 "The case that may derail GST")
On Tuesday, Congress president Sonia Gandhi invoked her late mother-in-law Indira Gandhi when asked about the trial court summons on her in the National Herald case. Not without reasons. Pt Jawaharlal Nehru had incorporated The Associated Journals on November 19, 1937, the day his beloved daughter, then Indira Priyadarshini, had turned 20. It had paid-up capital of Rs 500,000 - 2,000 preference shares of Rs 100 each (carrying a fixed but non-cumulative dividend of five per cent) and 30,000 ordinary shares of Rs 10 each. Three newspapers were published by The Associated Journals: National Herald in English, Qaumi Awaaz in Urdu and Navjeevan in Hindi.
Over the years, the equity capital of the company expanded significantly. Things took a curious turn in November 2010 when Sonia, son Rahul Gandhi, Congress treasurer Motilal Vora (also the chairman of The Associated Journals) and party leader Oscar Fernandes floated a not-for-profit company called Young Indian with a capital of Rs 5 lakh. While Sonia and Rahul owned 38 per cent each, Vora and Fernandes took 12 per cent stake each. A month later, on December 21, the directors of The Associated Journals, which included Vora and Fernandes, authorised assigning the company's loans of about Rs 90 crore to Young Indian for a consideration of Rs 50 lakh. Technocrat Sam Pitroda and journalist Suman Dubey, old Gandhi family loyalists, were appointed on the board of The Associated Journals on the same day. The transaction of the liability was approved by the shareholders of The Associated Journals in an extraordinary general meeting on January 21, 2011 in Lucknow. The shareholders, on that day, also approved the allotment of 90.2 million shares at Rs 10 each to Young Indian. With this, the paid-up capital of The Associated Journals zoomed from Rs 93 lakh to over Rs 91 crore. Young Indian came to own 98.97 per cent of the company; the remaining 1,088 shareholders were reduced to a minority.
The Associated Journals had been losing money for years before it eventually shut down. It seems that the Congress had been lending unsecured interest-free loans to the company to meet its various liabilities towards employees and other creditors over a period of time. The income tax returns of the Congress for the year ended March 2011 shows an item of "balance written off" in the expenditure column: Rs 89.71 crore. Though the return does not give further details of this sum, it neatly fits into the Young Indian-The Associated Journals transaction.
The money belongs to the Congress, and it can be argued that it is free to do what it wants to do with it. But, BJP leader Subramanian Swamy sees these transactions as a form of back door entrance to acquire control over the real estate assets of The Associated Journals, including the Herald House in the capital's Bahadur Shah Zafar Marg. Swamy alleged three years ago that these assets were worth Rs 1,600 crore.
