National Herald case: Enforcement Director­ate summons Sonia, Rahul

Agency probing 'illegal' benefits of Rs 414 crore obtained by the Gandhi family

At the Udaipur Nav Sankalp consultation of the Congress recently, when Rahul Gandhi declar­ed: “I have not taken one rupee from Mother India, I am afraid of nothing, and I will fight ba­ck,” loud cheers greeted him. It seems, he had some inkling of the developments to come.

The Enforcement Director­ate (ED) on Wednesday issued summons to Congress president Sonia Gandhi and Rahul Gandhi, in connection with a money laundering probe. It was for alleged irregularities in party-promoted Young Indian, which owns the National Herald newspaper.

Sources said that the federal agency is probing ‘illegal benefit’ of Rs 414 crore in the form of property obtained by the Gandhi family under  the Preven­tion of Money Launde­ring Act (PMLA). The agency is also examining the books of the trust run by the Gandhi family and the possibility of involvement of a firm (newspaper) in hawala operations.

As Rahul is out of the country, the party said he cannot appear before ED on June 2 when he has been summoned. Sonia will appear on June 8.

The story begins in 1937, when Jawaharlal Nehru started a company Associated Journals Limited (AJL) with 5,000 other freedom fighters as its shareholders. The company did not belong to any person in particular.

In 2010, the company had 1,057 shareholders. AJL published the National Herald newspaper in English, Qaumi Awaz in Urdu and Navjeevan in Hindi until 2008.

It had dues amounting to Rs 90 crore and was closed dow­n. But it owned valuable real estate in Delhi, Mumbai, Luck­now, Patna and Panchkula.

In 2010, a company, Young India (YIL), was set up with Rahul, then a general secretary of the Congress party, as a director. While Rahul and his mother Sonia held 76 per cent of the company’s shares, the remaining 24 per cent were held by Congress leaders Motilal Vora and Oscar Fernandes, who are both dead.

The company was said to have no commercial operations. Soon after its formation, YIL took over AJL.

In 2012, Bharatiya Janata Party (BJP) leader and advocate Subramanian Swamy filed a complaint before a trial court alleging that some Congress leaders were involved in cheating and breach of trust in the acquisition of Associated Journals by YIL.

He alleged that YIL had “ta­ken over” the assets of Nation­al Herald in a “malicious” way. The charge was that the directors had violated provisions of the Companies Act 1956.

According to the ED investigation in the matter, the objective of the takeover was twofold: “to obtain valuable benefits embodied in the business assets of AJL; and not pay any tax on the business income from them.”

It said the takeover included a “fraudulent transaction involving the purchase of a non-existent loan of Rs 90.21 crore by the Congress for Rs 50 lakh.”

The loan was actually a book entry, designed to transfer 99 per cent of the shares of AJL to YIL (held by the Gandhi family). For this, “The assessee company had taken accommodation entries of Rs 1 crore from a hawala entry operator located in Kolkata called Messers Dotex Merchandise.”

A commission of Rs 1 lakh was paid by cheque for the hawala entry of Rs 1 crore by the Gandhis, the ED says.

The income tax (IT) department, which passed an order in October 2017 — under (Sec 12 AA)3 of the Income Tax Act — said the company needed to pay tax on a transaction amounting to Rs 413 crore. This amounts to Rs 249.15 crore. The last appeal by the family against the order was dismissed on March 31, 2022.

The Congress party, however, challenged this. “This is a strange case of money laundering where no money is involved. The case is more hollow than a pack of cards. We will face it. We are not intimidated. This reeks of vendetta, pettiness, fear and political cheapness,” said Congress leader and advocate Abhishek Manu Singhvi.