore for Rs 50 lakh.

According to Swamy, the loan given by the Congress was illegal as political parties are not allowed to lend money for commercial purposes. The Gandhis maintain that the party did not receive commercial profit on its loan to the publishers.

What have the courts said so far?

In June 2014, the court summoned the Gandhis and the other accused in the case.

Metropolitan Magistrate Gomati Manocha had said back then that from the complaint and the evidence so far it appeared that Young Indians was “created as a sham or a cloak to convert public money to personal use”.

However, the court had noted that this was only “the stage of summoning” and the accused had the right to refute the allegations and defend themselves.

In July 2014, the Congress leaders moved the High Court which stayed the summons.

In February 2016, the Supreme Court directed Sonia Gandhi, Rahul, and other accused to face criminal proceedings in the case, saying “let there be a fair trial”. However, it had exempted the Gandhis from appearing in court saying that the accused leaders were “prominent persons” and would not run away.

What has the ED investigation revealed so far?

It was in August 2014 that ED launched a probe to see if there was any money laundering involved. The investigation was reopened in August 2015.

As the investigation continued, a portion of a nine-storey building in Mumbai’s plush Bandra area was attached by the ED in May 2020. The Mumbai property, worth Rs 120 crore, was purchased after fraudulently taking a loan from Delhi’s Syndicate Bank, the investigation found out.

The central probe agency recently questioned senior Congress leaders Mallikarjun Kharge and Pawan Bansal as part of the investigation.

The Income Tax department had said the shares Rahul Gandhi has in YIL would lead him to have an income of Rs 154 crore and not about Rs 68 lakh, as was assessed earlier. It has already issued a demand notice for Rs 249.15 crore to the company for the assessment year 2011-12, reports The Indian Express.

How has the Congress reacted to the summons?

Congress MP and senior lawyer Abhishek Manu Singhvi said at a press conference on Wednesday that there was no evidence of money laundering or of any money exchange.

“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,” Singhvi said.

“Started the National Herald newspaper in 1942, at that time the British tried to suppress it, today Modi government is also doing the same and the ED is being used for this,” Congress leader Randeep Surjewala was quoted by news agency ANI as saying.

With inputs from agencies

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