Hundreds of firms suspended under foreign regulations Act, but only 2 being probed by CBI

The CBI has only taken up the cases of FCRA violations registered against legal NGO Lawyers Collective and businessman Deepak Talwar.

File image of the CBI headquarters | PTI

New Delhi: In 2018, 155 registered associations were suspended for violations under the Foreign Contribution Regulation Act. In the state of Maharashtra alone in 2017, the registrations of 527 associations were cancelled.

And yet, the Central Bureau of Investigation took up just two cases for probe in the last four years — one against legal NGO Lawyers Collective, and the other against businessman Deepak Talwar.

The case of Lawyers Collective

Lawyers Collective, run by senior advocates Indira Jaising and Anand Grover, was booked for alleged discrepancies in foreign contributions in its returns filed with the Ministry of Home Affairs. The MHA cancelled the NGO’s FCRA licence for allegedly using foreign contributions for “political purposes”.

In CBI’s FIR, filed Tuesday, Lawyers Collective has also been booked for criminal conspiracy, criminal breach of trust, cheating, false statement made in declaration, violation of FCRA 2010, and criminal misconduct under the Prevention of Corruption Act.

Lawyers Collective said the CBI’s FIR has “no basis in fact and in law”, and has been filed to target and silence its office-bearers for the cases they have taken up in the past. As per a report in Scroll, the collective expressed “shock and outrage” at the action, and said the case was solely based on proceedings by the Ministry of Home Affairs in 2016, which the organisation had already challenged before the Bombay High Court. That appeal is pending and the court had noted in its interim orders that the ministry’s allegations were vague, it said.

The case against Talwar

Meanwhile, the case against Talwar was registered in November 2017 — he was booked by the CBI and the Enforcement Directorate for misusing foreign contributions amounting to Rs 90.72 crore. The contributions were were received under the Corporate Social Responsibility Scheme for the purpose of carrying out educational and social activities in India during the financial years 2012-2013 and 2015-2016.

Talwar, who was deported from Dubai in January this year, was arrested by the ED in a case of money laundering. He is also booked under criminal conspiracy, forgery, making false statements before authority, use of forged documents and attempt to cheat.

CBI roped in despite violation below Rs 1 crore

Advocate Nikhil Ahlawat, a legal expert on FCRA matters, explained that as per procedure, the CBI can investigate a case where the violation is for an amount above Rs 1 crore.

“As per notification S.O 2446 E of the Government of India dated 27 October 2011, CBI can investigate the matter where violation of provisions of FCRA 2010 for foreign contributions received in amount of Rs 1 crore or more, or any other cases which are entrusted to the CBI by the central government,” Ahlawat said.

“For violation of FCRA below Rs 1 crore, the Crime Branch would be the investigating agency. Interestingly, in this case, Section 43 of FCRA has been invoked by the central government to assign the investigation to CBI.”

According to the MHA, Lawyers Collective used Rs 13 lakh of its foreign contributions in advocacy with MPs or the media to organise rallies, dharnas and draft legislation meetings in 2009, 2011 and 2014.

‘CBI in FCRA case a rarity’

A source in the MHA said the “CBI getting involved in a case of FCRA is a rarity”.

“Sections under the IPC are not invoked in all cases of FCRA violations. In 99 per cent of cases, if there is criminal breach of trust or cheating along with the FCRA violation, it goes to the local police to probe. The CBI gets involved only if there is a bigger scam that needs to be unearthed,” the source said.

The source added that in the case of Lawyers Collective, the association used foreign funding for advocacy with MPs or media, and spending on these activities is a gross violation under FCRA and “against national interest”.

Also, Jaising, who was the Additional Solicitor General (ASG) of India under the previous UPA government, had violated FCRA norms by receiving foreign funds when she was a government servant, which is why the case was referred to the CBI.

Ahlawat, however, said that the complaint does not conclusively state that any of the acts done by the NGO were in any way countering the cause of national interest.

“The kind of allegations that have been made could be equally made against many of the other associations that are or were receiving foreign funds. Also, how the funds were used/misused has not been concluded in the inspection report,” he said. “The complaint seems premeditated.”

According to the CBI, an inspection of books and accounts of Lawyers Collective for the period of 2009-10 to 2014-15 was undertaken from 19 to 23 January 2016, to ascertain whether FCRA provisions had been violated. During the inspection, bank statements, account statements, bills, details of beneficiaries’ receipt and payment accounts were evaluated, and it was found that the association had violated provisions of the FCRA.

The CBI claimed that despite being given a chance to respond and explain, the arguments furnished by the NGO were “unsatisfactory”, with no adequate explanation. The CBI also stated that the association failed to produce any material evidence and so, it was concluded that the FCRA registration of the association be cancelled and further investigation be entrusted to CBI.

The procedure

Once a violation under FCRA is observed, an inspection and scrutiny of the bills, records and reports is carried out by an MHA team. After the inspection, a response is sought from the association on the discrepancies observed by the team. If the response by the association is found to be unsatisfactory, then the association is suspended and a show-cause notice is issued.

If the association fails to give an adequate explanation of the violations observed, a criminal case can be registered in the case.