New Delhi: The online news portal NewsClick allegedly received funds from China, routed through the US, amounting to Rs 76.84 crore within just three years, according to Enforcement Directorate (ED) investigators probing a money laundering case against the media company. Further, these funds were distributed to journalists in Delhi to “promote Leftist ideology” and enhance China’s image, an ED source told ThePrint.
The agency has claimed that NewsClick’s “China link” was established by its association with Shanghai-based American businessman Neville Roy Singham, described in ED documents as a “close confidant” of editor-in-chief Prabir Purkayastha and a contact person of the Communist Party of China (CPC).
ED investigators have alleged that Singham not only financed NewsClick but also exchanged incriminating emails about China with Purkayastha, as well as other journalists, activists, and several Communist Party of India-Marxist (CPI-M) leaders.
“Emails amongst Singham, Purkayastha, (Indian-American historian) Vijay Prashad, and (CPI-M leader) Prakash Karat revolved around updates from China, coverage of CPI-M in China, news of anti-China feeling in India, restriction of investments and imports from China, the CPI-M’s victory in local body elections in Kerala, praise for the Chinese government, and tributes by the CPI-M to Mao Zedong,” the ED source said. “All this clearly establishes the China link with the portal.”
The source added that Singham also contacted Purkayastha regarding the dubbing and subtitling of two 2019 Chinese movies, Red Star over China and The Secret of China, which were “produced by the propaganda department of the CPC Sichuan and Shaanxi party provincial committees”.
Further, said the ED source, Prabir Purkayastha and his associates engaged in a series of activities as part of China’s “image-building programme”, including organising lectures, interviews, studies, and other events.
One of these, the source said, was a lecture and interview organised by Action Aid India featuring Chinese professor Wen Tiejun on the theme of “China and the World — Ecological and Civilisational Challenges”.
In addition, said the source, Purkayastha and other associates worked on the topic of China’s investments in Africa, contrasting it with investments by Western governments. Their aim, alleged the source, was to enhance China’s image.
“Singham also organised a closed-door meeting on the China-USA relationship through the Tri-Continental Advisory Board platform. The meeting’s agenda was circulated to Purkayastha and others,” the source added.
The ED claimed that there was also an exchange between Pukayastha, Singham, Prashad, and Karat of a Chinese map where Arunachal Pradesh was shown as part of China. “This shows their intentions,” the source said.
“Moreover, during searches, documents like an NIA chargesheet on Hafiz Saeed, travel details of the directors of the company to China, Venezuela, and Tunisia, and paintings relating to communist ideology were found, establishing their intent,” the source said.
Apart from the “China links”, the ED has claimed that the scrutiny of the evidence has revealed questionable infusion of foreign inward remittance of Rs 9.59 crore through FDI and Rs 76.84 crore by way of export of services.
In a written response, Prabir Purkayastha told ThePrint that NewsClick is an independent news organisation and the allegations by ED are “wholly fictitious”. He added that NewsClick has no ties with the Chinese government or related entities and that the organisation has always complied with relevant Indian laws.
According to him, a “motivated” investigation is being carried out by various authorities in India, which has been challenged by NewsClick before the appropriate courts and authorities.
When asked about the ED’s allegations about CPI-M leaders, politburo member Brinda Karat told ThePrint: “I have no idea about ED’s claims. The CPI-M has issued a statement earlier on the issue. In any case, the ED has no business to make such politically motivated charges against the CPI-M and its leaders.”
Back in 2021, Karat had told ThePrint that CPI-M volunteers could follow “their own professional choices in which the party has no role”. She had further said that the party had “no involvement” with NewsClick.
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First ED raids in 2021
The controversy surrounding NewsClick‘s alleged connections to China grabbed public attention following an investigative report by The New York Times last month on a “global web of Chinese propaganda” financed by a network run by tech mogul Neville Roy Singham.
This report claimed that NewsClick, funded by Singham, had been incorporating “Chinese government talking points” into its coverage.
However, the ED initiated its investigation into NewsClick well before this, based on an FIR that was filed by Delhi Police’s Economic Offences Wing accusing the company of receiving FDI of Rs 9.59 crore from Worldwide Media Holdings LLC USA during the financial year 2018-2019.
In February 2021, the ED also conducted raids on the offices of the directors as well as editor Purkayastha in February 2021.
At the time, senior advocate Kapil Sibal, representing Purkayastha, had argued that NewsClick received funding from the US-based company during a period when there were no restrictions on FDI.
Subsequently, the Delhi High Court had in June 2021 directed the ED “not to take coercive action” against the portal and Purkayastha in two separate orders.
On 11 August this year, however, the ED sought vacation of the two orders, with its advocate Zoheb Hossain submitting that this was a “case of criminal conspiracy to bring in unaccounted money from abroad”.
On 12 August, the Delhi High Court requested responses from NewsClick and Purkayastha regarding the ED’s plea. While issuing the notices, the single-judge bench of the HC observed: “Prima facie, in the opinion of this court, the above contentions raised by the ED have merit and require deliberation.” The matter is now listed for 6 September.
Purkayastha said he was confident that the court would decide in favour of the organisation.
“We have the utmost faith in Indian courts and are confident that we will emerge victorious in those proceedings. In fact, a court in India has already dismissed a complaint under the Income Tax Act against NewsClick, finding no merit in the baseless and fictitious insinuations made therein,” he said.
‘Legal facade of FDI investment’
The ED source said that the agency’s examination of documents revealed that, in April 2018, an inflow of Rs 9.59 crore in FDI took place through the mechanism of “share subscription” into PPK Newsclick Studio Pvt Ltd, of which Prabir Purkayastha is a director and shareholder.
The source added that the value of the shares of PPK Newsclick Studio — a loss-making newly incorporated company with a nominal face value of Rs 10 per share — was artificially enhanced by fixing a premium of Rs 11,510 per share. This manipulation was allegedly done to create an impression of authenticity for the FDI.
The funds in this instance, claimed the source, originated from Worldwide Media Holdings LLC, USA, a Delaware Limited Liability company. This entity was incorporated by an associate of Neville Roy Singham, who initially infused capital into it and then through it channeled the funds to NewsClick in India, they said.
“As part of their scheme to get money to NewsClick, Worldwide Media Holdings LLC was incorporated by Jason Pfetcher with 100 percent equity of People Support Foundation (in which Jodie Evans, wife of Singham, is a director) in November 2017. This company transferred a fund of Rs 9.59 crore to PPK NewsClick Studio Pvt. Ltd in April, and since then the company has stopped any further business activity,” a source said.
During the investigation, the source of funds in Worldwide Media Holdings could not initially be explained. However, it was later found that Neville Roy Singham provided the funds to the US company, the source said.
During the investigation, Worldwide Media Holdings’ source of funds was eventually traced to China-based Singham.
“In order to get the fund of Rs 9.59 crore, Purkayastha, along with his associates, created a legal facade of FDI investment in PPK NewsClick Studio Pvt Ltd. Earlier also Singham was transferring funds to Purkayastha from M/s GSPAN LLC (owned by Singham) as consultancy fee to promote Leftist ideology,” the source said.
“All this is part of a well-devised scheme to justify investment of alleged FDI through equity participation,” he claimed.
The source added that while Purkayastha claimed during interrogation that he did not know anything about the US-based company, scrutiny of digital evidence revealed that he along with Jason Pfetcher and Singham conspired to “infuse opaque foreign funds in PPK NewsClick Studio Pvt Ltd”.
Purkayastha was in touch with Jason Pfetcher and Singham since at least 2017, the source claimed.
‘Make-believe agreements’ for Rs 76.84 crore
NewsClick claimed to have received export remittances of over Rs 76.84 crore for its services from companies based in the US from March 2018 to 2021. However, the ED maintains that no evidence of exporting services to the referred entities was purportedly found or produced during the course of the search.
According to the ED source, NewsClick claimed that it received remittance from Justice and Education Fund Inc. USA, The Tricontinental Ltd Inc. USA, GSPAN LLC USA, and Centro Popular De Midas Brazil in lieu of uploading news content on the “People’s Dispatch Portal”, owned and maintained by NewsClick until 2021.
However, the source alleged that NewsClick only had a “make believe agreement with these companies”. This means that although it was shown on records that payments were made for a specific service by these companies to NewsClick, it could not be proved.
The source pointed out that the Justice and Education Fund Inc. USA is a charitable organisation and is not in the profit-making business. Therefore, it is possible that the donation sent by the foundation was “recharacterised as service charge in order to escape the provisions of the FCRA (Foreign Contribution Regulation Act)”.
The source added that the funds that were routed through this organisation had actually belonged to Singham.
“The opaque source of FDI of Rs 9.59 crore and unexplained export remittance of Rs 79.48 crore has been traced back to a person located in China,” the source said. “Singham is located in China and is engaged in promoting the cause and activities of Communist Party of China.”
He also explained that a careful scrutiny of the service agreement between NewsClick and Justice and Education Fund “proved the falsehood” that the payment was for services.
“The nature and content of the services were not defined in the agreement, and all the risks associated with the content vest with NewsClick. Justice and Education Fund Inc. USA could not have legally entered into an agreement for uploading content on the website not owned by it,” the source pointed out.
He added that Amit Chakraborty, a shareholder of NewsClick, said in his statement under the Prevention of Money Laundering Act (PMLA) that Singham is the ultimate owner of the funds received from the Justice and Education Fund, USA, and GSPAN LLC, USA.
‘Anti-national news’
The ED investigation has revealed that People’s Dispatch Portal was owned by NewsClick until the agency conducted searches and investigations in 2021, the source said. Subsequently, the rights to the portal were allegedly transferred to the Justice and Education Fund.
NewsClick itself, the source claimed, was created to upload “anti-national news” at the behest of Singham.
“He has made all the investment in NewsClick by way of FDI and transferring of export proceeds and for a reason. The scrutiny of the digital data has revealed that electronic communication between Purkayastha and Singham has taken place on various issues of interest to China,” the source said. “Since, Singham, the investor, is influencing the content of the news, it is a case of paid news.”
The remittances, said the source, came from “chartered accountant companies based in the US that have the same address as each other”.
Funds used to renovate home, pay electrician
The ED’s investigations have allegedly exposed a web of significant financial transactions from the foreign remittances received by NewsClick, ranging from a hefty fee paid to an electrician to ‘payment’ for journalists and activists.
The ED source said that an amount of Rs 1.55 crore was paid from the remittances to an electrician and acquaintance of Purkayastha called Shri Joseph Raj for petty maintenance work.
However, “no documentation for corresponding work was either found or produced during the search”, the source said.
Further, an amount of Rs 1.65 crore was also diverted from NewsClick‘s bank account to Purkayastha’s, which was then used in the purchase and renovation of a flat in New Delhi’s Saket. This flat had a consideration price of Rs 1.80 crore, according to the sale deed.
“Investigation revealed that an additional payment of Rs 2 crore in cash was made in the purchase of the said flat. The ED has provisionally attached the property to the tune of Rs 4.52 crore along with Prabir Purkayastha’s fixed deposits to the tune of Rs 41 lakh, totalling Rs 4.93 crore,” the source said.
The ED also alleged that a payment of Rs 97.32 lakh was made to Bappaditya Sinha, a shareholder of NewsClick and a member of the IT cell of the CPI-M who reportedly manages the Twitter handles of several of the party’s leaders.
Funds were also allegedly paid to activist Gautam Navlakha, one of the accused in the 2018 Bhima Koregaon case. “NewsClick has paid Rs 17.08 lakh to Gautam Navlakha as salary. A part of the funds introduced in NewsClick was also distributed amongst other journalists and activists,” the ED source said.
The ED also alleged that Purkayastha and Navlakha incorporated a company named Sagrik Process Analyst Pvt Ltd with the help of investment received from M/s Viking System International. The ED source said that the reason why this company was incorporated could not be made clear during questioning.
“As on 31 March 2020, Prabir Purkayastha and Amit Chakraborty were the directors in the company. Purkayastha held 76 percent shareholding in the company, Gautam Navlakha held 9 percent, and Viking System International Inc. had 7 percent,” the source said.
Viking System International Inc., the ED source added, delivers naval architecture and marine engineering solutions primarily for the offshore oil and gas industries, as well as the military and naval vessel sectors. This, he remarked, had “no correlation with the area of business activities of NewsClick, which is a media company”.
(Edited by Asavari Singh)
This report has been updated to include a comment from CPI-M leader Brinda Karat.
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