February 22, 2020
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What’s In That Case Again?

Will the Nehru-Gandhis finally realise that all is not their family fiefdom; are their sins catching up?

What’s In That Case Again?
What’s In That Case Again?

Jawaharlal Nehru is once said to have told the employees of the National Herald, the newspaper he founded in 1938, “Hamein baniyagiri nahin aayee (we could never learn how to run a business).” His successors may well have made up for it, if Subramanian Swamy’s salvo fin­ally finds its mark. After being on the family’s case for years, the BJP leader may have them on the mat this time.

Or will he? Back in May 1978, when Sanjay Gandhi was walking into Tihar after being sentenced to 30 days in prison, Indira Gandhi had told him, “Don’t lose heart; this will be your reb­irth.” Just two years later, the Cong­ress was back in power.

It was this perhaps that Sonia was reminding herself and others of when she declared “I am Indira’s daughter-in-law”. The party is in the doldrums again, the performance in the recent Bihar assembly elections only a feeble ray of hope, and another crisis could only ground the grand old party completely.

For complainant Subra­manian Swamy, an even more salivating prospect would be to cross-exa­mine the Congress leaders on the witness box during the trial. He has, however, done enough damage for the moment, prompting Justice Sunil Gaur of the Delhi High Court to say that the case was “one of its kind”. Simply put, the crusader for some and rabble-rouser for others accuses Congress leaders of defrauding their own party and its donors.

While the Congress always supported Herald, it strangely never owned Asso­cia­ted Journals Ltd (AJL), the company that published the English daily and two other newspapers—Navjeevan in Hindi and Qaumi Awaaz in Urdu. Armed with an array of documents, Swamy seeks judicial intervention on the following questions:

  • Since a political party is not allowed to give loans, interest-free or otherwise, how did AJL end up showing a Rs 90 crore inte­rest-free loan it owed the Congress in 2008?
  • AJL was sitting on real est­ate in several cities worth several thousand cro­res, why didn’t it sell some of it and pay back its debtors in 2008 when the company suspended its publications?
  • How could ajl, with 1,037 shareholders, transfer 99 per cent of its equity to a private limited company (the newly formed Young Indian Pvt Ltd) promoted by five people (Sonia and Rahul Gandhi, Sam Pitroda, Suman Dubey and Motilal Vora) in 2010?
  • How did YI decide to take over AJL’s debt of Rs 90 crore and assign it a value of Rs 50 lakh?
  • How did the Congress decide to receive Rs 50 lakh from YI and write off its loan to AJL worth Rs 90 crore?

A majority of AJL’s shares seem to be held by the Janhit Nidhi Trust. Acc­ording to one report, Nehru himself is on record saying that a number of original shareholders of the company, including the Uttar Pradesh Congress Committee, transferred their shares to this trust, formed in 1955.

With the Congress neither owning AJL nor YI, the allegation that its five promoters had connived with the party to appropriate AJL property worth several thousand crores resonated with both the trial court and the high court, who felt sufficient facts had been brought on record to merit a trial.

Photograph by Jitender Gupta

The reactions of the Congress leaders suggest they were not prepared for the Delhi High Court’s order dismissing Sonia and Rahul’s plea for quashing the Herald case and exempting them from appearing in the trial court. But lawyers recall an excha­nge during the trial they claim was fraught with what was to come. At one point during the argument, Kapil Sibal, Sonia Gandhi’s counsel, asked, “What’s the problem, your lordship?” and Justice Gaur reportedly rep­lied curtly, “That you will see in the judgement.” And indeed, the 27-page order, delivered on December 7, upheld what Sibal continued to describe as Swamy’s ‘dramebaazi’ and sent the Congress reeling.

The order also left the trial court in no doubt that the higher court had taken a dim view of the transactions. Justice Gaur in his order poin­ted out that “allegations against the office-bearers of the Congress party are of siphoning off party funds in a clandestine manner—impropriety of extending interest-free loans to a separate legal entity—even writing off the huge debt can legitimately attract all­egations of cheating, fraud etc....”

The HC order has cleared the decks for a trial that the Cong­ress is arguing is unwa­rranted and frivolous. Former finance minister P. Chidam­baram was quick to tweet that none of the donors or Congressmen had complained, that no profit, capital gains or dividend had been derived by anyone, that assets have not changed hands and so nob­ody could have been defrauded.

Rahul himself accused the PMO of political vendetta, while Mallikarjun Kharge and Ghulam Nabi Azad fought the battle for their leaders in the Lok Sabha and Rajya Sabha respectively, questioning the government’s double standards. But while their pointed questions on the government dragging its feet on allegations of corruption against the chief ministers of Rajasthan (the Lalit Modi case), Madhya Pradesh (Vyapam) and Chhattisgarh (rice scam) were legitimate enough, they were right questions being asked at the wrong time. They came with an implicit adm­is­sion of guilt, suggesting that while the BJP leaders were equally guilty of similar offences, the government had singled the Congress out for a witch-hunt. But then the NDA government had nothing to do with it, they were reminded quickly. Swamy’s private complaint was filed in 2013 when the UPA was in power and it was an order issued by the Delhi High Court, not by the Modi government. And, finally, Congress leaders were the ones who refused to appear before the trial court and had appealed to the high court. So, why blame the PMO now?

In the end, the Congress leaders managed to appear only childishly petulant, and their attempts to stall Parliament lost them more goodwill. Discuss it in Parliament if you want or go to court, BJP leaders Arun Jaitley and Venkaiah Naidu urged. The battle in Parliament lost, the Congress members retreated to reformulate and revise strategy.

It will be harder, though, to cha­nge the hardening public perception. People who have for long been convinced that the Nehru-Gan­dhis have rob­bed this nation (Bofors, the 2G and coal scams, Robert Vadra’s sweetheart deals with DLF etc), this is one more evidence of the unen­ding dubious transactions the party and its first family ‘habitually’ engage in.

When the Congress president and her son appear before the trial court on Dec­ 19, they will expectedly plead ‘not guilty’. Will they be let off on bail? On what conditions, will they be required to surrender their passports? Or will the mother-son duo ref­use to apply for bail? More importantly, whether December 19 is marked by high drama or ends as a damp squib, will the grand old party recover from the blow? Will the Nehru-Gandhis be able to ride the storm with their credibility intact? Can there be a rebirth?

Partisan politics apart, the case will hopefully bring sharper focus and clarity on larger questions of what political parties can or cannot do with public donations, whether they should be brought under the ambit of the Right to Information Act and whether there should be more transparency on their audited accounts. It also has the potential of putting the spotlight on other political parties and publications believed to be their mouthpieces. The case could put pressure on the Serious Fraud Investigation Office under the Union ministry of finance, the Enforcement Directo­rate and other agencies to take suo motu notice of the transactions between these publications and political parties that support them.


Curiously, the Herald never enjoyed good health even when the Congress ruled at the Centre. When the publications were suspended in 2008, the English edition did not have a single computer, and the newsroom relied on typewriters. The solitary computer in the teleprinter room, reports suggested, were used to check e-mails. Following the suspension, the 265 remaining employees, including 40 journalists, were paid a VRS of Rs 15 lakh per head.

Ironically, its last editorial was titled ‘Herald hopes for a better tomorrow’. “With its glorious tradition,” it went on to ask, “will National Herald be made to remain only a part of history, or will it continue to function to herald change and progress?”

Ho Chi Minh Sarani Uday Shankar Mahawar runs 20 cos here. (Photograph by Sanjay Rawat)

While Nehru not only reported for the newspaper and sometimes wrote a signed editorial or two, finances were always an issue. It ceased publication for three years between 1942-45, during which time its legendary editor M. Chalapathi Rau shifted to the Hindustan Times. But when the Herald resumed publication, Rau spurned HT managing editor Devdas Gandhi’s (also the Mahatma’s youngest son) offer of Rs 2,000 per month, an astronomical sum those days, and opted to go back to Lucknow as the editor of Herald on a salary of Rs 700.

The newspaper again ceased publication in 1977 after the Congress lost power at the Centre. And though it resumed publication two years later, money was somehow still scarce although the group benefited immensely during the Emergency, acquiring property and securing government advertisements.

Khushwant Singh, who briefly edited the newspaper in 1978-79, recorded that a suitcase full of cash would mysteriously appear from time to time to pay the bills and salary; he himself never got paid app­arently. Congress was in the opposition, of course, and he recorded, “The police were anxious to find out how the paper survived. Twice during my tenure, the office was raided by them.... The police never entered my room,” Singh writes.

What purpose the Herald served after Independence was never very clear. Fact is, Nehru did not want to interfere and kept his distance. Chalapathi Rau is on record saying that only twice had Nehru asked him to write editorials on specific subjects. While Indira Gandhi asked her aide Yashpal Kapoor to take over the newspaper and revive it, and although Moham­mad Yunus and R.K. Dhawan were also pressed to look after the newspaper, there is little evidence to suggest that she, Rajiv or other Congress leaders thought much of the newspaper or tried to make it a party mouthpiece.

Nor did the newspaper ever sell too many copies or carry much influence. Indeed, journalist and Congress-watcher Rasheed Kidwai recalls in a blog that Sam Pitroda once asked an employee what the circulation of the paper was and was told, “Ninety”. He took it to be 90,000 and exclai­med that it was pretty impressive considering the poor printing and facilities. The newspaper at the time was printing just 5,000 copies, only a few of which ever made it to the newsstand.

Intermittent reports of an imminent revi­val of the newspapers have always been denied, fuelling speculation that the AJL and now its holding company YI plan to make use of the real estate—leased to it for a pittance and for the express purpose of bringing out newspapers—for commercial purposes and pocket the profit. It will not of course be the first newspaper or media house to do so. But the case may unwittingly have paved the way for a revival of the newspapers. Not only was the Delhi High Court told on behalf of Sonia Gandhi that Young Indian Pvt Ltd had been formed to revive the Herald, that appears to be the only window for her, Rahul and others to get the benefit of the doubt.


The Herald Papers

A bit of history, some facts and many questions

  • Associated Journals Ltd was set up in 1938 to publish the National Herald from Lucknow; It also published Urdu daily Qaumi Awaaz and Navjeevan in Hindi.
  • In 1955, AJL shareholders transferred their shares to Janhit Nidhi Trust. A year later, AJL became a not-for-profit Sec 25 company under Companies Act
  • AJL originally had 1,037 shareholders; Jawaharlal Nehru himself had put in Rs 100
  • AJL owns properties in Delhi, Haryana, Mumbai, Lucknow, Patna and Indore
  • 2,000 cr The value according to Subramanian Swamy
  • 1.71 cr Was the book value of AJL’s total fixed assets
  • Over 70 years, Congress ‘funded’ AJL Rs 90 cr. It is unclear if this was an investment or a loan.There is no legal bar for either, holds the Congress.

The Facts

  • Following National Herald ceasing publication in 2008, Congress offered to write off the loan
  • In 2010, Sonia and Rahul set up Young Indian, a Section 25 company, with a share capital of Rs 5 lakh. They held 38% each, the balance was held by Motilal Vora, Oscar Fernandes and Sam Pitroda.
  • In 2010, YI took over AJL’s liabilities. In lieu of this debt, it took over 99% of AJL’s equity.
  • YI had no other assets or independent business or income other than those of AJL.


Question Hour

  • Could AJL have sold or mortgaged its real estate to repay the Rs 90 crore debt?
  • Since AJL has rented out office space in buildings to corporates, was it really not in a position to repay its debt?
  • Can a registered political party give out money for a commercial enterprise?
  • If Congress is guilty, where does that leave Shiv Sena (Saamna), CPI(M) (Janashakti, Deshabhimani), etc?
  • Why did ED first close the Herald case, then reopen it after change at the top?
  • Is BJP indulging in vendetta politics? Could the sight of Sonia, Rahul in court evoke sympathy for Congress?

By Uttam Sengupta in Delhi

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