It’s a majority shareholder in Associated Journals; loan was to help pay VRS of National Herald employees and revive newspaper

A day after the Congress admitted it had given a Rs. 90-crore interest-free loan to Associated Journals Limited (AJL) to help it revive the now-defunct National Herald, it found itself forced to explain the relationship between AJL and Young Indian, the Section 25 company, now at the heart of the controversy stirred up by Janata Party chief Subramanian Swamy. Young Indian, party general secretary Janardan Dwivedi explained, was the majority shareholder in AJL and while, ideologically both espoused the ideals of the freedom movement the two entities were engaged in different activities — one to run a newspaper, the other to work among the youth.

The Congress had given AJL a loan, Mr. Dwivedi explained, for two reasons: it was not merely to revive the organisation and the newspaper but also to help pay VRS and compensation to the 700-odd employees who were still on the rolls of National Herald in Delhi and Lucknow, when it became impossible to run the newspaper and it was closed in 2008. The loan was given over four years, from 2008 to 2012. The party came to the aid of the newspaper for “emotional reasons,” he said, pointing out that National Herald had been started by Jawaharlal Nehru in 1938 and that, in its pre-Independence years, the paper had played a critical role in giving a voice to those fighting for freedom. The loan was interest-free because its purpose was not commercial.

By 2011, most of AJL’s many shareholders were either dead or untraceable and given that while it was a financially-strapped company, it was land-rich, the Congress decided that it would be best for another company — Young Indian — to become a majority shareholder to protect the properties AJL has scattered all over the country.

However, Young Indian, as a Section 25 company, is a not-for-profit entity regulated by the same laws as a trust. Its directors — in this case, Congress president Sonia Gandhi, party general secretary Rahul Gandhi, party treasurer Motilal Vora and senior leader Oscar Fernandes — cannot draw any benefit from it, not even a salary. A Section 25 company, these sources added, differs from a trust only in that it is managed by directors, not trustees.

Meanwhile, with Dr. Swamy raising the pitch on Saturday, seeking de-recognition of the Congress by the Election Commission, the party found itself with no option but to abandon its high-horse approach to try and stem the barrage of charges against its leaders.

If the Janata Party leader’s contention is that the Congress broke the law by giving a loan for a non-political purpose, the party forcefully contested this: on Saturday, Mr. Dwivedi addressing a special conference at the party headquarters contested Dr. Swamy’s definition of “political work,” saying it was for the Congress to determine what was a political purpose: “Is running a newspaper which espouses the ideals of Nehru and Gandhi not a political purpose?” he thundered.

For the Congress, the Bharatiya Janata Party (BJP) also coming forward to back Dr. Swamy’s allegations forcefully against Ms. Gandhi and her son has caused concern. If IAC activist Arvind Kejriwal’s onslaught against Ms. Gandhi’s son-in-law, Robert Vadra, a few weeks ago, struck the Congress at its heart, these accusations against Mr. Gandhi are also potentially damaging for the party. On Saturday, the party said it was prepared to answer charges in any court of law.

For the first two days, Congress spokespersons chose not to answer charges but attack Dr. Swamy instead. Part of the reason was that most of them knew very little about the Young Indian-Associated Journals issue, and they were shooting in the dark. Mr. Gandhi’s threat to take Dr. Swamy to court did not help, as a day later, a party spokesperson challenged the Janata Party leader to go to court himself. Saturday’s special briefing, therefore, went some way in lifting the veil on the issue.

It also explained why Mr. Gandhi’s office on October 10 had said Young Indian was not starting a newspaper and Mr. Dwivedi on Friday said Associated Journals was: the two are different entities.

Of course, in party circles, it is also being said that while for the last two years the Congress has been working on the possibility of reviving National Herald: indeed, the Herald office in Delhi (an address at which Young Indian is registered) has been recently refurbished at some expense. However, many in the party felt that it may not be a viable proposition. The current controversy has now forced the Congress to say it will revive the newspaper — though it is not prepared to set a date.

More In: National | News