National Herald Case, Rahul Gandhi Appears Before ED

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What has happened?

The Enforcement Directorate (ED) has summoned Congress president Sonia Gandhi and former party chief Rahul Gandhi for questioning in a money laundering case involving the National Herald
While Ms. Gandhi has been called to appear on June 8, her son Mr. Gandhi has been asked to depose on June 13.
The Congress alleged that the summons reeked of “vendetta, pettiness and cheap politics”.
It was a different time politically in India about 10 years ago.
The Congress was in power, leading a multi-party coalition government to make up for the lack of majority in the Lok Sabha.
Congress president Sonia Gandhi and her son Rahul Gandhi were often described as “extra-constitutional authorities“ over the Manmohan Singh government.
It was against this backdrop that veteran-yet-maverick politician and lawyer Subramanian Swamy moved a Delhi court in 2012 alleging money laundering by Sonia and Rahul in what is known as the National Herald case.

It is a newspaper that was launched in 1938 by Associated Journals Ltd (AJL), a brainchild of Jawaharlal Nehru, the then president of the Indian National Congress.
Nehru started the firm with 5,000 other freedom fighters as its shareholders.
Nehru was the patron of the National Herald and until he became the first prime minister of independent India, he was the chairman of the board of directors.
Seventy years after its launch, the National Herald was shut down with a debt of Rs 90.25 crore owed to the Congress.
This was in 2008 and the Congress was eyeing a second consecutive term at the Centre in the 2009 Lok Sabha election.
Until then, the AJL published the National Herald in English, the Qaumi Awaz in Urdu and the Navjeevan in Hindi.

The Congress-led United Progressive Alliance (UPA) won the Lok Sabha election and a year later a new company was set up – Young India Ltd (YIL) in 2010 with Rahul, then a Congress general secretary, as a director.
Sonia and Rahul held 76% of the company’s shares-38% each.
The remaining 24% was held by Congress leaders Motilal Vora and Oscar Fernandes.
Vora passed away in 2020 and Fernandes in 2021.
YIL is said to have no commercial operations.
In 2010, when YIL was incorporated, AJL had 1,057 shareholders.
Its holdings were transferred to Young India in 2011.
This is where, Swamy alleges, the National Herald scam happened.
And, the Enforcement Directorate (ED) believes there is enough evidence to link Sonia and Rahul to this scam of money laundering.

After YIL was set up, the Congress assigned the debt owned by AJL to YIL, which paid Rs 50 lakh to the Congress.
In return, YIL got the right to recover the debt from AJI – by acquiring the National Herald’s assets, including real estate at one of New Delhi’s prime locations.
Swamy alleges that YIL “took over” the assets of the defunct print media outlet in a “malicious” manner to gain profit and assets worth more than Rs 2,000 crore.

So, he basically alleged that YIL paid the Congress Rs 50 lakh to recover a debt of Rs 90.25 crore but ended up securing assets worth more than Rs 2,000 crore.

Swamy alleged that this transaction was illegal as it had been taken from party funds.
Swamy named Sonia, Rahul, Vora, Fernandes, journalist Suman Dubey and technocrat Sam Pitroda as accused in his petition to the Delhi court.
This evoked a strong rebuttal from the Congress.

With Swamy going gung-ho with his allegations, Rahul’s office in November 2012 threatened legal action against Swamy for accusing him and his mother.
At the party level, Congress spokesperson PC Chacko challenged Swamy to prove his allegations in a court of law.
After nearly eight years, AJL decided to relaunch the three newspapers in a digital format in 2016.

AJL had far too many shareholders compared to a few in YIL.
Some of them, including former Union law minister Shanti Bhushan and former Supreme Court judge Markandey Katju, alleged that the shares held by their fathers were transferred in 2010 without their consent.
They complained that they were not served any notice when YIL “took over” AJL.
Despite the complaints and political slugfest, the case did not move much further for a couple of years.
Things began to change after 2014.

In May 2014, the Narendra Modi government came to power.
Swamy wrote a letter to Arun Jaitley, seeking an income tax investigation against senior Congress leaders in the AJL takeover case.
Parallel to it, a Delhi court issued summons a week later to Sonia and Rahul on Swamy’s petition to appear before it in the National Herald case.
The same year, the ED launched a probe to ascertain if any money was laundered in the case.

Swamy, meanwhile, kept knocking the doors of the government and the courts seeking speedier investigation into the case.
In 2015, the Supreme Court asked Swamy to approach the high court for speedy progress in the case.
In September 2015, the ED reopened its investigation in the National Herald case.
In December, Sonia and Rahul secured anticipatory bail in the case from the Delhi court.
In 2016, the Supreme Court granted an exemption to all the five accused- -Sonia, Rahul, Vora, Fernandes and Dubey – from personal appearances but refused to quash proceedings against them.
In 2018, the Centre decided to snap the perpetual lease and evict AJL from the Herald House premises that was allotted to it on Bahadur Shah Zafar Marg in New Delhi in 1962.
The government said AJL was no longer conducting any printing or publishing activity for which the building was allotted to it.
The government’s decision was challenged and in April 2019, the Supreme Court stayed the eviction proceedings against AJL under,
The Public Premises (Eviction of Unauthorised Occupants) Act, 1971, until further notice.

The probes by the ED and the income tax department have made some startling revelations.
YIL, the company that began with a capital of Rs 5 lakh 12 years ago and which is a charitable non-profit organisation, now has assets worth Rs 800 crore across the country.
Soon after its incorporation, YIL secured a loan of Rs 1 crore from a Kolkata-based shell company so that it could enter into a financial agreement with the Congress for the acquisition of AJL.
The ED aims to question the Gandhis about the nature of their involvement in the National Herald debt swap case.
The Congress is unhappy, saying the ED action “reeks of vendetta, pettiness, fear and cheap politics”.
Only a few days ago, Rahul, speaking at an event in the UK, called the ED part of the “deep state“, which, he alleged, is “crushing the voice of India”.

Q) Which of the following regulation envision that press without licence was a penal offence?