ED Seizes Rs 751.9 Cr Assets in National Herald Case: Sonia-Rahul’s 76% Stake in Young India Under Scrutiny

November 21, 2023November 21, 2023 Niyati Rao

In a significant development related to the National Herald case, the Enforcement Directorate (ED) has charged Young India with financial impropriety, resulting in the seizure of assets amounting to INR 751.9 crore. This enforcement action has been initiated in connection with allegations of money laundering against Young India, an entity affiliated with the Congress party.

The ED’s intervention in this matter included the sealing of the Young India Company’s office located in the Herald Building, Delhi, on August 3, 2022. Prior to this, on August 2 and 3, ED teams conducted raids at 16 locations associated with National Herald, spanning across Delhi, Mumbai, and Kolkata. These extensive operations, conducted from morning until late evening, were a part of the investigative process.

The decision to seize assets valued at INR 751.9 crore followed thorough inquiries, including the questioning of individuals such as Sonia Gandhi and Rahul Gandhi. This enforcement action underscores the ED’s commitment to addressing allegations of financial irregularities and money laundering, particularly in cases involving influential entities.

Sonia Gandhi Responds to Over 100 Queries during 12-Hour Grilling

In a significant development related to the National Herald case, Sonia Gandhi, former Congress president, underwent rigorous questioning spanning three days, from July 19 to July 21, 2022. Over the course of this extensive interrogation, lasting a total of 12 hours, Mrs. Gandhi addressed a barrage of more than 100 questions posed by the Enforcement Directorate (ED).

This line of inquiry is part of the ongoing investigation into the financial affairs associated with the National Herald newspaper. The exhaustive nature of the questioning reflects the thoroughness with which the ED is conducting its probe, seeking comprehensive insights into the intricacies of the case.

It is noteworthy that this follows a similar line of inquiry directed at Rahul Gandhi, who faced over 50 hours of questioning over five days in June 2022. The extended duration of questioning for both prominent figures indicates the depth and complexity of the investigation.

Key Questions Posed to Sonia Gandhi by ED in National Herald Case Investigation

In the ongoing investigation into the National Herald case, the Enforcement Directorate (ED) directed specific inquiries to Sonia Gandhi, former Congress president, shedding light on critical aspects of the financial proceedings. During the extensive 12-hour questioning conducted over three days in July 2022, Sonia Gandhi responded to a series of probing questions, including:

Nature of Young India Limited’s Operations:

In which sector does Young India Limited operate? Provide insights into the organization’s core activities and functions.

Meetings at 10 Janpath:

How many transaction-related meetings occurred at your residence, 10 Janpath? Clarify the circumstances and details surrounding these gatherings.

Transaction Information:

What information do you possess regarding the transaction in question? Specifically, how were the shares involved in the transaction sold, and what details are available concerning the entire process?

What is the National Herald Case?

The National Herald case refers to a legal and financial controversy that emerged in 2012, initially brought to public attention by Bharatiya Janata Party (BJP) leader Subramanian Swamy. The case revolves around the alleged misuse of funds and property associated with the National Herald newspaper.

In August 2014, the Enforcement Directorate (ED) autonomously acknowledged the matter and formally initiated a case of money laundering. The prominent individuals implicated in the case include Sonia Gandhi and Rahul Gandhi, both prominent figures in the Indian National Congress party, along with other party members such as Motilal Vora, Oscar Fernandez, Sam Pitroda, and Suman Dubey.

The allegations center on accusations of financial impropriety and the misuse of funds related to the Associated Journals Limited (AJL), the company that published the National Herald newspaper. The ED’s involvement in the case underscores the suspicion of money laundering activities associated with the financial affairs of National Herald.

Nehru Launched the National Herald Newspaper

Jawaharlal Nehru initiated the National Herald newspaper in 1938, involving 5,000 freedom fighters. Published by Associated Journal Limited (AJL), the newspaper served as the Congress party’s platform post-independence. AJL produced the newspaper in three languages—’National Herald’ in English, ‘Navjeevan’ in Hindi, and ‘Qaumi Awaaz’ in Urdu. Over time, the publication faced financial losses, leading to its closure in 2008 despite a substantial loan of 90 crores taken by the Congress.

In 2010, a new entity, Young Indian Private Limited (YIL), was established, taking over AJL, the proprietor of National Herald. YIL’s board of directors featured Sonia Gandhi and Rahul Gandhi, with the former and the latter collectively holding a 76% stake, and the remaining 24% being held by Motilal Vora and Oscar Fernandez. Following the demise of Motilal Vora in 2020 and Oscar Fernandez in 2021, the Congress transferred AJL’s outstanding Rs. 90 crore loan to YIL.

In exchange for repaying the Congress loan, AJL granted Young Indian 9 crore shares. With this share acquisition, Young Indian gained control of 99% of AJL’s shares. Subsequently, the Congress forgave AJL’s Rs. 90 crore debt. The intricacies of this transaction prompted legal scrutiny, with Bharatiya Janata Party (BJP) leader Subramanian Swamy filing a case challenging the validity and propriety of the deal.

What is the Accusation Against Sonia and Rahul?

The charges against Sonia Gandhi and Rahul Gandhi in the National Herald case, as presented by BJP leader Subramanian Swamy, revolve around allegations of financial impropriety and the misuse of funds. The key accusations are as follows:

Transfer of Loan Recovery Rights:

Swamy alleges that the Congress party’s rights to recover a loan of Rs. 90 crore were transferred to Young Indian Limited (YIL).
YIL, in turn, paid Associated Journal Limited (AJL) Rs. 2,000 crore in assets, with only Rs. 50 lakhs being transferred to the Congress party.

Loan Repayment and Forgiveness:

It is alleged that YIL, owned by Rahul and Sonia Gandhi, owed the Congress party Rs. 90 crore.
After paying Rs. 50 lakhs, the remaining Rs. 89.50 crore was reportedly demanded from AJL by the Congress, and the loan was eventually forgiven.

Acquisition of National Herald Properties:

Swamy contends that, in order to recover the loan to YIL, the right to acquire properties of National Herald, including a prime location building in Delhi, worth about Rs. 2,000 crores, was acquired.

Increase in YIL Assets:

Allegations suggest that the assets of YIL, initially formed in 2010 with Rs. 5 lakh, have seen a substantial increase to Rs. 800 crore in just a few years.

Income Tax Department’s Findings:

The Income Tax Department has reportedly assessed Rahul Gandhi for earning Rs. 154 crore from the shares of YIL.
A tax notice of Rs. 249.15 crores has been sent to YIL for the year 2011-12.

What is Congress’ Response to These Accusations?

The Congress party, in response to the allegations in the National Herald case, has put forth several arguments to refute the charges. Key points of their defense include:

Charitable Purposes of YIL:

Congress contends that Young Indian Limited (YIL) was established with the primary objective of serving charitable purposes rather than engaging in profit-making ventures.

Characterization of Transaction as Commercial, Not Financial:

The Congress asserts that the transactions conducted by Young Indian Limited were of a commercial nature, not financial. This distinction is emphasized to counter the allegations of financial impropriety.

Absence of Property or Cash Transfer in Money Laundering Case:

Abhishek Manu Singhvi, a Congress spokesperson, questions the legitimacy of the money laundering charges, arguing that since there was no transfer of property or cash, the case does not meet the criteria for money laundering.

Financial Assistance to AJL by Congress:

Singhvi claims that when Associated Journal Limited (AJL) faced financial losses, the Congress party extended financial assistance of Rs. 90 crore to save it. As a result, AJL obtained the loan, which was later converted into equity.

Non-Profit Nature of Young Indian:

The Congress party underscores that Young Indian is a non-profit-making company. According to Singhvi, no dividends can be paid to its shareholders and directors, indicating that the funds transferred to Young Indian cannot be utilized for personal gain.

Rights over Properties and Business Retained by AJL:

Singhvi has stated that AJL continues to possess the same rights over all properties, as well as the printing and publishing business of National Herald, as it did before. The only change, he claims, is that Young Indian owns the shares of AJL. However, Singhvi asserts that Young Indian cannot use these funds for profit or dividend distribution.