The adjudicating authority of the Enforcement Directorate (ED) has issued show cause notice to Amnesty India International Pvt Ltd (AIIPL) and its CEO Aakar Patel for contravention of the provisions of Foreign Exchange Management Act, 1999 (FEMA) and imposed penalties to the tune of Rs 51.72 crore and Rs 10 crore on the two, respectively.
What's the case?
The ED had initiated investigation under FEMA on the basis of information that Amnesty International, UK, had been remitting huge amount of foreign contributions through its Indian entities (non-FCRA companies) following the FDI route, in order to evade the Foreign Contribution Regulation Act (FCRA) to expand its NGO activities in India, despite the denial of prior registration or permission to the Amnesty International India Foundation Trust (AIIFT) and other trusts under FCRA by the Ministry of Home Affairs. The show cause notice issued by the ED has charged that 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, was nothing but the amount borrowed from overseas remitter, thereby violating the FEMA provisions.
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After getting detailed reply from AIIPL and following the principal of natural justice, the adjudicating authority of ED has 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 been found involved in many activities which are not relevant to their declared commercial business, and a circumventing model has been applied by them to route the foreign funds in the guise of business activities to escape FCRA scrutiny.
Consequently, it is held that the funds that have arrived at 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 in 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 Patel has been imposed under the provisions of FEMA," said an ED official.
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