ED slaps Rs 61.72 crore penalty against Amnesty India, ex-CEO Aakar Patel, here’s why

As per the ED, London-based Amnesty International sent a “huge amount” of foreign contribution to its Indian entities (Amnesty India International Pvt. Ltd) "in guise of business activities to escape FCRA scrutiny".

Pic Courtesy: ANI

New Delhi: The Enforcement Directorate (ED) Friday (July 8) said it has issued a penalty of over Rs 61 crore against Amnesty India and its former head Aakar Patel over charges of violation of the Foreign Exchange Management Act (FEMA). The federal probe agency issued a show-cause notice to Amnesty India International Pvt. Ltd. (AIIPL) with a penalty of Rs 51.72 crore, while its former CEO Aakar Patel has been fined Rs 10 crore for “contravention” of the provisions of FEMA. The order was issued on completion of the probe by the adjudicating authority of ED. 

As per the federal probe agency, London-based Amnesty International sent a “huge amount” of foreign contribution to its Indian entities (AIIPL) "in guise of business activities to escape FCRA scrutiny".

The ED had initiated investigation under FEMA on the basis of allegations that Amnesty International, UK had been remitting huge amount of foreign contribution through its Indian entities via Foreign Direct Investment (FDI) route in order to evade Foreign Contribution Regulation Act (FCRA) to expand its NGO activities in India. 

“During the period between November, 2013 and June, 2018, remittance which was received by AIIPL and claimed as receipt for Business/Management Consultancy and Public Relation Services for export of services to foreign beneficiary is nothing but amount borrowed from overseas remitter, thereby violating the FEMA provisions,” the ED said in a statement. 

After getting a detailed reply from AIIPL, the adjudicating authority of ED held that "AIIPL is an umbrella entity under Amnesty International Ltd., UK, which was declared to be set up for the cause of social activities in India".

"However, AIIPL has involved in many activities which are not relevant to their declared commercial business, and circumventing model has been applied by them to route the foreign funds in the guise of business activities to escape FCRA scrutiny," the statement further read. 

The ED said it has rejected all contentions and submissions from AIIPL regarding the claim of the remittance towards the export of services to Amnesty International in the “absence” of concrete evidence.

"Consequently, it is held that the funds that have arrived to the hands of AIIPL through inward remittances to the tune of Rs 51,72,78,111.87 is nothing but the fund lent by Amnesty International to AIIPL to ensure its objectives in the territorial jurisdiction of India, which is not accordance with the provisions of Regulation 3 of Foreign Exchange Management (borrowing and lending in Foreign Exchange) Regulations, 2000. Accordingly, penalty to the tune of Rs. 51.72 Crore on AIIPL and Rs. 10 Crore on Aakar Patel have been imposed under the provisions of FEMA," the ED added.