After much deliberation over the last day and a half, the Congress has decided to take a combative stance on the National Herald case, in which its leaders Sonia and Rahul Gandhi have been accused of misappropriating funds. Faced with a court summons later this month, the Gandhi family is now alleging that the entire case is a "political vendetta". But despite this new adversarial approach, their legal defence remains the same: We did nothing wrong.
"No one has ever complained of being cheated in this matter," said Abhishek Manu Singhvi, a party spokesperson who is also a lawyer for Rahul Gandhi in the matter. "But a person with no locus, Dr Subramanian Swamy, alleges that, though he himself has not been cheated, an offence of cheating has occurred."
What is the National Herald case?
The National Herald case involves money moving between the Congress party and two other companies that are mostly owned by people from the party.
The Congress had loaned Rs 90 crore to Associated Journals Limited, a private company with shareholders that published a newspaper that had been set up by former prime minister Jawaharlal Nehru. Once the the debt-laden paper had been shut down, the party decided to close the company – which also had real estate assets said to be worth more than Rs 2000 crore.
Associated Journals' debt was assigned to Young Indian, a not-for-profit company with Rahul and Sonia Gandhi owning 76% of its shares, after the latter paid just Rs 50 lakh to the Congress Party. Because Associated Journal could not pay off its debts, they were converted into equity which eventually meant that Young India owned all of Associated Journal including its very valuable assets, for the tiny sum of Rs 50 lakh.
Who was being cheated?
The Congress has argued it was simply moving its money around among various companies that it considered its own, even though Associated Journals does have small shareholders who aren't Congress leaders. The party's spokespersons and lawyers have argued that none of these shareholders have complained, nor has anyone in the Congress, and Young India, owned primarily as it is by Rahul and Sonia Gandhi, hasn't had any issues either. Who then is the aggrieved party here?
The answer to that is a little surprising: Bharatiya Janata Party leader Subramanian Swamy representing supporters of the Congress.
It was Swamy's complaint that kicked off the investigation and examination by the court and he remains the complainant in the case. And effectively, Swamy is claiming that Rahul and Sonia Gandhi, along with a few other Congress leaders who also own parts of Young India, were cheating Congress supporters and other shareholders of Associated Journals out of money they were owed.
How is Swamy representing the Congress?
As the Delhi High Court, upholding the trial court summons against Sonia and Rahul, said in its order, "it is matter of record that Congress Party had assigned the huge debt of Rs 90 crores to a Section 25 Company i.e. Young Indian on receiving a paltry amount of Rs 50 lacs only. For this, the Congress Party owes an explanation to its supporters, donors, etc."
Indeed, during the court proceedings, Swamy was asked what his locus (grounds) for complaining are, since he wasn't the one being cheated here.
Which means Swamy is speaking up as a public citizen, concerned about the way the Congress is being run.
And indeed, while there might be some truth to Rahul and Sonia Gandhi's cries of this being a vendetta, seeing as Swamy has relentlessly gone after the family for decades now, the trial itself could end up having interesting outcomes, because it will examine how political parties are allowed to use the funds that they have put together primarily through donations.
What can parties do with their money?
As the High Court explains, it is understandable that a political party might have income from sources other than its supporters and it may well choose to invest its money in mutual funds or things of that sort to augment its resources. That said, the allegations here are not that it made problematic investments but that it looks like senior leaders like Rahul and Sonia Gandhi effectively attempted to siphon off funds by allegedly treating all Congress-related outfits as their own property.
"The impropriety of extending interest free loans to a separate legal entity i.e. AJL, which is a Public Limited Company, by the Congress Party is a matter of concern in a democratic set up, particularly, when the source of Congress Party’s fund is largely from donations given by public and so, any citizen can legitimately question the siphoning off funds by Political Party, the High Court said in its order. "What crops up in the mind of a prudent person is as to where was the need of extending interest free loans to a Public Limited Company engaged in a commercial venture of publishing newspapers."
"No one has ever complained of being cheated in this matter," said Abhishek Manu Singhvi, a party spokesperson who is also a lawyer for Rahul Gandhi in the matter. "But a person with no locus, Dr Subramanian Swamy, alleges that, though he himself has not been cheated, an offence of cheating has occurred."
What is the National Herald case?
The National Herald case involves money moving between the Congress party and two other companies that are mostly owned by people from the party.
The Congress had loaned Rs 90 crore to Associated Journals Limited, a private company with shareholders that published a newspaper that had been set up by former prime minister Jawaharlal Nehru. Once the the debt-laden paper had been shut down, the party decided to close the company – which also had real estate assets said to be worth more than Rs 2000 crore.
Associated Journals' debt was assigned to Young Indian, a not-for-profit company with Rahul and Sonia Gandhi owning 76% of its shares, after the latter paid just Rs 50 lakh to the Congress Party. Because Associated Journal could not pay off its debts, they were converted into equity which eventually meant that Young India owned all of Associated Journal including its very valuable assets, for the tiny sum of Rs 50 lakh.
Who was being cheated?
The Congress has argued it was simply moving its money around among various companies that it considered its own, even though Associated Journals does have small shareholders who aren't Congress leaders. The party's spokespersons and lawyers have argued that none of these shareholders have complained, nor has anyone in the Congress, and Young India, owned primarily as it is by Rahul and Sonia Gandhi, hasn't had any issues either. Who then is the aggrieved party here?
The answer to that is a little surprising: Bharatiya Janata Party leader Subramanian Swamy representing supporters of the Congress.
It was Swamy's complaint that kicked off the investigation and examination by the court and he remains the complainant in the case. And effectively, Swamy is claiming that Rahul and Sonia Gandhi, along with a few other Congress leaders who also own parts of Young India, were cheating Congress supporters and other shareholders of Associated Journals out of money they were owed.
How is Swamy representing the Congress?
As the Delhi High Court, upholding the trial court summons against Sonia and Rahul, said in its order, "it is matter of record that Congress Party had assigned the huge debt of Rs 90 crores to a Section 25 Company i.e. Young Indian on receiving a paltry amount of Rs 50 lacs only. For this, the Congress Party owes an explanation to its supporters, donors, etc."
Indeed, during the court proceedings, Swamy was asked what his locus (grounds) for complaining are, since he wasn't the one being cheated here.
It was asserted by respondent-complainant that the question of locus standi does not arise as the supporters/donors, etc., of Congress Party as well as the shareholders of AJL have been blatantly duped and larger public interest has been sacrificed which is a serious cause of concern as the trust reposed in the Congress Party has been openly breached.
Which means Swamy is speaking up as a public citizen, concerned about the way the Congress is being run.
And indeed, while there might be some truth to Rahul and Sonia Gandhi's cries of this being a vendetta, seeing as Swamy has relentlessly gone after the family for decades now, the trial itself could end up having interesting outcomes, because it will examine how political parties are allowed to use the funds that they have put together primarily through donations.
What can parties do with their money?
As the High Court explains, it is understandable that a political party might have income from sources other than its supporters and it may well choose to invest its money in mutual funds or things of that sort to augment its resources. That said, the allegations here are not that it made problematic investments but that it looks like senior leaders like Rahul and Sonia Gandhi effectively attempted to siphon off funds by allegedly treating all Congress-related outfits as their own property.
"The impropriety of extending interest free loans to a separate legal entity i.e. AJL, which is a Public Limited Company, by the Congress Party is a matter of concern in a democratic set up, particularly, when the source of Congress Party’s fund is largely from donations given by public and so, any citizen can legitimately question the siphoning off funds by Political Party, the High Court said in its order. "What crops up in the mind of a prudent person is as to where was the need of extending interest free loans to a Public Limited Company engaged in a commercial venture of publishing newspapers."
Limited-time offer: Big stories, small price. Keep independent media alive. Become a Scroll member today!
Our journalism is for everyone. But you can get special privileges by buying an annual Scroll Membership. Sign up today!