What Is National Herald Case?

The Enforcement Directorate (ED) has filed a chargesheet against seven persons, including Congress leaders Sonia Gandhi and Rahul Gandhi in a money laundering case related to the National Herald newspaper. Apart from the top two leaders from the party, whose names have been listed as accused number 1 and number 2 in the chargesheet, the names of Congress Overseas chief Sam Pitroda and Suman Dubey were also included. The chargesheet was submitted on April 9 in Delhi’s Rouse Avenue Court and it was reviewed by Special Judge Vishal Gogne.

The National Herald case was never new. The story of the newspaper dates back to 1938, of which the investigation has been going on for decades. The National Herald newspaper was founded by Prime Minister Jawaharlal Nehru. The case that revolved around the newspaper trace back to its origin when a petition was filed by BJP leader Subramanian Swamy in 2012. The petition had prompted a trial court to allow the Income Tax Department to investigate the financial affairs of the National Herald newspaper and the Gandhis; this case was later taken on by the ED.

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Started in 1937 with 5,000 freedom fighters as its shareholders, National Herald was published by Associated Journals Limited (AJL). There were two other dailies published by AJL—Quami Awaz in Urdu and Navjeevan in Hindi. The newspaper, which began as the echo of the liberal faction of the Indian National Congress, eventually turned into a mouthpiece of Congress after Independence.

Although the newspaper had to be discontinued in 2008, AJL remained as a functioning company and retained real estate assets reportedly worth over Rs 2,000 crore. During the time of its shutdown, AJL owed Congress an accumulated debt of 900 million rupees. Later in 2010, the Congress had assigned the debt to Young India Private Limited (YIL), a non-profit company which was created a few months earlier. Sonia and Rahul Gandhi are among its board of directors and they each own 38% of the company.

Young India Private Limited acquired complete control over AJL in 2010 and its real estate. According to the ED, the company, which started with Rs 5 lakh capital, owns around Rs 800 crore worth of assets as of 2022. This takeover was scrutinised since it appears to have facilitated the Gandhis to get control over the valuable assets that were originally intended for journalistic purposes.

The ED’s investigation has alleged that AJL closed its publishing operations in 2008 and started using the properties for commercial purposes. It said AJL had to repay a loan of Rs 90.21 crore to the All India Congress Committee (AICC); however, AICC treated the said loan of Rs 90.21 crore as non-recoverable from AJL and sold it for Rs 50 lakh to a newly incorporated company, YIL, which is owned by the Gandhi mother-son duo.

As YIL is classified as a not-for-profit entity, it is prohibited from distributing profits. The ED thus contends that the real value of the transaction lay in the control of AJL’s assets rather than any financial gains from dividends.

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Meanwhile, the Congress party has described it as a “strange case of alleged money laundering without any money” and accused the BJP of “political vendetta.” The party also stated that YIL’s status as a non-profit entity means that no individual could financially benefit from the transfer of AJL’s assets. About the Rs 90 crore loan, it has been argued that it was solely intended to clear AJL’s liabilities and that the goal was to revive the National Herald by preserving its legacy rather than profiting from real estate.