Pioneer, Page 3, March 16, 2013Smash and grab of National Herald
By Sandhya Jain on March 15, 2013
One month after he filed a criminal complaint against Congress president Sonia Gandhi, vice-president Rahul Gandhi, treasurer Motilal Vora, general secretary Oscar Fernandes, family friends Suman Dubey and Sam Pitroda, and the private firm Young Indian, for ‘misappropriation’ of the assets of National Herald and associated journals, before the chief judicial magistrate at Patiala House Courts, New Delhi, Janata Party leader Subramanian Swamy tasted victory.
Metropolitan Magistrate Gomti Minocha took cognizance of the complaint on Friday and directed Swamy to testify in the case on July 9, 2013. The complaint was first heard by link magistrate Ambika Singh on February 14.
Swamy, a well known activist against corruption in high places, has alleged criminal breach of trust by the accused persons against the All India Congress Committee (hereafter Congress) and The Associated Journals Ltd (hereafter AJL) who are the publishers of National Herald newspaper, founded under the chairmanship of Jawaharlal Nehru to support the freedom struggle. Funds were collected from the public at large and since 1977 the party received tax exemption under Section 13A of the Income Tax Act as it was funding the paper.
Yet the assets of AJL shareholders were allegedly ‘misappropriated’ by the accused, under the cloak of Section 25 of the Companies Act, 1956, through crony control over the Congress and AJL, disregarding the conflict of interest and breach of trust involved.
The takeover was executed in eight steps. First, AJL was formally closed and printing of National Herald, Navjivan and Qaumi Awaz terminated in 2008, leaving an unpaid debt of Rs 90 crore approximately. Second, on November 23, 2010, Young Indian Pvt Ltd (hereafter Young Indian) was incorporated with a paid up capital of just Rs 5 lakh under Section 25 of the Companies Act, in which Sonia Gandhi and Rahul Gandhi owned 38 per cent shares each (or jointly 76 per cent).
Third, in December 2010, the Board of Directors of Young Indian passed a resolution to “own” the outstanding debt of the AJL, and obtained an unsecured zero interest loan from the Congress for equivalent amount to liquidate the said debt. Sonia Gandhi was then Congress president, Rahul Gandhi general secretary, and Motilal Vora party treasurer and CMD of AJL.
Fourth, the AJL held a board meeting and declared that it could not discharge the debt to Congress. It resolved without reference to and approval of the shareholders that Young Indian would own its debt, and for Rs. 50 lakhs its entire share equity would be transferred to Young Indian. Thus AJL became a wholly owned company of Young Indian.
Fifth, the accused wrote off the loan obtained from the party as irrecoverable.
Sixth, the AJL Balance Sheet shows that it had real estate assets of at least Rs 2000 crore (possibly Rs 5,000 crore), in Delhi, Lucknow, Bhopal, Indore, Mumbai, Panchkula, Patna and other yet identified places. These were provided by various Union and State Governments after 1947 for facilitating newspaper printing, and publishing.
Seventh, after taken possession of this vast real estate, Young Indian declared that according to its objectives submitted for obtaining registration under section 25 of the Companies Act, 1956 it will not engage in publishing newspapers, including the National Herald.
Eighth, National Herald House in New Delhi has been rented and Young Indian receives at least Rs. 60 lakhs/month for space made available.
In his petition Swamy contends that National Herald was not owned by the Nehru family, but the general public, particularly those who joined the freedom movement, contributed most of the share capital. Hence, Young Indian had no right to appropriate 99 per cent of AJL shares with funds from the Congress.
When National Herald closed down in 2008, the Congress gave AJL an interest-free loan to pay off the employees’ terminal compensation. That Congress was funding the paper was admitted in the editorial by editor TV Venkitachalam on April 1, 2008 when the paper appeared last: “The paper is part of Nehru’s legacy and has continued to uphold the traditions of secularism and non-alignment and I hope the Congress will not allow it to close down finally.”
With closure, AJL continued to hold valuable properties and owed only Rs 90 crore to the Congress; it had very little other liability. This real estate could pay off the loan and give huge benefits to the thousand plus shareholders who contributed roughly Rs 89 lakh to AJL’s capital at various times.
The constitution of the Congress provides in Art XIX (i) that the “Working Committee shall constitute a Trust for holding immoveable properties belonging to the All India Congress Committee” under the chairmanship of the party president, and with the treasurer and general secretary in-charge of administration as ex-officio members. Yet AJL shares were taken over by Young Indian, a company whose main beneficiaries are the party president and vice president. The party treasurer is not an appointed post as per the constitution, but an appointee of the president. He played a critical role in the entire episode and owns 12 per cent share in Young Indian. Oscar Fernandes was made a director of AJL on June 17, 2010. He also owns 12 per cent share in Young Indian.
Suman Dubey and Sam Pitroda are close associates of the party president and promoters of Young Indian. Both were made directors of AJL on November 21, 2010.
AJL director since June 19, 2000, Vishwa Bandhu Gupta, resigned suddenly or was asked to resign on February 4, 2011, just before AJL converted the Rs 90.25 crore loan due to the Congress into equity shares by which control of AJL passed into the hands of Young Indian. The latter’s first Annual report (April 27, 2012), states that it “is engaged in activities to inculcate in the mind of India’s youth commitment to the ideals of democratic and secular society”. At the same time, the Annual Report of AJL says it is recasting “its activities” to align with Young Indian’s “main objects”, which suggests the intention to merge AJL into Young Indian.
All in all, an unedifying story.
http://www.niticentral.com/2013/03/15/swamys-petition-against-sonia-rahul-admitted-55860.html