Photo Credit: IANS
The National Herald was a newspaper founded in 1938 by Jawaharlal Nehru to push his own views, which differed from the more conservative consensus within the Congress party at the time. It was published by Associated Journals Limited, a company that also brought out the Quami Awaz in Urdu and Navjeevan in Hindi. After Independence, the Herald became the informal mouthpiece of the Congress. It shut down in 2008 as a result of financial pressures.
What happened to Associated Journals after the Herald shut shop?
Associated Journals Limited became a real estate company after the closure of the National Herald. It owns prime real estate in Delhi, Lucknow and Mumbai. Its Delhi headquarters is on the upscale Bahadur Shah Zafar Marg, and is now rented out to companies such as the Tata Consultancy Services, as per an NDTV report.
In Mumbai, Associated Journals owns a plot of land in the Bandra area. According to an Indian Express report, the Maharashtra government had allotted the land to build a library and research facility, but it is now the site of an under-construction 11-storey office building.
How did the Gandhis get involved?
Initially, there was no legal or commercial link between Associated Journals Limited and the Gandhis, or the Congress party. That changed when the party began to give interest-free loans to AJL. By 2010, the loans totaled around Rs 90 crore. In the same year, a company named Young Indian Private Limited was incorporated. Subramanian Swamy alleges that Sonia Gandhi and Rahul Gandhi own 38% shares apiece, and are directors in Young Indian.
Here’s where it gets controversial: In 2010, the Congress transferred the Rs 90 crore loan to the recently formed Young Indian Pvt Ltd. A few months later, AJL was acquired outright by Young Indian for the paltry amount of Rs 50 lakh, and the Rs 90 crore debt was written off.
In sum, for the modest amount of Rs 50 lakh, the company Young Indian became the owner of AJL and its prime real estate.
What are Swamy’s allegations?
In 2013, Swamy filed a case against Sonia Gandhi and Rahul Gandhi for alleged illegalities in Young Indian Pvt Ltd’s acquisition of Associated Journals. His main charges are:
1. Land grab: Swamy claims that the real estate owned by Associated Journals is valued at over Rs 2,000 crore. Young Indian acquired AJL and its land for Rs 50 lakh. Why did AJL sell itself so cheaply? And why, if it was under financial pressure, did it not sell off some of its land to pay back the Rs 90 crore loan?
2. Improper financial conduct by the Congress: As per law, a political party is a nonprofit entity and cannot engage in commercial financial transactions, including giving or receiving loans. This hits at the validity of the original loan the Congress gave AJL.
3. Defrauding AJL’s minority stockholders: Associated Journals has 1,057 shareholders. Swamy alleges that they were not consulted, or their approval sought, before the company was acquired by Young Indian.
What is the rebuttal to Swamy’s charges?
1. No one was defrauded in the first place: Former Finance Minister in the United Progress Alliance government P Chidambaram argues that if no one has been defrauded, then there is no case of fraud.
Further, Swamy is an unaffected party and thus has no locus standi to file the complaint. Further, all real estate remains in the name of Associated Journals Limited – therefore, since no money has been made, no fraud can be said to have committed.
Unfortunately for the Congress, this defence was greatly weakened by a statement from former law minister Shanti Bhushan on Friday. Bhushan claimed he was a shareholder in Associated Journals and called the takeover by Young Indian “wholly illegal”.
2. Young Indian is a non-profit so profiteering not possible:
3. Swamy’s valuations have no basis in fact: N Sundaresha Subramanian, writing in the Business Standard, points out that there is no factual backing for the Rs 2,000 crore valuation Swamy puts on AJL’s real estate holdings. Basing his calculations on rental incomes, Subramanian calculates that the valuation of the property works out to only Rs 98 crore, which is just Rs 8 crore in excess of the original loan.
4. The EC has already rejected Swamy’s charge that a political party cannot lend money: In 2012, Subramanian Swamy filed a plea with the Election Commission to de-recognise the Congress. His argument was that the party had violated the Representation of the People Act by giving a loan to Associated Journals. The Commission rejected Swamy’s contention, pointing out that Sections 29B and 29 C of the Act “provide for the manner in which political parties … may raise their funds… [but] there is no provision … prescribing the manner in which the political parties may use their funds”.
5. Various moves were made to revive the Herald: In a press statement November 2, the Congress said its interest-free loans to AJL was in order to revive the National Herald. Supporters of the party further said AJL did not sell its real estate to repay the loan, because the properties were intended to be used later as financial backup to help revive the National Herald.