“National Herald Fraud Case”;
National Herald Fraud Case
Call it rivalry or bitter-sweet friendship, in the game of politics, everyone is a super player!
BJP leader Subramanian Swamy, had filed a complaint before the trial court in 2012, alleging that Congress leaders were involved in cheating and breach of trust in the acquisition of Associated Journals Ltd (AJL) by Young Indian Pvt Ltd (YIL), a non-profit company with a paid up capital of five lakhs, in a fraudulent manner to gain profit and assets worth 5000 crore.
The YIL has the Congress President Sonia Gandhi and Vice President Rahul Gandhi on the Board Of Directors panel owning 38% shares each along with General Secretary – Motilal Vora, Treasurer -Oscar Fernandes, Technocrat- Sam Pitroda and Journalist – Suman Dubey owning the remaining shares.
It’s interesting to note that Mr. Vora and Mr. Fernandes are also the Directors of AJL, with Mr. Vora being the Chairman of AJL while Suman Dubey and Sam Pitroda are directors of YIL and AJL both.
The National Herald was an Indian newspaper established in 1938 by Jawaharlal Nehru in order to make an impact on the reactionary tendencies of the Congress Party. The newspaper served as his mouthpiece allowing him to address and endorse unpopular stances that he would not have been able to defend as a politician through his editorial pieces for the paper. While the paper suffered from financial troubles from the outset and was shut down briefly in the 1940s and 1970s, it finally ceased operations in April, 2008.
The newspaper was run by AJL before being ceased. In an attempt to keep AJL afloat, the Congress party gave the company unsecured, interest-free loans for a few years. By 2010, the AJL owed the Congress an accumulated debt of Rs. 90 crore. This debt is considered an asset to the Congress. The congress then assigned this debt owed to it by AJL to a charitable private company called YIL which pays the Congress a sum of Rs. 50 lakh as consideration for transferring the Rs. 90 crore debt to it.
In December 2010, a large chunk of share equity in AJL goes to Young Indian in lieu of the Rs. 90 crore and the shareholding of the original 761 shareholders is reduced to as low as 1 percent. Following this, AJL eventually ends up becoming a wholly owned company of YIL, for a mere sum of Rs. 50 lakh.
Now, YIL acquires control over the real estate worth of at least Rs. 5,000 crore owned by AJL spread over prime areas of New Delhi, Lucknow, Bhopal, Mumbai, Indore, Patna, Panchkula and other places. One of the properties is the National Herald House which was formerly used for the purpose of publishing a newspaper at concessional rates, is used for commercial renting purposes.
1) The Representation of the People Act, 1950, says that a political party (in this case the Congress) enjoys income tax exemption under law and cannot divert it’s funds to a commercial entity (in this case AJL).
2) Why was YIL, in which the Gandhi’s enjoyed 76% stake assigned the AJL debt in the first place?
3) With such a huge asset value, why didn’t the AJL liquefy some of the assets to pay off the loan?
4) The fact that YIL has acquired assets worth rs5000crore for a mere rs50lakhs raises eyebrows.
5) Is it just a coincidence that the directors of both AJL and YIL are faithful to the Congress? Also they are directors in both the entities.
The High Court So Far
1) The High Court has noted that the “probity of a political party with a national stature” was “at stake” in the case, as the office-bearers of the party held the funds in trust.
2) The Bench dismissed the appeals filed by the Congress leaders, observing that prima facie the case “evidenced criminality”.
3) The High Court further explained that it is too early to go into what “species of criminal offence is made out at this initial stage.” But it adds that it would be “preposterous” to deny criminality in transactions that, it feels, has left lakhs of citizens who donated to the party cheated.”
4) Congress president Sonia Gandhi and her son Rahul Gandhi will appear in a Delhi court on December 19, 2015 for the case.
What Congress Says
1) The Congress leaders stayed the summons by moving the High Court just a week before they were asked to appear in the court on 7th August,2014
2) They claim that YIL was created only for charitable purposes and the shareholders do not profit from it.
3) Senior lawyer Kapil Sibal argued that there is no criminal offence in this case. That the transfer of shares was just a commercial transaction without any hidden motive.
4) He also claimed that the issue in The Parliament and The Herald case are two different ones and should not be mixed.
5) Kapil Sibal also stated that the case is just one of the attempts to wipe out the Congress by targeting its leaders.
In A Nutshell
1) The arguments and allegations are a mix up of ethics and law.
2) There is a strong emphasis on the turn of events from the Congress appear to be misleading and there is a breach of trust with the remaining shareholders and the public in general.
3) How personal interests are watered in the guise of charity and business transactions is still mystery to be solved.
4) Is it just a personal battle or a political one? And who will finally benefit is yet to be seen.
5) What the real faces and intentions of our leaders are continues to be under clouds.
The counsel has assured the judges that the accused will appear in court on the next date. The Congress will be required to clear the air and restore its dignity as a legendary political party.
The next date given by the High Court is 19th December, 2015.
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