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Senior Congress leader and former union minister P. Chidambaram on Monday blasted the BJP led central government at the Centre over the Enforcement Directorate (ED) filing a prosecution complaint against Sonia Gandhi and Rahul Gandhi in alleged National Herald money laundering case and accused the financial probe agency action as “blatant abuse of power”.
He also cited detailed financial and legal facts of the case and asserted that there is no evidence of money laundering or financial impropriety.
While addressing a press conference here at the DPCC headquarters, the former Union Finance Minister said, “The ED’s chargesheet is a politically motivated attack orchestrated by the ruling establishment to malign the principal Opposition party.”
He said, “National Herald (NH) is a product of the freedom movement of India. It was founded by eminent freedom fighters such as Purushottam Das Tandon, Acharya Narendra Dev, Rafi Ahmed Kidwai and Jawaharlal Nehru and National Herald, Mavjivan and Qaumi Awaz are symbols of the freedom struggle.
Chidambaram pointed out that NH is owned by Associated Journals Ltd (AJL), a company registered in 1937-38 and it is a public limited company.
He also pointed out that AJL holds six immovable properties in India.
“The property in Lucknow alone is a freehold property. The other properties in Delhi, Panchkula, Mumbai, Patna and Indore are leasehold properties allotted by the government concerned with the condition that the property cannot be sold,” he said.
Chidambaram explained that over time, AJL incurred huge losses. AJL (and NH) could not pay the taxes, statutory dues, or wages and salaries.
“The outstanding liabilities of AJL were huge and mounting. Between 2002 and 2011, the Congress party stepped in and advanced money in small tranches, by cheques, amounting to Rs 90 crore. The monies were used to pay the outstanding liabilities, including wages and salaries,” he said.
“AJL was a debt-laden company. On legal advice, it was decided to restructure the company. In 2010, a new company, Young Indian, was formed as a not-for-profit company under Section 25 of the Companies Act, 1956 (now Section 8 of the Companies Act, 2013). YI had four shareholders, all senior office bearers of the Congress party.
“YI took over the Rs 90 crore loan advanced by the Congress party to AJL after paying a consideration of Rs 50 lakh. YI became the lender to AJL. Since the loan was irrecoverable from AJL, it was decided by the two companies that the loan will be converted into Equity and, accordingly, equity shares were issued by AJL to YI,” he explained
The Congress leader also said that conversion of debt into equity is a well known instrument of re-structuring companies.
Citing example, Chidambaram said, “Banks do it regularly. Recently, the Government of India (GOI) converted the liability of Rs 36,000 crore owed by Vodafone India to the government into equity. GOI’s equity in Vodafone India is now 48.99 per cent.”
He further said that as YI is a not-for-profit company and even if it made profits, under Section 25 (now Section 8) it cannot give or distribute salaries or dividends to its shareholders.
“Since incorporation, not a single rupee has been paid by Young Indian to its directors or shareholders,” he said.
He also said that the Income-tax department has valued the properties of AJL at Rs 413 crore.
The former union minister also explained that in 2013, an individual complainant lodged a private complaint against the Directors of YI alleging cheating, conspiracy, etc.
” At the stage of cross-examination of the complainant, the complainant filed an appeal in or about 2020 to the High Court, Delhi and obtained a stay of further proceedings in the trial court. Hence, effectively, the criminal case is stayed since 2020,” he said, adding that in 2023, the ED registered a case under PMLA (Prevention of Money Laundering Act) presumably based on the criminal case (started on a private complaint) pending before the Trial Court.
And now the ED has filed a prosecution complaint (or charge sheet) under PMLA on April 9, he said.
Firing salvos, Chidambaram asked: “Where is the crime? Where are the ‘proceeds of crime’? Where is the tainted money? Where is the offence of ‘money laundering’?”
He said that if the authors are not ignorant, we can only attribute their statements, comments and opinions to malice.
“It is elementary that there is no transaction of money. Without money, there are no ‘proceeds of crime’. Without ‘proceeds of crime’, there is no money laundering. Without money laundering, the ED has no jurisdiction,” Chudambaram said.
The assault on the integrity and reputation of Sonia Gandhi and Rahul Gandhi is a blatant abuse of power. On the facts of this case, it is clear that the ED, at the behest of its political masters, is carrying on a vendetta against the leaders of the principal Opposition party, the Congress,” he added.
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