Explained: The charges that brought Rahul Gandhi to ED

It was a different time politically in India about 10 years ago. The Congress was in power, leading a multi-party coalition government to make up for the lack of majority in the Lok Sabha. Congress president Sonia Gandhi and her son Rahul Gandhi were often described as “extra-constitutional authorities” over the Manmohan Singh government.It was against this backdrop that veteran-yet-maverick politician and lawyer Subramanian Swamy moved a Delhi court in 2012 alleging money laundering by Sonia and Rahul in what is known as the National Herald case.What is the National Herald?It is a newspaper that was launched in 1938 by Associated Journals Ltd (AJL), a brainchild of Jawaharlal Nehru, the then president of the Indian National Congress. Nehru started the firm with 5,000 other freedom fighters as its shareholders. Nehru was the patron of the National Herald and until he became the first prime minister of independent India, he was the chairman of the board of directors.The National Herald soon became the mouthpiece of the Congress. A year after it was launched, its masthead carried the words, ‘Freedom is in peril, defend it with all your might’. These were taken from a cartoon by Gabriel from Brentford, UK. Indira Gandhi had sent it to Nehru in 1939.Seventy years after its launch, the National Herald was shut down with a debt of Rs 90.25 crore owed to the Congress. This was in 2008 and the Congress was eyeing a second consecutive term at the Centre in the 2009 Lok Sabha election. Until then, the AJL published the National Herald in English, the Qaumi Awaz in Urdu and the Navjeevan in Hindi.Heralding a ‘scam’The Congress-led United Progressive Alliance (UPA) won the Lok Sabha election and a year later a new company was set up — Young India Ltd (YIL) in 2010 with Rahul, then a Congress general secretary, as a director.Sonia and Rahul held 76% of the company’s shares — 38% each. The remaining 24% was held by Congress leaders Motilal Vora and Oscar Fernandes. Vora passed away in 2020 and Fernandes in 2021. YIL is said to have no commercial operations. medium91988331In 2010, when YIL was incorporated, AJL had 1,057 shareholders. Its holdings were transferred to Young India in 2011. This is where, Swamy alleges, the National Herald scam happened. And, the Enforcement Directorate (ED) believes there is enough evidence to link Sonia and Rahul to this scam of money laundering.A debt swapAfter YIL was set up, the Congress assigned the debt owned by AJL to YIL, which paid Rs 50 lakh to the Congress. In return, YIL got the right to recover the debt from AJl — by acquiring the National Herald’s assets, including real estate at one of New Delhi’s prime locations.Swamy alleges that YIL “took over” the assets of the defunct print media outlet in a “malicious” manner to gain profit and assets worth more than Rs 2,000 crore.So, he basically alleged that YIL paid the Congress Rs 50 lakh to recover a debt of Rs 90.25 crore but ended up securing assets worth more than Rs 2,000 crore. This also means that the Congress waived off a debt of Rs 89.75 crore. Also interestingly, YIL had a share capital of just Rs 5 lakh. medium91989638This Rs 90.25 crore was given by the Congress earlier to the National Herald as a loan. Swamy alleged that this transaction was illegal as it had been taken from party funds.Swamy named Sonia, Rahul, Vora, Fernandes, journalist Suman Dubey and technocrat Sam Pitroda as accused in his petition to the Delhi court. This evoked a strong rebuttal from the Congress.A Congress threat and defenceWith Swamy going gung-ho with his allegations, Rahul’s office in November 2012 threatened legal action against Swamy for accusing him and his mother of illegally purchasing Associated Journals to gain ownership over the land it held across India.At the party level, Congress spokesperson PC Chacko challenged Swamy to prove his allegations in a court of law. He had said, “If Swamy has the guts, he should sue Rahul Gandhi and Sonia Gandhi. It is for those who make allegations to prove the charges. If there is a violation, let them take it to court.”Another Congress spokesperson, Sandeep Dikshit, defended the debt swap saying, “The Associated Journals was in dire straits. Whatever Swamy may say, the Associated Journals was a companion organisation of the Congress, and it is the party’s duty to revive the institution and the newspapers under it.” medium91988358The then head of the Congress media cell, Janardan Dwivedi, said, “The Indian National Congress has done its duty in supporting The Associated Journals Ltd to help initiate a process to bring the newspaper back to health in compliance with the laws of the land.”He, however, said the financial transaction was “in the form of interest-free loans from which no commercial profit has accrued to the Indian National Congress” and hence there was no violation of the income tax rules, as Swamy alleged. Political parties are entitled to receive funds without paying income tax.This barrage of defence put out by Congress leaders showed that the party did not reject financial transactions between the Congress and the companies that handled the National Herald, which resumed publication in 2016.But there were shareholders.AJL had far too many shareholders compared to a few in YIL. Some of them, including former Union law minister Shanti Bhushan and former Supreme Court judge Markandey Katju, alleged that the shares held by their fathers were transferred in 2010 without their consent. They complained that they were not served any notice when YIL “took over” AJL.Despite the complaints and political slugfest, the case did not move much further for a couple of years. Things began to change after 2014.Swamy renews campaignIn May 2014, the Narendra Modi government came to power at the Centre with the Bharatiya Janata Party (BJP) securing a single-party majority for the first time since Rajiv Gandhi’s Congress won it in 1984 in the shadow of Indira’s assassination. In the third week of June, Swamy wrote a letter to the then finance minister, Arun Jaitley, seeking an income tax investigation against senior Congress leaders in the AJL takeover case. medium91989645Parallel to it, a Delhi court issued summons a week later to Sonia and Rahul on Swamy’s petition to appear before it in the National Herald case. The same year, the ED launched a probe to ascertain if any money was laundered in the case.Case in court and courtyard of politicsSwamy, meanwhile, kept knocking the doors of the government and the courts seeking speedier investigation into the case. In 2015, the Supreme Court asked Swamy to approach the high court for speedy progress in the case. In September 2015, the ED reopened its investigation in the National Herald case.In December, Sonia and Rahul secured anticipatory bail in the case from the Delhi court. In 2016, the Supreme Court granted an exemption to all the five accused — Sonia, Rahul, Vora, Fernandes and Dubey — from personal appearances but refused to quash proceedings against them.In 2018, the Centre decided to snap the perpetual lease and evict AJL from the Herald House premises that was allotted to it on Bahadur Shah Zafar Marg in New Delhi in 1962. The government said AJL was no longer conducting any printing or publishing activity for which the building was allotted to it. medium91988316The government’s decision was challenged and in April 2019, the Supreme Court stayed the eviction proceedings against AJL under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, until further notice.What is happening now?The ED has summoned Sonia and Rahul for questioning in the case. Sonia has contracted Covid-19 and it is yet not certain if she could appear before the ED as per schedule on June 8. Rahul’s questioning has been rescheduled for June 13 after he sought extension citing he was out of India.The probes by the ED and the income tax department have made some startling revelations. YIL, the company that began with a capital of Rs 5 lakh 12 years ago and which is a charitable non-profit organisation, now has assets worth Rs 800 crore across the country.Soon after its incorporation, YIL secured a loan of Rs 1 crore from a Kolkata-based shell company so that it could enter into a financial agreement with the Congress for the acquisition of AJL, in which Sonia, and her two children — Priyanka Gandhi Vadra and Rahul — are the majority shareholders.The ED aims to question the Gandhis about the nature of their involvement in the National Herald debt swap case. The Congress is unhappy, saying the ED action “reeks of vendetta, pettiness, fear and cheap politics”. Only a few days ago, Rahul, speaking at an event in the UK, called the ED part of the “deep state”, which, he alleged, is “crushing the voice of India”.