The National Herald case has all the makings of a nautanki
By what stretch of reason did the courts find the grounds to admit a case against the Congress for reviving National Herald?columns Updated: Feb 11, 2016 00:16 IST
On December 19, Congress president Sonia Gandhi, vice president Rahul Gandhi, treasurer Motilal Vora, senior leader Oscar Fernandes, and two friends of the Gandhi family, Suman Dubey and Sam Pitroda, appeared before a judge of the Delhi District Court to answer to the charge of having cheated and misappropriated funds to the tune of Rs 90.25 crore, to acquire the ownership of a defunct daily newspaper, the National Herald.
Their arraignment had all the makings of a nautanki: Large contingents from both the BJP and the Congress besieged the premises and shouted slogans at each other. Surrounded by a swarm of security police, the Gandhis and other ‘accused’ entered the courthouse at 2.47pm. With them, to furnish bail for Sonia, came Manmohan Singh, the former prime minister of India. The magistrate took up the case at 3pm; the ‘accused’ were granted unconditional bail; another date was set for February 20. They walked out of the courtroom at 3.05. Both sides declared it a victory.
In the excitement no one paused to ask whether Subramaniam Swamy’s petition should have been admitted by the district court and the admission affirmed by the high court, in the first place. For a cursory examination shows that there was not even a shred of justification for admitting it, and that it is Swamy, not the Gandhis, who should be in the dock for framing false and malicious charges and wasting the court’s precious time.
As president of the Congress, Sonia Gandhi has every right to revive the National Herald, for the paper had been founded by Pandit Jawaharlal Nehru in 1937 with the express purpose of “reflecting the policy and principles of the Indian National Congress”. It got off to a flying start in 1937 but never fully recovered from the blow it received when the British banned it in 1942 for supporting the Quit India Movement. By the time the ban was lifted in 1945, the British were on their way out and Pandit Nehru and other senior leaders, who used to write for it regularly before 1942, were preoccupied with the transition.
The death blow came when, in the mid-seventies, other large publications began to underprice their newspapers and make good the loss by increasing their revenues from advertising. Within a decade this had forced scores of independent newspapers all over the country to close down.
From then on the National Herald became entirely dependent on annual handouts from the Congress party. In 2008, when these losses had mounted to Rs 50 crore, Sonia Gandhi decided to call it a day and shut down the paper. Provident fund, voluntary retirement, and other minor closure raised the figure to Rs 90.25 crore.
By this time, almost every other political party in the country had its own newspaper or channel. So, in 2012, the Congress decided to revive the National Herald. Given the value of brand recognition, this made sense, but the National Herald was technically owned by Associated Journals Limited (AJL), an unlisted company set up under a 1913 Act with GD Birla, several Tata trusts and a number of well-wishers were among its shareholders. And AJL could not raise a paisa as it had an ocean of debt on its balance sheet.
The normal way of reviving a company in this condition, that scores of India’s largest firms are taking today, is to convert all or a part of its debt into equity shares and sell these at a discount to those willing to gamble on its recovery. Freed of the burden of interest payments the company regains the capacity to borrow money and launch a new business plan. This is the route the Congress decided to take. To take over AJL’s debt it formed a new company called Young Indian in which the Gandhis and their ‘co-accused’ were the principal shareholders. And to ensure that future profits, if any, went to the organisation and not the shareholders, they made Young Indian a not-for-profit company under Section 25 (a) of the Companies Act.
To appreciate how scrupulous the Congress’ leaders have been one needs to compare this with the manner in which Reliance Industries’ chairman Mukesh Ambani bailed out Raghav Bahl’s TV-18 and Network-18 media companies. In September 2011, Bahl’s companies had run up a debt of Rs 2,116 crore. To repay this and finance expansion Bahl floated a whopping rights share issue of Rs 4,000 crore. To maintain his controlling stake in the two companies he had to buy Rs 1,700 crore worth of the shares. This was provided to him by Mukesh Ambani’s Reliance Industries through a specially created corporate entity, the Independent Media Trust, which purchased optionally convertible debentures (OCDs) in TV and Network 18. Two years later, on May 27, 2014, giving Bahl only three days notice, Reliance converted the OCDs into shares and took over both companies.
Reliance has also bought out Eenadu TV with its 50 vernacular channels, and given a “personal loan” of Rs 403.85 crore to Radhika and Prannoy Roy, the founder-owners of NDTV. These, and other corporate acquisitions of debt-ridden media companies, have significantly shrunk the public sphere — the space for civic debate — in the country. But they are entirely legal. If Reliance could set up IMT to pump capital into the TV-18 group, by what stretch of reason did two Delhi courts conclude that there were sufficient grounds to admit a case against the Congress party for setting up a not-for-profit company to revive the National Herald?
Rahul Gandhi’s accusation of political vendetta cannot be dismissed lightly. For when, after examining Swamy’s charge for a full year, the Enforcement Directorate dismissed it on August 18 for want of substantive evidence, the ministry of finance not only dismissed its executive director, Rajan Katoch, but removed him from government service the next day.
On December 17, two days before the start of the nautanki at Patiala house, home minister Rajnath Singh allotted Swamy a fully-appointed government bungalow to live in.
Prem Shankar Jha is a senior journalist and author
The views expressed are personal
First Published: Feb 11, 2016 00:11 IST