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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

Congress To Use Tribal Card to Regain Power in the Country

Congress to use tribal card to improve countrywide position

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Congress Chhattisgarh
Congress will be using the tribal card to regain dominance and their plan of action will begin from Chhattisgarh. Wikimedia Commons

BY SANDEEP PAURANIK

In order to regain dominance in the country, the Congress is mulling using the tribal card. This plan of action is to be first implemented in Chhattisgarh.

Riding on the success of the Assembly and urban body elections, the Congress feels that it can increase it base through tribals as they constitute 8 per cent of the total population.

The Bharatiya Janata Party (BJP) in the first three Assembly elections in the state, after its formation in 2000, recorded huge victories and came to power. But after the Assembly elections held last year, the scenario changed. After registering a victory in the Assembly elections and then in the urban body polls, the Congress showed that it still dominates the tribal areas.

Rahul Gandhi Congress
Former President of Congress Rahul Gandhi gave an important message while innaugrating the National Tribal Dance Festival in Raipur. Wikimedia Commons

The Congress gave the responsibility of the tribal areas to the tribal leader of Madhya Pradesh Umang Singhar which eventually helped the party. Now, the party is planning to spread out nationwide through Chhattisgarh.

Former party president Rahul Gandhi, while inaugurating the National Tribal Dance Festival in Raipur, gave a message to the tribals who are here to participate in the festival that the Chhattisgarh government is working for all the sections and this is the reason why there has been a downward trend in naxal attacks and the state economy has also improved.

The Congress is planning to publicise the improvements in Chhattisgarh throughout the country because the tribal population in the state is 32 per cent.

BJP media panellist Sandeep Sharma, however, claims that the party’s base has not shrunk. He said till Madhya Pradesh and Chhattisgarh were not divided, the Congress was strong in the area but in the elections held after three years of the bifurcation, the BJP won the Assembly elections and was in power for 15 years. Though we faced defeat in the 2018 elections, the only reason was that people wanted a change but they were not angry with the BJP, he claimed.

The BJP won in the Lok Sabha elections and the margin in the urban body elections was also not much. So, it would be inappropriate to say that the BJP’s base has shrunk, he said adding that in one year the Congress’ base has declined by 9 per cent whereas in Assembly elections it got 12 per cent more votes and in urban body elections the margin was 3 per cent.

Congress
The Congress is planning to publicise the improvements in Chhattisgarh throughout the country. Wikimedia Commons

Analysing the political landscape of the state, political analyst Rudra Awasthi said, “When it was Madhya Pradesh then the Congress had stronghold in Chhattisgarh. Several big leaders were also from the state but after the formation of Chhattisgarh since Ajit Jogi was accused of being a fake tribal the Congress lost its stronghold over the tribals. Though it continued to dominate in some of the areas which helped it in regaining the power.

“As of now, the Congress has started including the tribals with the backward class. First Bhupesh Baghel was the state chief of the party and he was replaced by Mohan Markam as he became the Chief Minister. During the Assembly elections, the Congress talked about the identity of the tribals which helped the party. After winning the elections, the decisions of the Congress government were in favour of the tribals which helped the party in the urban body elections,” said Awasthi.

Also Read- Unity in Diversity is the Strength of the Country: Rahul Gandhi

The Congress is mulling over spreading its message to the tribals across the country through the three-day festival going on here. For this several senior leaders of the party will attend the festival and share the government’s schemes while giving the message that the Congress government in the state has brought a positive and a significant change in the lives of the tribals. (IANS)