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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.
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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.

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Shiv Sena Declares Rahul Gandhi a Threat For BJP in 2019 Lok Sabha Elections

It went on to add that ditto was the scenario with the post of President, since many had hoped that Advani at least would be catapulted to the Rashtrapati Bhavan in June 2017.

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Rahul Gandhi, Wikipedia

A day after asking Prime Minister Narendra Modi to refrain from “ridiculing” Rahul Gandhi for declaring his ambition to become Prime Minister, the Shiv Sena on Friday showered praises on the Congress chief, saying “he poses a challenge to the BJP” in the 2019 Lok Sabha elections.

“This is not the Rahul Gandhi of 2014. He is a changed person now. He has weathered abuse and criticism to emerge intellectually strong.

“He can throw up a serious challenge to the Bharatiya Janata Party in 2019,” the Sena cautioned in an editorial in the party mouthpieces “Saamana” and “Dopahar Ka Saamana”.

Asserting that “Gandhi has acquired political strength and clout”, the ruling BJP ally pointed out that this was effectively demonstrated in the December 2017 Gujarat Assembly polls.

“The BJP leaders mock him in vulgar language, but Rahul Gandhi has always maintained Modi’s dignity as Prime Minister and never stooped low to criticise him ever.

“This proves that Rahul Gandhi possesses political intellect and culture, which even his opponents would concede,” the Sena added.

However, the Sena wondered why the BJP was running “so scared and indulging in chest-beating” over Gandhi’s desire to become the Prime Minister should his party won.

“Today, the BJP wants to know how — with a queue of Prime Minister aspirants among the opposition parties — could Gandhi declare himself as a contender for the top post?

"He can throw up a serious challenge to the Bharatiya Janata Party in 2019," the Sena cautioned in an editorial in the party mouthpieces "Saamana" and "Dopahar Ka Saamana".
Shiv Sena supports Rahul’s ambition to become PM, IANS

“This question should be replied to by the BJP’s senior leaders like L.K. Advani or Murli Manohar Joshi and others,” the Sena said in a veiled reference to the side-lining of the party’s senior leaders under the current dispensation.

It went on to add that ditto was the scenario with the post of President, since many had hoped that Advani at least would be catapulted to the Rashtrapati Bhavan in June 2017.

But finally, Modi and BJP President Amit Shah had their way and they went ahead with their choice without consulting any of the allies and friendly parties, it said, adding how it had proposed the name of RSS chief Mohan Bhagwat for President.

“So, why is the BJP now demanding that Congress should consult its (UPA) allies before declaring the candidate for the Prime Minister’s post? Let the people of the country decide whether Gandhi is good for them or not,” the Sena said.

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The Sena advised the BJP that instead of ridiculing Gandhi, “the BJP should have welcomed his statement and countered it by throwing a challenge to the Congress that it would defeat him in the 2019 battle”.

The Sena reiterated the shabby treatment meted out by the BJP to its allies, and although it came to power with their support, the allies were rewarded “with back-stabbing, damage and destruction”.

“The people will be the final judge whether Gandhi will become the Prime Minister or be dumped. Even Modi was very nice before the (2014) elections. But later on, peoples’ pain and problems continue… The masses are reeling under it like a donkey carrying a heavy load… The only difference is, after each election, the donkey’s master changes,” the Sena concluded. (IANS)