The Enforcement Directorate (ED) told a Delhi court on Wednesday that a number of high-ranking Congress leaders had engaged in "fake transactions" with Associated Journals Limited (AJL), the business connected to Sonia Gandhi and Rahul Gandhi, in a significant development in the ongoing National Herald case.
The ED's representative, Additional Solicitor General (ASG) V Raju, testified in court that many of the advance rent payments made to AJL over the years were fraudulent and existed "only on paper." The ED claims that the rent receipts were falsified to demonstrate a flow of funds that never actually happened and that these transactions were carried out at the direction of senior congressional leaders.
According to the ED, senior Congress officials once again gave the order for advertising payments to be sent to AJL in a similarly dishonest way. According to the Prevention of Money Laundering Act (PMLA), the agency now considers the money obtained through these means to be proceeds of crime (POC).
Rahul Gandhi and Sonia Listed as the Principal Recipients
According to the ED, by 2015, the only people who truly benefited from these dubious transactions were Sonia Gandhi and Rahul Gandhi, who controlled AJL in its entirety through the holding company Young Indian Ltd.
The court also brought up dubious share transfers. According to the ED, Suman Dubey gave shares to Sonia Gandhi and Oscar Fernandes gave shares to Rahul Gandhi, but the shares were later returned. The ED claims that this action was taken only to establish a paper trail and had no economic significance. The ED contended that all of these transactions were fraudulent and lacked any real economic substance.
Questions for the court the ED's classification of criminal proceeds
The ED's classification of various financial transactions as proceeds of crime, especially rent and advertising payments, was questioned by the court during the hearing. It pointed out a disparity in the ED's classification: whereas ₹142 crore in rent was classified as POC, another ₹29 crore was not.
The bench also brought up an important point: shouldn't donors and those who are paying the advance rent be listed as respondents in the case if they are being accused of engaging in fraudulent activity and many of them are well-known or members of the same political party?
The ED responded by stating that its investigation is still ongoing and making it clear that it is still determining whether an asset qualifies as POC at the time of acquisition or later. The agency affirmed that a supplemental chargesheet with more details would be provided soon.
What is the National Herald Case?
Jawaharlal Nehru and other freedom fighters established the National Herald newspaper in 1938 as a forum for the Indian National Congress's liberal faction. It was first published by Associated Journals Limited (AJL) and later became the spokesperson for the Congress party. Hindi and Urdu versions were also printed.
However, the newspaper's debt of over ₹90 crore caused it to shut down by 2008.
When BJP leader and attorney Subramanian Swamy filed a complaint in a trial court in 2012, accusing Young Indian Ltd. of cheating and criminally breaching trust in the way AJL's assets were acquired, the case gained political traction. Swamy claimed that the company, which names Rahul Gandhi and Sonia as important stakeholders, carried out a "malicious takeover" to seize control of AJL's priceless assets.
One of Swamy's main arguments was that Young Indian Ltd. paid only ₹50 lakh for assets valued at ₹2,000 crore, a point the ED also emphasised in previous proceedings. Given these new developments, the case is probably going to get more intense in the coming weeks as the ED conducts its investigation and gets ready to submit more court filings.
Also Read: ED alleges Sonia, Rahul Gandhi benefited ₹142 Cr in Herald case
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