New Delhi: How much was earned in rent over the past few years by Young Indian Limited from properties acquired from Associated Journals Limited (AJL) in Indore, Panchkula, Delhi and Mumbai, and how was that money spent? Was the money used for charitable purposes? If yes, for which charities? Where is the record of the alleged loan of Rs 90 crore that was given by the Congress party to AJL?
These are some of the questions that the Enforcement Directorate (ED) asked Congress leader Rahul Gandhi over five days, as part of its probe in the case of alleged money laundering involving National Herald, ThePrint has learnt.
Founded by freedom fighters, including former Prime Minister Jawaharlal Nehru, in 1938, National Herald became a mouthpiece of the Congress after Independence. The newspaper had to shut down operations in 2008 with a debt of over Rs 90 crore.
The National Herald case pertains to the alleged misappropriation of assets, worth over Rs 2,000 crore, in an equity transaction.
There are allegations of cheating, conspiracy and criminal breach of trust in the 2010 acquisition of National Herald publisher AJL by Young Indian Pvt Ltd, in which the Gandhis — Rahul and his mother and Congress interim president, Sonia Gandhi — are said to have majority stake.
Young Indian, started in 2010, is a not-for-profit company that was incorporated under special provisions of the Companies Act.
While Rahul Gandhi was questioned for over 10 hours a day for five days between 13 and 21 June, Sonia Gandhi was also summoned by the agency for questioning in the case on 23 June.
However, Sonia reportedly requested for a postponement, citing health issues, which was accepted by the ED. She has now been asked to appear before the agency in the last week of July. Sonia is believed to be recovering from Covid and a lung infection.
Many Congress members have spoken out against the ED action.
Earlier this week, Congress spokesperson Abhishek Manu Singhvi claimed the ED action was “illegal and unconstitutional”, and alleged that the BJP is “high on its rage and that is why it has made the ED its cage”.
“Rahul Gandhi has been called again and again to distract the nation’s attention, to keep all cameras focused on this charade at the ED office and to make sure that the issues that deserve attention, be it Agnipath, be it price rise, be it unemployment, remain camouflaged and hidden,” Singhvi said.
Senior Congress leader P. Chidambaram has questioned the ED probe saying that there was “no transaction of money” in this case, and that the offence of money laundering requires “money” and “laundering of money”.
Rahul Gandhi himself has said that he is not affected by “ED and such agencies”, and that “officers who interrogated me understood that a leader of the Congress party can’t be scared and suppressed”.
‘Does not pertain to only physical transaction’
According to ED sources, since Young Indian “fraudulently” acquired properties of AJL worth Rs 800 crore and has been using and possessing the same, it becomes an “offence under Section 3 of the Prevention of Money Laundering Act (PMLA)” and that is what is being investigated.
Section 3 of the PMLA says whosoever directly or indirectly attempts to “indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with proceeds of crime and projecting it as untainted property shall be guilty of the offence of money laundering”.
An ED source said “the offence of money laundering is made out if any person directly or indirectly attempts to indulge or knowingly assists or knowingly is party or is actually involved in any process or activities connected with any property derived or obtained as a result of criminal activities as defined in schedule to PMLA”.
“Accordingly, it is deliberately misleading to convey to people that the offence of money laundering deals only with movement of cash inside and outside the country,” the source added.
“There are properties of AJL in Mumbai, Panchkula, Bhopal, Indore, Delhi that are being used to generate revenue, where is all that money going?” the source questioned.
The source also said that the Supreme Court has said that any activity connected with the proceeds of crime falls within Section 3 of the PMLA. In the National Herald case, the source added, the focus of the ED’s investigation is Section 3 of the Act.
“It is a matter of record that these properties that were earlier with AJL were fraudulently acquired by Young Indian, in which the Gandhis are shareholders and those properties have been put for commercial use for earning rent,” the source claimed.
“Moreover, it is evident from findings of the Income Tax Department, Income Tax Appellate Tribunal and Delhi High Court, that in this case immovable properties of AJL of more than Rs 800 crore have been taken over by Young Indian solely owned by Gandhi family fraudulently, dishonestly and by committing an offence of cheating as a part of criminal conspiracy,” the source said.
In 2013, BJP MP Subramanian Swamy filed a complaint before a trial court in Delhi (the Delhi metropolitan magistrate’s court), calling into question transactions allegedly made by Sonia and Rahul Gandhi involving National Herald.
Allegations levelled against the Gandhis prompted the Income Tax Department to launch a probe into the matter. The Delhi trial court issued summons for trial to Sonia Gandhi and Rahul Gandhi and both were then granted bail in 2015.
The ED source also claimed that even though Young Indian is a not-for-profit company, it has not been carrying out any charitable activity since 2010, but has been engaged in commercial business.
“This charitable company in which the Gandhis are major shareholders has been making money. The rents from buildings in prime locations have been coming to this company, but nothing was used for charitable purposes. So where was it spent? How much money is being made by Young Indian through these rents, that is what we have been asking the accused in this case,” the source claimed.
“From what we have found in the investigation, it is wrong to say that the benefit of these properties is going for charitable purposes,” the source added.
According to sources, Rahul Gandhi was also asked about the loan of Rs 90 crore that the All India Congress Committee allegedly gave to AJL and what was done with the money.
It is said by the Congress that AJL was given a loan of over Rs 90 crore over a period of time and, to offset that loan, it converted its debt into equity and sold it to Young Indian. However, there are no records of the payments of the loan, according to ED sources.
‘A legitimate investigation’
Speaking on the allegations by Congress leaders that the ED initiated an investigation without a predicate offence and, hence it is illegal, sources said since a court had already taken cognisance of the offence of cheating and criminal conspiracy in the matter, and the Gandhis were out on bail, there was no FIR required for the ED to start a probe.
Congress leader Randeep Surjewala had earlier said the ED action is based on a private complaint, and ED summons can only be based on an FIR and hence it is illegal.
“The Delhi metropolitan magistrate’s court has already taken cognisance of the offences under sections 403, 406, 420, 120B of Indian Penal Code (IPC), which led to takeover of properties of AJL by Young Indian (and) issued summons to Sonia Gandhi, Rahul Gandhi and others who are currently on bail. So, why is an FIR required to initiate a probe?” the ED source quoted above claimed.
According to the source, the magistrate in this case had taken cognisance of the offence under Section 204 of the Code of Criminal Procedure (CrPc) and issued summons for trial because he felt that there was sufficient ground.
The source claimed that an appeal was also made by the Gandhi family against the magistrate’s judgment before the Delhi High Court and the Supreme Court, which was dismissed.
The ED source said, since an offence under sections 420 and 120B is a scheduled offence under the PMLA, and Young Indian took over these properties worth more than Rs 800 crore as a sequel to these offences (since the acquisition of AJL is under question and a probe had been ordered by the court in this regard), accordingly, this amount of Rs 800 crore (value of the properties) becomes “proceeds of crime” under the PMLA, and thus is a “legitimate case”.
(Edited by Poulomi Banerjee)