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National Herald Scam: Everything You Need To Know

A real life 'hera-pheri' done by top politicians of the Indian National Congress, as alleged by Subramanian Swamy

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National Herald was a newspaper, it's publishing rights were with AJL before Young Indian took over.
National Herald was a newspaper, it's publishing rights were with AJL before Young Indian took over.

BY SHANTAM SAHAI

  • Indian National Congress lends Rs 90 crores to AJL, with no interest
  • AJL transfers all the shares with the Rs 90 crores debt to Young Indian, in return for Rs 50 lakhs
  • Subramanian Swamy files a private complaint in a court in Delhi, to uncover what is being investigated as the ‘National Herald Scam’

National Herald scam is a case that put the Indian National Congress under the public scanner, with Sonia Gandhi and Rahul Gandhi being in the spotlight, it involves other names such as Motilal Vora. All of it started on 1st November 2012 when BJP’s Subramanian Swamy filed a private complaint (a crusade against corruption) in a court in Delhi. He alleged criminal misappropriation by the Gandhis. According to Swamy, the Gandhis had committed fraud by illegally acquiring a public limited company, Associated Journals Limited (AJL) through Young Indian, a private limited owned by them.

The case came out as a conspiracy to amass wealth by exerting influence in the Indian National Congress and fooling the shareholders of AJL. Even though Rahul Gandhi called it a ‘political vendetta’, he surely didn’t expect Swamy would be able to connect all the dots and reach a conclusion of ‘why would the Congress party lend a loan of Rs 90 crore (with no interest) to AJL?’

ALSO READ: National Herald case: Sonia, Rahul may seek bail if needed

What is Associated Journals Limited (AJL)?

It is an unlisted public limited, incorporated on 20th November 1937. Its registered office is Herald House, 5-A, Bahadur Shah Zafar Marg, New Delhi. Even though it was an idea of Jawaharlal Nehru, he never owned AJL. It was started with the support of 5000 freedom fighters who became shareholders. AJL’s initial capital was Rs 5 lakh, which was divided into 2,000 preferential shares each worth Rs 100 and 30,000 equity shares worth Rs 10 each.

Motilal Vora (also the treasurer of the Indian National Congress) was the chairman and managing director of the company since 2002.  The company commanded publishing rights of the National Herald newspaper. It also owned various real estate properties which were estimated to be around Rs 5000 crore. AJL had incurred huge losses before it was transferred to Young Indian in 2011.

What is Young Indian?

It is a private limited which was incorporated on 23rd November 2010 with a capital of Rs 5 lakh. Its registered office too, was 5-A, Herald House, Bahadur Shah Zafar Marg, New Delhi. The company’s 76% shares are held by Sonia Gandhi and Rahul Gandhi (who are also in the board of directors), whereas the rest are held by Motilal Vora and Oscar Fernandes, another Congress leader.

The judicial process and investigation are still going on regarding the National Herald Scam. Pixabay
The judicial process and investigation are still going on regarding the National Herald Scam. Pixabay

How was AJL transferred to Young Indian?

  1. The Indian National Congress provided AJL with an unsecured zero interest loan of Rs 90 crores. Remember, the treasurer of INA and chairman of AJL are both the same person, Motilal Vora.
  2. In December 2010, the Board of Directors of Young Indian formally passed a resolution offering to own the outstanding debt of AJL of Rs 90 crores. This offer was accepted by the Chairman and Board of AJL.
  3. The AJL thereafter held a meeting of their Board and without reference to the Shareholders resolved that in lieu of Young Indian owing the debt and for a further consideration of Rs 50 Lakhs, the entire share equity of AJL would be transferred to Young Indian. Thus, AJL became a wholly owned company of Young Indian.
  4. The Indian National Congress wrote off the loan as irrecoverable by falsely holding that the Net Worth of the Company is negative.

Important Points

  • The Memorandum of Association of the AJL bars the Company from entering into any transaction which is not for furthering its objective to publish newspapers.
  • National Herald House is a prime property in Bahadur Shah Zafar Marg and was given by the Government for the purpose of publishing a newspaper at concessional rates. However, the Young Indian, now the owner of the National Herald House, has opened this property for commercial renting such as to Multinational Companies and to the Ministry of External Affairs for its Passport Seva Kendra on rent.

Important Questions

  • Why should Young Indian, which is majorly owned by the Gandhis, be assigned the AJL’s debt of Rs 90 crore that was gonna be written off by the INA?
  • Why didn’t AJL, which owns several real estate properties, use a part of its prime assets to repay the debt?

ALSO READ: Ruckus in Rajya Sabha over National Herald case

What do the shareholders say?

A number of shareholders have claimed that AJL’s chairman, Motilal Vora, and its directors did not inform them or obtain their approval while deciding to transfer its entire equity to Young Indian in December 2010.

“This is the first time I am hearing about such a company in which my grandfather had shared. I have no idea what kind of deal was struck. Had a letter or a notice for approval been sent to any of my siblings or at our Allahabad address, I would have been informed,” said former Supreme Court Judge Markandey Katju, whose grandfather Kailash Nath Katju held 131 shares in AJL.

Legality

As alleged by Subramanian Swamy, it is illegal for a political party to lend money for commercial purposes as per Section 29A to C of the Representation of the People Act, and Section 13A of Income-tax Act.

“According to the evidence so far, it appears that YIL was in fact created as a sham or a cloak to convert public money to personal use to acquire control over ₹20 billion worth of AJL assets,” said Metropolitan Magistrate Ms Gomati Manocha in 2014. The court had noted that all the accused, allegedly, had acted “in consortium with each other to achieve the said nefarious purpose/design”.

The National Herald case is currently an ongoing one, with the accused being charged under Sections 403, 406 and 420 read with Section 120-B of IPC.

Next Story

Are There Enough Jobs In Prime Minister Narendra Modi’s Led India?

“More young people are entering the labor force, millions want to leave agriculture but can’t find construction work because construction activity has slowed down because the investment rate in the economy has slowed down.”

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VOA
Modi’s Bharatiya Janata Party dismisses concerns about the job data saying it does not capture the real picture because it focuses only on the 15 percent of Indians who work in the formal economy. Pixabay

For people streaming in from rural areas around New Delhi, the first stop is a collection of busy city intersections where contractors select daily wage labor from the crowds of young and old waiting every morning to get work.

Many standing at these intersections say they get work for barely half the month. “I have the ability to work hard. I never turn down any work. But I would prefer to get a cleaner, permanent job,” says 29-year-old Tek Chand. “The problem is one day I have money to buy rations, the next day I don’t.” Like millions of others, he migrated from his village three years ago to seek work and a better life in the city.

FILE - Indian Prime Minister Narendra Modi, center, arrives with his cabinet colleagues on the opening day of the budget session of the Indian Parliament, in New Delhi, Jan. 31, 2019.
Indian Prime Minister Narendra Modi, center, arrives with his cabinet colleagues on the opening day of the budget session of the Indian Parliament, in New Delhi, Jan. 31, 2019. VOA
As India prepares for general elections on April 11, Prime Minister Narendra Modi is being attacked by opposition parties for failing to make good on a promise he made in 2014 to create millions of jobs for India’s huge young population. Modi’s Bharatiya Janata Party rebuts that criticism and says India is generating new opportunities as it becomes one of the world’s fastest growing major economies.

Job creation is a massive challenge for a nation with one of the world’s youngest populations — half the country’s 1.3 billion people are under the age of 25.

Recent data shows that joblessness has soared to record high levels. Opposition parties have made joblessness one of their principal election planks and have accused the prime minister of failing the estimated 8 to 10 million young people who enter the workforce every year.

The independent Mumbai-based Center for Monitoring Indian Economy estimates that unemployment reached 7.2 percent last month and that 11 million jobs were lost in 2018. With a working population of 500 million, that translates into more than 30 million people waiting for jobs. An unpublished official survey that showed unemployment at a 45-year-high has also been widely quoted by Indian media.

India's main opposition Congress party President Rahul Gandhi speaks during a public meeting at Adalaj in Gandhinagar, India, March 12, 2019.
India’s main opposition Congress party President Rahul Gandhi speaks during a public meeting at Adalaj in Gandhinagar, India, March 12, 2019. VOA

On the campaign trail, the head of the main opposition Congress Party, Rahul Gandhi, who is seen as Modi’s principal challenger, talks repeatedly about a “jobs crisis.”

“Our government is refusing to accept that we have a massive crisis and potential disaster in front of us,” Gandhi told a group of university students in New Delhi recently, many who will be first time voters.

Modi’s Bharatiya Janata Party dismisses concerns about the job data saying it does not capture the real picture because it focuses only on the 15 percent of Indians who work in the formal economy. It points to a recent industry report that jobs have been created in the medium and small sectors.

The BJP says millions of people have found work in the transport and infrastructure sectors or as delivery boys in booming online businesses as India becomes one of the world’s fastest growing major economies. They point out that the issue is not jobs but livelihoods, and point to millions of people who are not counted in job data.

They are self-employed people like cab owner Chain Pal Singh. As the app based taxi business boomed, Singh’s friend, who operated a cab, persuaded him to quit his job and take out a loan to buy a car. His decision has paid off — in four years he has earned enough money to invest in two more cabs.

Singh says he is much better off than when he held a job. “I used to earn about $225 dollars a month. Now in some months I can earn almost double that amount. Its beneficial for me.”

Following defeats in key state elections in December, Prime Minister Narendra Modi told parliament last month, “This truth has to be acknowledged. The unorganized sector has 80 to 85 percent of the employment.” He pointed to millions of commercial vehicles sold in recent years and questioned if they had not generated jobs for drivers.

Economists admit India’s large informal sector has made it difficult to calculate employment, but they say joblessness or underemployment remains the country’s biggest challenge. While scarcity of jobs is not a new problem, two disruptive economic steps in the last two years exacerbated the problem.

In 2016 a sweeping currency ban meant to tackle the problem of illegal cash, dried up jobs as it created huge currency shortages, particularly in small businesses and in the countryside. A poorly-implemented tax reform known as the Goods and Services Tax a few months later was another blow to businesses.

Meanwhile, Modi’s “Made in India” campaign, which aimed at making India a manufacturing hub like China, has made a slow start and sluggish labor-intensive sectors cannot cater to growing numbers of job seekers.

“We can’t keep patting ourselves on the back that we are the fastest growing economy specially if all these other indicators are not growing at a rate that will absorb the growing labor force,” says Santosh Mehrotra, a human development economist at the Jawaharlal Nehru University in New Delhi.

“More young people are entering the labor force, millions want to leave agriculture but can’t find construction work because construction activity has slowed down because the investment rate in the economy has slowed down.”

Also Read: The Mental Health ‘Epidemic’: About Six in Ten Teen Say, They Feel A Lot Of Pressure To Get Good Grades

He points out that exports, another sector that created a number of jobs has also not been performing well.

As the campaign heats up, the opposition will try to keep the spotlight on jobs, or lack of them, even as the BJP tries to focus on national security following a recent confrontation with Pakistan. The final verdict on whether to give Prime Minister Modi a second term in office will be delivered by millions of voters when they cast their ballots. (VOA)

One response to “Are There Enough Jobs In Prime Minister Narendra Modi’s Led India?”

  1. If the employment picture is bleak despite the construction of so many more Kilometers of roads, railways, air ports, bridges, toilets and other infrastructures compared to the five or even ten years of UPA government, imagine where we would be if we had UPA III government .