National Herald Case: Why Is ED Grilling Sonia And Rahul Gandhi? All You Need To Know

Congress President Sonia Gandhi on Tuesday appeared before the Enforcement Directorate (ED) for her second round of questioning in the money laundering case linked to the National Herald newspaper.

She reached the federal agency's office in Vidyut Lane flanking the APJ Abdul Kalam Road in central Delhi around 11 am accompanied by her children Rahul Gandhi and Priyanka Gandhi Vadra.

While Priyanka Gandhi stayed back at the ED office, Rahul Gandhi left soon after.

The 75-year old Gandhi was questioned for over two hours during her first day of questioning in the case on July 21 where she replied to 28 questions put forth by the agency.The questioning pertains to the charge of alleged financial irregularities in the Congress-promoted Young Indian Private Limited, which owns the National Herald newspaper.

Why ED is involved?

Considering the aspect of money laundering, the ED investigation pertains to alleged financial irregularities in the Congress-promoted Young Indian Private Limited (YIL), which owns the National Herald newspaper.

The ED is interrogating about the incorporation of the YIL, operations of the National Herald, the loan given by the Congress party to the newspaper's publisher Associated Journals Limited (AJL), and the transfer of funds within the news media establishment.

Rahul Gandhi has also been questioned by the ED in this case last month in sessions that clocked over 50 hours over five days. 

'Satyagraha' and 'Show of strength': how Congress reacted?

The Congress on Tuesday said it will stage a 'satyagraha' all over the country to protest the Enforcement Directorate's summons to party President Sonia Gandhi in the money laundering case linked to the National Herald newspaper.

Congress MPs met at the office of Leader of Opposition Mallikarjun Kharge in Parliament premises and staged a march towards the ED office to protest the questioning. 

#WATCH | Delhi: Congress MPs march from Gandhi Statue in the Parliament premises towards Vijay Chowk, in protest against ED questioning of party's interim president Sonia Gandhi in National Herald case.

Rahul Gandhi also taking part in the protest march. pic.twitter.com/dfu18gdUoN

AICC general secretary Ajay Maken claimed they have been denied permission to organise a satyagraha outside Rajghat, the memorial of Mahatma Gandhi.

"It is very unfortunate that the Government of India has refused to give permission to us to stage a satyagraha. It is the same BJP which organised a protest on June 5, 2015 in support of Baba Ramdev in 2005," Maken said.

"If the principal opposition party in the country is not allowed to stage a satyagraha, then it amounts of murder of democracy. Where will democracy survive," Maken told reporters.

Democracy comprises both the ruling party and the opposition and how will democracy survive if one of its wheels is "disallowed" to stage a protest at Rajghat, he asked.

"This work is being done with political vendetta in mind against the opposition party and our leaders are being harassed only with this objective," Maken charged.

He also alleged that their right to stage a satyagraha is being denied, and their members were not allowed entry into their own office

The Delhi Police deployed a huge force, including CRPF and RAF personnel, and barricade the entire over one kilometre stretch between her residence and the ED office. Traffic restrictions were also imposed in the area.

Previously when ED summoned Congress leader Rahul Gandhi, the Congress party workers demonstrated similar protests as a 'show of strength'.

The Congress held a major show of strength in the national capital on June 13 when former party chief Rahul Gandhi appeared before the Enforcement Directorate in connection with a money laundering case.

The party took out a march to the ED office on APJ Abdul Kalam Road in a show of support for Gandhi when he appears before the agency.

What is the National Herald case?

The National Herald newspaper was started by India's first Prime Minister Pandit Jawaharlal Nehru in 1938 from Lucknow. It was part of the independence movement against the British.

Associated Journals Limited (AJL), which published National Herald along with Qaumi Awaz in Urdu and Navjeevan in Hindi, did not belong to any one person but was founded in 1937 with 5,000 other freedom fighters as its shareholders, as per Business Standard. There were 1,057 shareholders in 2010. 

Subramanian Swamy in 2012 filed a complaint alleging some Congress leaders, including the Gandhis, were involved in cheating and breach of trust in the acquisition of Associated Journals Ltd (AJL) by Young Indian Ltd (YIL) in 2011, as per the Business Standard report.

Sonia and Rahul Gandhi owned 76 per cent of YIL and the remaining 24 per cent was owned by Congress leaders Motilal Vora and Oscar Fernandes.

AJL published the National Herald newspaper in English, Qaumi Awaz in Urdu, and Navjeevan in Hindi until 2008, when it was shut down after running into losses. 

The Congress party granted a Rs 90 crore interest-free loan to the AJL to help it, but it could not be revived, and AJL failed to repay the loan to the Congress, according to The Financial Express. 

Under the Income Tax Act, no political organisation can have financial transactions with a third party, notes a Rediff News report.

In 2010, AJL declared the loan cannot be paid and transferred the loan to YIL. In lieu of it, AJL also issued its shares to YIL, giving YIL control of 99 per cent of AJL and its real estate assets, as per Rediff News. YIL paid a further consideration of Rs 50 lakh to AJL.

The report added that the Congress party wrote off the loan given to AJL as unrecoverable.

This meant, as per the complaint, that YIL ended up having the control of AJL and its real-estate assets for Rs 50 lakh on a Rs 90 crore loan that Congress party wrote off. 

Swami alleged that YIL had "taken over" the assets of the National Herald in a "malicious" way. 

Some AJL shareholders, such as former law minister Shanti Bhushan and former Allahabad High Court Chief Justice Markanday Katju, said their shares in AJL were transferred to YIL without their knowledge.

Case went beyond the newspaper

The real estate, pegged at around Rs 2,000 crore, owned by AJL in cities such as Delhi, Mumbai, Patna, and Panchkula, is at the centre of the case.

By acquiring AJL, the Gandhis-owned YIL also acquired this real estate. The acquisition is controversial as they inherited such massive real estate in lieu of loan of 90 crore at a payment of Rs 50 lakh, as per Swamy's complaint. 

The Mint newspaper explains: In 2010, AJL’s board approved the assignment of Rs 90.21 crore in accumulated loans taken from the All India Congress Committee to YIL. This debt was then retired for a consideration of Rs 50 lakh, which YIL paid to AICC. On AJL’s books it was converted into equity.

The Mint quoted an accounting expert as saying: "What inference can be drawn [from this exercise]? Was this [new company YIL] established to transfer loan? Why did AICC need to transfer loan to YIL? What benefit did it expect? If it was a bad loan with AJL and was bad with YIL as well, what was the need [for doing all this]?"

What are the accusations on the mother-son duo?

BJP MP Subramanian Swamy had accused the Gandhis and others of conspiring to cheat and misappropriate funds, with Young Indian paying only Rs 50 lakh to obtain the right to recover Rs 90.25 crore that Associate Journals Limited owed to the Congress.

The move to question the Gandhis was initiated after the ED late last year registered a fresh case under the criminal provisions of the Prevention of Money Laundering Act. 

This was after a trial court here took cognisance of an Income Tax department probe against Young Indian based on a private criminal complaint by BJP MP Subramanian Swamy in 2013.

While the first complaint in the case was filed in 2012 and the ED began investigating the case in 2014, the ED registered a fresh case under the criminal provisions of the PMLA after a trial court in Delhi took cognisance of an Income Tax Department probe on the basis of a private criminal complaint by BJP MP Subramanian Swamy first filed in 2012.Sonia and Rahul Gandhi are among the promoters and majority shareholders in Young Indian. Like her son, the Congress president too has 38 per cent shareholding.

The ED issued summons to Rahul and Congress President and his mother Sonia Gandhi on June 1. Officials said ED wants to record their statements under criminal sections of the Prevention of Money Laundering Act (PMLA).

In February last year, the Delhi High Court issued a notice to the Gandhis seeking their response on Swamy's plea. 

Congress leaders Mallikarjun Kharge and Pawan Bansal were questioned by the ED in the case in April.

The Congress has maintained there has been no wrongdoing and Young Indian is a "not-for-profit" company established under section 25 of the Companies Act and hence there can be no question of money laundering.

It is understood that Rahul Gandhi, during his deposition before the ED, stuck to the position that there was no personal acquisition of assets by himself or his family.

(With PTI Inputs)