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How AJL takeover bid by hotelier in 90s spurred Congress, Gandhis

Sources pointed out that the Nehru-Gandhi family was a part of AJL "much before Young Indian was created".

Written by Sheela Bhatt | New Delhi |
Updated: December 19, 2015 7:46:01 am
Sonia Gandhi, Rahul Gandhi, National Herald, Associated Journals Ltd, Youth Indian, Rahul National Herald, Sonia National Herald, politics news, india news According to the 2011 list of shareholders, members of the Nehru-Gandhi family held a huge number of shares in the company, apart from Young Indian.

It was an attempt by the late hotelier Lalit Suri in the 1990s to take over Associated Journals Ltd (AJL) that prompted Sonia Gandhi and Rahul Gandhi to formulate a scheme to ensure that control of the group founded by Jawaharlal Nehru remained within his family “in perpetuity”, highly placed sources told The Indian Express.

Angered by Suri’s offer in 1999 to buy a majority of AJL shares, sources quoted Congress president Sonia Gandhi as saying “never, never” at the time to any idea of “giving away National Herald to a commercial entity”.

Suri was a close friend of Sanjay Gandhi and later Rajiv Gandhi, and was nominated to the Rajya Sabha in 1992 and 2002. But he fell out of favour with the Gandhi family before his death in 2006.

AJL, the publishers of The National Herald newspaper, is now at the centre of a political firestorm with the Gandhis summoned to appear before a Delhi court on Saturday in connection with the group’s takeover by Young Indian Pvt Ltd in which they hold 76 per cent stake.

The summons was issued on a complaint filed in 2012 by BJP leader Subramanian Swamy alleging financial irregularities in the deal.

AJL’s list of shareholders authenticated by its managing director and Congress treasurer Motilal Vora on September 13, 2011 — after the inclusion of Young Indian as a majority shareholder with 99% stake — shows that Suri held 50,000 shares in the company and his wife Jyotsna another 50,000 shares.

Records also show that Deeksha Holdings (P) Ltd, a company promoted by Suri, with its address listed as World Trade Centre, 401, Barakhamba Lane, New Delhi-110001, held 1,00,000 shares of AJL. This made the Suris one of the largest shareholders in AJL before Young Indian Pvt Ltd was created.

When contacted by The Indian Express, Jyotsna Suri, now the president of the Federation of Indian Chambers of Commerce & Industry (FICCI), did not answer a specific query on AJL and did not respond to an emailed questionnaire.

Randeep Surjewala, Congress spokesperson, said: “I do not remember it (the takeover attempt). But Young Indian is Section 25 company and not a profit-making company. It was promoted to help AJL secure its assets in perpetuity. Not a rupee’s benefit will go to Young Indian from AJL.”

Given the substantial number of shares held by the Suris in AJL, sources said, the takeover bid “made sense” at the time, said sources.

“Like many other industrialists and businessmen in the 1990s, Suri used to give loans to the Congress party. In the process, he acquired substantial shares of AJL,” said sources.

According to a source who was close to Suri, the businessman often wondered why the Congress was “pouring money in a dark hole”.
Founded by Nehru in 1937, AJL remained an integral part of Congress history and the freedom movement. Yet, its financial condition was poor, which prompted Nehru to say: “I will not let National Herald close down even if I have to sell Anand Bhavan.”

Ultimately, records show, the party ended up paying over Rs 90 crore to AJL “over a long period of time” to clear its debts.

“The party supported the loss-making AJL over these years because it believed that The National Herald newspaper had to be preserved because it is a part of the rich and vibrant legacy of India’s freedom struggle,” said a senior Congress leader.

According to the 2011 list of shareholders, members of the Nehru-Gandhi family held a huge number of shares in the company, apart from Young Indian. They include:

# 2,62,411 shares held by Priyanka Gandhi Vadra and Rameshwar Thakur, trustees and authorised attorney of Janhit Nidhi (a registered public trust) with their registered address at 11/6 INS building, Rafi Marg, New Delhi.

# 47,513 shares held by Rahul Gandhi and Rameshwar Thakur, trustee and authorised attorney, Rattan Deep Trust, with address registered as Ratan Deep Trust, 18, Paschim Marg, Vasant Vihar, New Delhi-67.

The list also shows Nehru with three preference shares, Indira Gandhi with 50 ordinary shares and her husband Feroze Gandhi holding 10 shares.

Sources pointed out that the Nehru-Gandhi family was a part of AJL “much before Young Indian was created”.

“Indira Gandhi and later Sonia tried to revive its past glory but could not find a suitable editor and manager to lift its balance sheet,” said an office-bearer of the party who was once associated with AJL.

“It was a constant headache as the paper’s journalistic standards fell. In one case, an obscure publisher started publishing under the title National Herald from Madhya Pradesh and had to be taken to court at substantial legal cost. In another instance, National Herald’s land in Madhya Pradesh was sold to pay pending bills,” he said.

Asked about the need to create Young Indian in 2011, when there was no threat of a takeover, a Congress leader said, “Over nearly a decade, AJL received multiple loans adding up to Rs 90 crore from the Congress party. A time came when AJL could not pay the salaries of its employees at the end of the month. It needed a new revenue model.”

Sources say the Congress consulted “some of the most eminent experts in the country” while formulating a revival plan. “Their considered advice was to form a Section 25 not-for-profit company (Young Indian). In order to bail out AJL and free it from the burden of its debt of Rs 90 crore, it was suggested that this loan could be assigned to the not-for-profit company by the Congress party. Then, with the consent of AJL’s shareholders, this debt could be extinguished by issuing new equity to Young Indian, the not-for-profit company,” said a Congress leader.

However, a senior lawyer involved in the case said the “dominant holding of 76% of Sonia and Rahul Gandhi in Young Indian raises ethical questions and makes the defence questionable”.

“Everything is done within the Gandhi family circle more than within the Congress circle,” said the lawyer, who did not wish to be named.

“Young Indian has 9,02,16,898 out of the total 9,11,48,821 shares of AJL. The new company, in which 76% of shares are held by Sonia and Rahul Gandhi alone, has its address at N-125 Panshcheel Park, New Delhi. This is the same address as that of journalist Suman Dubey who is shown as holding 10 shares in the list,” said the lawyer.

Congress sources, however, said that the entire deal followed the standard pattern of “acquisitions and mergers of companies”. “Conversion of debt into equity is a normal business practice to restore the financial health of companies that are over burdened with debt,” said sources.

“It was due to the revival plan that the net worth of AJL became positive. In 2011-12, AJL was able to declare its first profit in several years. Old tenants were changed and rents were renegotiated. The idea was to relaunch the paper but those plans are in limbo with the court case,” said a Congress leader.

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