What is National Herald Case in which ED Summoned Sonia and Rahul Gandhi | EXPLAINED

National Herald was a newspaper founded by Jawaharlal Nehru and other freedom fighters in 1938. It was originally published by Associated Journals Limited (AJL).

New Delhi: Congress interim president Sonia Gandhi and party MP Rahul Gandhi has been summoned by the Enforcement Directorate (ED) over the National Herald Case, which was closed by the investigating agency in 2015. The Enforcement Directorate summoned Rahul Gandhi on Monday and party chief Sonia Gandhi on June 23 in connection with the National Herald case, lodged against various Congress leaders, including the Gandhis, for allegedly misappropriating funds.

All roads leading to the Enforcement Directorate (ED) office in central Delhi have been barricaded by the police after it denied permission to a protest march by supporters of Congress leader Rahul Gandhi, who is set to appear before the federal agency on Monday. The Delhi Police has imposed provisions of Section 144 CrPC to prohibit assembly and entry of people on roads leading to the ED headquarters in Pravaratan Bhawan on A P J Abdul Kalam Road.

Earlier, Sonia Gandhi, 75, was asked to depose before the federal agency on June 8 and Rahul Gandhi on June 2. The ED summons created a furore among the party members as the Congress termed it as nothing but a diversionary tactic. Congress leaders Abhishek Manu Singhvi and Randeep Surjewala said party president Sonia Gandhi has been summoned by the ED for questioning in a money laundering case linked to the National Herald newspaper on June 8, and she was determined to appear before the agency as she has nothing to hide.

What is the National Herald Case?

The over a decade-old National Herald case pertains to the alleged misappropriation of assets of over Rs 2,000 crore in an equity transaction. The case has been lodged against various Congress leaders including Gandhis for allegedly misappropriating National Herald fund. Initially the case was lodged with the Central Bureau of Investigation (CBI) and ED case is based on the CBI’s case. And, Sonia Gandhi and son Rahul are alleged to have been involved in a ‘cheating and breach of trust’ when Associated Journals Ltd was acquired by Young India Pvt Ltd in which the Gandhis held a majority stake.

National Herald was a newspaper founded by Jawaharlal Nehru and other freedom fighters in 1938. It was originally published by Associated Journals Limited (AJL). The AJL was incorporated as a public limited company on November 20, 1937 under the Indian Companies Act, 1913, for the purpose of publication of newspapers in different languages. It started publishing newspapers such as “National Herald” in English, “Navjivan” in Hindi and “Quami Awaz” in Urdu.

The publication of the newspapers was suspended on various occasions due to financial difficulties and certain labour problems, and on April 2, 2008, the newspaper was closed after a Rs 90 crore loan from the Congress failed to revive it. The National Herald is published by Associated Journals Limited (AJL) and owned by Young Indian Pvt Limited – with Sonia Gandhi and Rahul Gandhi on the board of directors.

In 2012 BJP leader Subramanian Swamy filed a complaint accusing Congress leaders of cheating and breach of trust in the acquisition of AJL by YIL. Under the Income Tax Act, no political organisation can have financial transactions with a third party.

Investigation of The National Herald Case

The investigation agency registered a fresh case under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a trial court took cognisance of an Income Tax Department probe against Young Indian Pvt Ltd on the basis of a private criminal complaint filed by BJP MP Subramanian Swamy in 2013. The questioning of the senior Congress leaders and the Gandhis is part of ED’s investigation to understand the share holding pattern, financial transactions and role of the promoters of Young Indian and AJL, the officials said. ED has also recently questioned senior Congress leaders Mallikarjun Kharge and Pawan Bansal as part of the investigation.

The National Herald Case History- Chain of Events

• On March 31, 2010, there was outstanding loan of Rs 88,86,68,976 (over Rs 88 crore) and a further loan of Rs 1.35 crore was received during the period April 1, 2010 to December 16, 2010, aggregating to Rs 90.21 crore.
• On December 16, 2010, the AICC transferred the entire outstanding loan of Rs 90.21 crore due from AJL in favour of appellant company, Young Indian, for a consideration of Rs 50 lakh.
• Further, almost 99.99 per cent shares of AJL were transferred to Young Indian.
• On December 13, 2010, in the first Managing Committee meeting of Young Indian, Rahul Gandhi was appointed as Director.
• On January 22, 2011, a fresh allotment of the shares of Young Indian were made, in which 1,900 shares, having paid-up value of Rs 1,90,000, were granted to Rahul Gandhi and 1,350 shares with a paid-up amount of Rs 1,35,000 in the name of Sonia Gandhi among other share holders.

In order to fulfil its objective of acquiring 100 per cent shares of AJL, Rahul Gandhi, along with his sister Priyanka Gandhi Vadra, purchased additional shares amounting to 47,513 and 2,62,411, through Ratan Deep Trust and Janhit Nidhi Trust, respectively, without complying provisions of the Companies Act.