The Enforcement Directorate (ED) has called Congress leader Rahul Gandhi and party president Sonia Gandhi for interrogation in connection with a money laundering case involving the National Herald newspaper. According to sources, the investigation agency intends to record the two Congress leaders’ remarks under criminal provisions of the Prevention of Money Laundering Act, 2002 (PMLA).
The case began in 2012, when BJP leader Subramanian Swamy filed a complaint in a trial court, alleging financial irregularities by Sonia Gandhi, Rahul Gandhi, and others, during the acquisition of the Associated Journals Limited – publisher of the National Herald newspaper – by the Gandhi family-owned Young Indian Pvt Limited, in 2010. Swamy also shared the warning on social media.
Former Indian prime minister Jawaharlal Nehru launched the National Herald newspaper in Lucknow, in 1938, as part of the independence fight against the British Raj. After independence, the daily, produced by Associated Journals Limited, became a voice for the Congress party. Associated Journals Limited also published two other newspapers in Hindi and Urdu, Navjeevan and Qaumi Awaz, respectively. Associated Journals was created in 1937, with at least 5,000 independence fighters as stockholders, including Nehru. The number of stockholders fell to 1,057 in 2010.
The registered office of Associated Journals was at ITO, New Delhi. According to a Business Standard article, the National Herald, Qaumi Awaz, and Navjeevan, were produced until 2008, when it was forced to close due to debts of more than Rs 90 crores. Associated Journals decided to start republishing the three papers on January 21, 2016.
Young Indian is one of the main parties involved in this. Rahul Gandhi, the Congress party’s general secretary at the time, was the director of the private company founded in November 2010. Rahul Gandhi and his mother Sonia Gandhi own 76 percent of the firm.
What role does the Congress play?
The National Herald was believed to have assets worth Rs 2,000 crores in Delhi, Lucknow, and Mumbai when it ceased operations in 2008 due to huge losses. In a private case filed in 2012 before a trial court, BJP leader Subramanian Swamy claimed that Congress leaders were complicit in deception and violation of trust in the acquisition of Associated Journals by Young Indian, with assets worth crores of rupees allegedly transferred to the latter. He claimed that Young Indian took over the assets of the defunct print media business worth Rs 2,000 crores in a wicked way, in order to benefit.
Notably, no political organisation may engage in financial transactions with a third party, as per the Income Tax Act. According to reports, certain Associated Journals’ owners, including former law minister Shanti Bhushan and former Allahabad High Court Chief Justice Markanday Katju, claimed that their shares were transferred to Young Indian without their knowledge.
According to a story in the Indian Express, the IT department indicated that Rahul Gandhi’s shareholding in Young Indian will result in an income of Rs 154 crores, rather than Rs 68 lakhs, as previously estimated. According to the report, the government has already issued a demand notice to Young Indian for Rs 249.15 crores, for the assessment year 2011-12.
Who are the defendants in the case?
In addition to Sonia and Rahul Gandhi, the complaint implicated late Congress stalwarts Motilal Vora and Oscar Fernandes, journalist Suman Dubey, and technocrat Sam Pitroda. Former Haryana Chief Minister Bhupinder Singh Hooda is also charged by the ED in the money laundering case.
What have the courts said?
In 2014, Metropolitan Magistrate Gomati Manocha summoned all of the suspects in the case, including the Gandhis. According to sources, the court stated that Young Indian looked to be founded as a “sham or cloak” to convert public money for personal use, based on the complaint and evidence so far.
The court did point out, however, that this was merely “the stage of summons”, and that the accused had the right to contradict and defend themselves. The summons were stayed by the Delhi High Court in August 2014.
The Supreme Court ordered Sonia Gandhi, Rahul Gandhi, and the other suspects to face criminal charges in the case, in February 2016. Although the court spared the Gandhis from physically appearing for hearings since they were “prominent individuals” and not a flight risk.
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What did the ED probe reveal?
In August 2014, the ED initiated an investigation to determine if money laundering had occurred. It closed the case in January 2015, claiming technical reasons. Swamy sent a letter to Prime Minister Narendra Modi throwing doubt on ED Director Rajan Katoch. Katoch was ousted in August 2015, and the ED restarted the case in September 2015.
Sonia and Rahul Gandhi were granted bail in the case by the Patiala House Court in December 2015. In 2018, the ED launched a money laundering investigation into Associated Journals Limited, in connection with a land allocated to a company in Haryana’s Panchkula, by then-chief minister and Congress politician Bhupinder Singh Hooda. The ED attached National Herald assets worth Rs 16.38 crores in Mumbai, in 2019.
At present, the probe agency is investigating the shareholding pattern, financial transactions, and role of the promoters of Young Indian and Associated Journals. The agency has also registered a fresh case under the criminal provisions of the PMLA, after a trial court took cognisance of an Income Tax Department probe against Young Indian, on the basis of Swamy’s complaint.
The ED recently questioned senior Congress leaders Mallikarjun Kharge and Pawan Bansal as part of the investigation. The ED has now issued fresh summons to Sonia Gandhi, who is to appear before it on June 8, and Rahul Gandhi, who is scheduled to appear on June 13.
What is the Congress party’s response?
The Congress party has been claiming that Young Indian was created with the aim of being a charity, and not for any profit. The opposition party hit out at the BJP-led central government, accusing it of indulging in cheap vendetta politics to divert attention from issues such as inflation, falling GDP growth, and the social divisions in the country today.
“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,” Congress MP and senior lawyer Abhishek Manu Singhvi told reporters on June 1.