New Delhi Congress leaders Sonia Gandhi and Rahul Gandhi illegally obtained the underlying assets of Associates Journals Limited (AJL), which ran the National Herald newspaper, to get control of its properties and acquired around ₹142 crores as direct proceeds of crime, the Enforcement Directorate (ED) told a Delhi court on Wednesday.
The federal agency said a prima facie case of money laundering was made out against the Gandhis and others. Special judge Vishal Gogne asked ED if the Congress was made a party to the case as its name was mentioned at several places in the charge sheet.
But ED special counsel Zoheb Hossain said the Congress was not made an accused yet as several donors to the party were themselves victims in the case.
“The Congress party finds mention at many places but not as accused…is the party a victim?” the court asked ED counsel during the hearing.
Special counsel Hossain said, “We have certainly mentioned AICC members being cheated…the Congress has not been made an accused yet”.
The remarks were made during the opening submissions on whether to take cognisance of the matter. The Gandhis have denied the charges and the Congress has called it political vendetta.
“Accused number 1 (Sonia Gandhi) and accused number 2 (Rahul Gandhi) acquired around ₹142 crores as direct proceeds of crime from the period of 2010 to 2023, through the properties of AJL which were rented out,” said additional solicitor general (ASG) SV Raju.
Raju said the objective of the conspiracy was to illegally obtain AJL’s assets by the beneficial owners of Young Indian (YI), a company in which Sonia Gandhi and Rahul Gandhi allegedly hold a 76% stake.
“There is sufficient evidence showing prima facie, the offence of money laundering…the accused persons, by actually and knowingly being involved in the process or activity connected with proceeds of crime derived through criminal activity relating to the scheduled offences of cheating and criminal conspiracy which led to the fraudulent takeover of properties worth more than ₹2,000 crores of AJL, a public unlisted company, by private firm YI owned by Rahul and Sonia Gandhi.”
Relying on the valuation by the income tax department of AJL assets, the law officer added, “These immovable properties valued at ₹755 crore, are also proceeds of crime as per the fair market value ascertained by the district valuation officer of the Income Tax department, and adopted in the IT assessment of YI.”
Established in 1937 by Jawaharlal Nehru, AJL published the National Herald, Qaumi Awaz in Urdu and Navjeevan in Hindi. It was given land in various cities of India for the purpose of publishing newspapers. But it closed operations in 2008 and offered a voluntary retirement scheme to all employees, which was accepted by them; by then, the debt on its books had risen to ₹90 crore, the money coming from the Congress. It was taken over in 2010 by Young Indian (YI), a company in which Sonia Gandhi and Rahul Gandhi together hold 76%. The allegation is that YI paid ₹50 lakh against the loan and took over AJL.
ED has alleged that AJL, which got land in various cities at concessional rates to run the National Herald, but closed the newspaper in 2008, relaunched its news operations around 2016 “just to show that it is still engaged in publishing of newspapers” after an investigation was started into company’s affairs by various agencies.
ED’s primary allegations against the Gandhis is that they are beneficial owners of YI, which acquired the assets of the newspaper’s parent company Associated Journals Limited, worth ₹2,000 crore, for a mere ₹50 lakh. According to the ED charge sheet details shared by an officer on Tuesday, the current market value of these assets is ₹5,000 crore.
The federal agency claims to have identified proceeds of crime worth ₹988 crore in the case – real estate and other assets worth ₹755 crore, shares worth ₹90 crore, and rent of ₹142 crore earned since 2010-11. The rent was earned by AJL from its prime properties in Delhi, Mumbai, Indore, Panchkula, Lucknow and Patna after YI took over the company in Financial Year 2010-11, ED has claimed.
Sonia Gandhi, a sitting Rajya Sabha member from Rajasthan, was questioned by ED in July 2022 for about 11 hours spread over three days, and Rahul Gandhi – the Leader of the Opposition in the Lok Sabha – was interrogated for nearly 40 hours in four sittings in June 2022.
Last month, ED filed a charge sheet against Sonia Gandhi and Rahul Gandhi — the first ever charge sheet against both leaders — in its money laundering investigation. The charge sheet mentioned Sonia and Rahul Gandhi as accused number 1 and 2, respectively, under sections 3 and 4 (which deal with money laundering and its punishment) and section 70 (offences by companies) of the Prevention of Money Laundering Act or PMLA. The charges attract a maximum imprisonment of seven years if proved.
In court on Wednesday, ED referred to a May 2010 letter from the director of AJL to the Congress treasurer, saying the loan by AICC could not be repaid. “Even after this letter, AJL received a further loan of ₹1.38 crore from AICC during the period August 2010 to December 2010, aggregating to ₹90.21 crore,” said Special counsel Hossain.
The counsel submitted that the loan was thereafter converted into equity in favour of YI.
The court posted the matter for day-to-day hearing from July 2 to 8. The Gandhis were represented by senior advocate RS Cheema and senior advocate Abhishek Manu Singhvi.
Hossain informed the court that the rental income from the properties of AJL, after they were obtained from the criminal activity relating to the scheduled offences, should be treated as proceeds of crime. “Accused number 1 and 2 (Sonia and Rahul Gandhi), collectively held a 76% stake in YI, and were involved in the breach of trust,” he said.
“Shares totalling to ₹90.21 crores were acquired…there are immovable properties with current market value at ₹755 crores. The rent from the properties which constituted direct proceeds of crime is Rs. 142.67 crores”.
The counsel added that ED investigation revealed YI was effectively controlled by the Gandhis. The counsel further submitted that YI received donations of around ₹18 crores from various entities during 2017-2018 which were found to be not genuine. “The purpose behind collecting bogus donations was to discharge the income tax demand of YI on account of its acquisition of AJL, which would have fallen on the majority shareholders and owners of YI i.e., Rahul and Sonia Gandhi,” he submitted. To this end, YI carried out a tax evasion of ₹414 crores as found by the Income Tax department, ED submitted.
Besides the Gandhis, Sam Pitroda, the head of the Congress’ international arm, and Suman Dubey, a former journalist and close confidant of the Gandhis, have also been named as accused, besides others.