#NewsBytesExplainer: Why ED penalized Amnesty India, ex-CEO Aakar Patel
What's the story
The Enforcement Directorate (ED) issued a show-cause notice to Amnesty International India and its former CEO Aakar Patel on Friday for alleged violations of the Foreign Exchange Management Act (FEMA). The central agency launched an investigation under the FEMA based on claims that Amnesty International UK had been remitting significant foreign payments through its Indian entities evading the Foreign Contribution Regulation Act (FCRA).
Context
Why does this story matter?
The Central Bureau of Investigation (CBI) is probing a similar case against Aakar Patel and Amnesty International. To recall, CBI had also issued a Lookout Circular (LOC) against Patel for allegedly violating the Foreign Contribution (Regulation) Act (FCRA). Later, Patel approached a Delhi court seeking to quash the LOC after he was stopped from traveling to the US in April.
Details
Amnesty International and Patel have been fined heavily
The ED has imposed a fine of Rs 51.72 crore on Amnesty International while Patel has been fined Rs 10 crore. It alleged that funds received by Amnesty International to expand NGO activities in India were in violation of the FCRA rules. There were no prior registrations or permission to the organization and its India-based trust under FCRA by the home ministry, ED said.
Information
What does ED's show cause notice say?
According to the show cause notice, remittances received by Amnesty International India and claimed as receipts for business consultation and public relations services between November 2013 and June 2018 are nothing more than borrowed funds from outside contributors which is a blatant violation of FEMA.
Allegations
ED made serious allegations following Amnesty's response
According to the ED, the adjudicating body determined that Amnesty International Pvt Ltd (AIIPL) is engaged in activities unrelated to their declared commercial activity. It was claimed that they used the approach to hide foreign funding behind corporate operations in order to avoid FCRA investigation. The declaration from the ED comes only days after it got a comprehensive response from Amnesty International India.
Violation
Probe agency found serious violation of FEMA Regulations, 2000
As a result of the examination by ED officials, it is allegedly held that the funds received by AIIPL through inward remittances to the tune of Rs 51.72 crore are nothing more than funds lent by Amnesty to AIIPL to run its activities in India. These were, however, contrary to the provisions of Regulation 3 of the FEMA Regulations, 2000, ED said.
Quote
Contentions, submission from AIIPL dismissed
"All contentions and submission from AIIPL regarding the claim of the remittance towards the export of services to Amnesty International have been dismissed, in the absence of concrete evidence," the ED statement read.