The real estate caper: How Sonia and Rahul outdid Robert Vadra

If you thought Robert Vadra was the only real estate wizard in the Gandhi family, think again. Mom-in-law and bro-in-law Sonia Gandhi and Rahul can also teach the Damaad a thing or two on profitable realty moves.

The facts of the case are simple – as previous stories by Firstpost in 2012 show. The Congress party lent Rs 90 crore to Associated Journals Ltd (AJL), a defunct media company that once published National Herald, which then got taken over by Young Indian, a non-profit company under section 25 of the Companies Act owned largely by Sonia Gandhi and Rahul for Rs 50 lakh. In the process, the loan given to Associated Journals became a loan to Young Indian, and the latter got full control over Associated Journals and all its assets.

But here’s the interesting bit that will have Robert Vadra gnashing his teeth: Associated Journals owns real estate valued at over Rs 1,600 crore, including Delhi’s Herald House on Bahadur Shah Zafar Marg.

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In essence, with just Rs 50 lakh of their own, a private section 25 non-profit controlled by mother and son now owns property worth Rs 1,600 crore. Or so it is alleged. Maverick politician Subramanian Swamy, who filed the complaint against Sonia and Rahul, estimates their value at over Rs 2,000 crore now.

With very little money of his own Robert Vadra managed to make crores from properties in Gurgaon and Rajasthan (read here, here and here). His in-laws appear to have done just that too.

So it is not surprise that metropolitan magistrate Gomati Manocha issued a summons to Sonia and Rahul to turn up on 7 August to answer charges of “cheating” and “misappropriation of property”. As noted in this _Firstpost_ report today (27 June), the magistrate observed that “Complainant has established a prima facie case against the accused under section 403 (dishonest misappropriation of property, 406 (criminal breach of trust) and 420 (cheating) read with section 120B (criminal conspiracy) of IPC… Hence, let the accused Sonia Gandhi, Rahul Gandhi, Moti Lal Vohra, Oscar Fernandes, Suman Dubey and Sam Pitroda be summoned for August 7, 2014. Let the Young Indian be summoned through its authorised representative for the same date.”

This is a political disaster for the Congress, even though it is likely to allege political vendetta on the part of the ruling BJP.

It is not going to be easy for the dynastic duo to wriggle out of this one, for the facts clearly show that Sonia and Rahul owned 3,800 shares - 1,900 each - out of the issued capital of 5,000 shares of Young Indian – at least at the time the controversy broke cover in 2011-12. Motilal Vora, Congress Treasurer, and Oscar Fernandes, owned 600 shares each of the remaining capital of Young Indian. Why should Congress party office-bearers own what should be a party asset created through a loan given by the party? The impropriety - to the extent it was one - of Sonia and Rahul applies equally to Vora and Fernandes, unless there is some other explanation we haven’t heard of as yet.

According to a story by Raman Kirpal for Firstpost in November 2012, once Swamy made his allegations, Congress General Secretary Janardhan Dwivedi jumped in to claim that the party had lent Rs 90 crore to Associated Journals Ltd (AJL) “to enable AJL to pay off its liabilities and revive its defunct newspapers, including National Herald and Qaumi Awaaz.” He claimed the money was used to pay off employees of Associated Journals who lost their jobs when the publications had closed down. “We are proud that not only the salary dues of these 700 employees were paid off but even the VRS was given with all the benefits to those who opted for it and their provident funds were also paid.”

Kirpal noted at that time: “The evidence on record, however, suggests that the money could not really have gone to pay workers’ dues, or even to revive the newspapers. The money was simply given indirectly to Young Indian, the section 25 (non-profit) company 76 percent owned by Sonia and son, to enable them to take over Associated Journals (as _Firstpost_ noted).”

“This how it happened. Once the loan was given, Motilal Vora, AICC Treasurer and one of the three directors of Associated Journals, got it converted to equity. The loan then went into Young Indian’s books. Seeking the board of directors’ approval for issuance of 9.02 crore shares to Young Indian, Motilal Vora said: ‘9,02,16,898 equity shares of Rs 10 each be allotted to Young Indian in consideration of the extinguishment of the amount of Rs 90,21,68,980 due to Young Indian under loan facility available by the company from All India Congress Committee which loan facility and all the benefits thereunder was subsequently transferred by the All India Congress Committee in favour of Young Indian which was approved by the board in the board meeting held on 21.12.2010 and by the shareholders by a special resolution in the extraordinary general meeting of the members held on 21.01.2011.’’’

“Young Indian obliged and readily took over the loan of Rs 90 crore from Associated Journals in order to acquire it. This money is unlikely to have been used to pay the dues to employees of National Herald and Qaumi Awaaz. Reason: their dues were largely settled much earlier.”

The simple point is this: Congress party funds were used to transfer a property worth possibly a couple of thousand crore to a private entity controlled by Sonia and Rahul – and their trusted lieutenants.

Vadra will be wondering why he didn’t think of that.