Deals at National Herald: Who got what, when, how

A primer on the case that has stalled Parliament, and will see Sonia Gandhi and Rahul Gandhi appear in a trial court on Dec 19.

Written by Sandeep Singh | Updated: December 10, 2015 8:10 am
Herald House in New Delhi. Express Herald House in New Delhi. Express

The Background

Jawaharlal Nehru established The National Herald newspaper in 1938. It was published by The Associated Journals Limited, a “Section 25” company, which are typically formed to promote commerce, art, science, religion, or for charity, and are generally not-for-profit entities. AJL also published the Qaumi Awaz in Urdu and Navjeevan in Hindi. The company owns prime real estate in various cities, including Delhi and Mumbai. Plagued by overstaffing and a lack of revenues, AJL ran into losses, and stopped publishing in April 2008.

The Congress Bailout

In a bid to keep AJL afloat, the Congress party gave the company unsecured, interest-free loans for a few years up to 2010. At the end of March 2009, AJL’s unsecured debt stood at Rs 78.2 crore; by the end of March 2010, it had risen to Rs 89.67 crore. Despite owning real estate that is learnt to be valued much higher than the quantum of its debt, the management of AJL appears to have made no concrete effort to repay the AICC. Veteran Congress leader Motilal Vora has been the chairman and managing director of AJL since March 22, 2002. He has been the treasurer of the All India Congress Committee (AICC) from well before that.

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Formation of Young Indian

Young Indian Pvt Ltd was incorporated as a Section 25 company on November 23, 2010, with Gandhi family loyalists Suman Dubey and Satyan Gangaram (Sam) Pitroda as directors. On December 13, 2010, Rahul Gandhi was appointed a director of Young Indian.

On January 22, 2011, Sonia Gandhi joined the board as a director. Vora and Congress Rajya Sabha member Oscar Fernandes too were appointed to the Young Indian board on the same day.

Sonia Gandhi and Rahul Gandhi have individual shareholdings of 38 per cent each in the company. Vora and Fernandes hold the remaining 24 per cent in equal parts.

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The AJL-YIL-AICC deal

In 2010, the AICC decided to assign AJL’s nearly Rs 90 crore debt to Young Indian. Thus, Young Indian became the new owner of the debt on the books of AJL, that was originally due to AICC.

Soon afterward, in December 2010, AJL decided to transfer its entire equity to Young Indian in lieu of YIL owning its Rs 90 crore debt. Young Indian paid Rs 50 lakh for this acquisition.

By virtue of this decision and transaction, AJL, which originally owed Rs 90 crore to the Congress party, became a fully-owned subsidiary of Young Indian, which was owned by four individuals — Rahul Gandhi, Sonia Gandhi, Motilal Vora and Oscar Fernandes.

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The Controversy

The acquisition of AJL by Young Indian has been questioned in court. Sonia Gandhi and Rahul Gandhi have been summoned to appear before a trial court at 3 pm on December 19. Some of the key questions that have arisen are:

> Why was YIL, 76 per cent of whose stake was owned by Sonia Gandhi and Rahul Gandhi, assigned AJL’s debt of Rs 90 crore to the Congress party? Within a month of Young Indian being incorporated, AJL became YIL’s fully-owned subsidiary, and YIL became the owner of AJL’s real estate assets across the country.

> Why didn’t AJL utilise a part of its assets to repay the debt? It is also unclear if AJL took approval from its 1,057 shareholders for the induction of Young Indian as its majority acquirer, and whether a fair valuation of its assets was carried out before handing over the equity for a consideration of just Rs 90 crore (debt), and an additional payment of Rs 50 lakh.

> Is there a conflict of interest in Motilal Vora holding important positions in all the three entities involved — as AICC treasurer, AJL CMD, and a 12 per cent shareholder and director at Young Indian?

> The Representation of the People Act, 1950, does not allow a political party to give a loan, so how did the Congress party offer a loan to AJL?

Watch video: No Relief For Sonia, Rahul In National Herald Case; Issue Paralyses Parliament

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  1. G
    gordon kramer
    Dec 10, 2015 at 4:53 am
    WHAT A STUPID COUNTRY INDIA IS WHERE THESE CORRUT FAKE HIS ARE CALLED LEADERS AND GIVEN POLICE PROTECTION AND LARGE HOUSES TO LIVE IN WITH PLENTY OF CORRUPT CASH 😎🚶🏻👮👮😇😇😎🚶🏻😂😂😂🚶🏻😎😎🇮🇳😈👺👹WHAT A STUPID COUNTRY INDIA IS WHERE THESE CORRUPT FAKE HIS ARE CALLED LEADERS AND GIVEN POLICE PROTECTION AND LARGE HOUSES TO LIVE IN WITH PLENTY OF CORRUPT CASH 😎🚶🏻👮👮😇😇😎🚶🏻😂😂😂🚶🏻😎😎🇮🇳😈👺👹
    Reply
    1. r
      raj5151235
      Dec 10, 2015 at 3:45 am
      I say," Bharat Ratna for Subramanium Swamy " . Greed and intolerance of western blood showing in Ma & her Beta in 2015. Throw out these opportunists. Nationalists in Congress party should revolt and sack Sonia. Damad is doing the very same. How can anybody vote for such a party or their allies ???
      Reply
      1. K
        Kanu Patel
        Dec 10, 2015 at 5:08 am
        AJL WILL BE PROVED THE LAST NAIL ON THE POLITICAL FUTURE OF THE HIS .
        Reply
        1. T
          TIHAEwale
          Dec 10, 2015 at 3:33 am
          the fact The Representation of the People Act, 1950, does not allow a political party to give a loan, the transaction doesn't violate law of the land. So the case goes into thin air.
          Reply
          1. N
            Navneet Sarin
            Dec 10, 2015 at 2:00 am
            The writer has given the facts which are just shown in books but the real question where all the properties and ets are lying and what is their real value. What is this Young India and what it is doing. I feel public must know all the facts to ascertain the full truth of the episode.
            Reply
            1. N
              Narayanan S
              Dec 12, 2015 at 3:20 pm
              It not just mind set of politicians who are mostly uneducated or less educated. But it is mind set of bureaucrats who are all highly educated and their mind set for the past 4 decades cannot be changed in short period of 1 year or 2 years. As once the great lawyer N A Palkhivalla said in the Betram Hall of Loyola College chennai "Educated Illitrates".
              Reply
              1. A
                Arun
                Dec 10, 2015 at 3:29 am
                Jawaharlal Nehru established The National Herald newspaper in 1938. Rahul along with Priyanka and Varun hi are the legal heirs of the property. Let them decide what is the amount each one gets. Why is Subramania Swamy interested in Jawaharlal Nehru's property ?
                Reply
                1. A
                  Arun
                  Dec 10, 2015 at 7:02 am
                  Why is Subramania Swamy interested in Jawaharlal Nehru's property ?
                  Reply
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