Lessons from the raids on Amnesty International
On 15th November 2019, India’s federal investigative agency – the Central Bureau of Investigation (CBI), conducted searches at the offices of ‘Amnesty International India Private Limited’ (a for-profit entity) and ‘Indians for Amnesty International Trust’ (a not-for-profit entity). Their offices were raided in October 2018 as well for alleged FCRA violations.
Reason for the raids
The raids were initiated by the CBI based on complaints received from the Ministry of Home Affairs for alleged violations of the provision of the Foreign Contribution Regulation Act (FCRA) 2010 and contraventions under the Indian Penal Code.
Amnesty International’s work in India, as also elsewhere across the globe, is to uphold universal human rights and build a global movement of people who take injustice personally. These are the same values that are enshrined in the Indian Constitution and flow from a long and rich Indian tradition of pluralism, tolerance, and dissent. However, it would seem the government of India is miffed with Amnesty International’s work on human rights, particularly in Kashmir.
Findings
According to CBI, Amnesty International (India) has received foreign contributions to the tune of INR 46 Crore (1 Crore = 10 million) from Amnesty International (U.K.) through the for-profit company named ‘Amnesty International India Private Limited’ (AIIPL).
The complaint made by the MHA claims that Amnesty International (India) used commercial methods in order to illegally circumvent the provisions of Foreign Contribution Regulation Act (FCRA) which they were obliged to observe. Under law, commercial receipts from any ‘foreign source’, including fees in lieu of goods or services, do not fall under the ambit of ‘foreign contribution’ as defined under FCRA 2010.
Reportedly, in order to evade FCRA, Amnesty (UK) remitted Rs 10 Crore to the for-profit entity in India classifying it as Foreign Direct Investment (FDI) under Foreign Exchange Management Act (FEMA) instead of FCRA.
Alleged FCRA violations
Purportedly, inspection of Books of Accounts of Amnesty International India Pvt. Ltd, Bangalore by MHA revealed that the for-profit company allegedly indulged in activities “that were not commensurate to the activities of a for-profit company, but, constituted activities that are either prohibited or regulated under FCRA.”
Under FCRA 2010, any ‘person’ (‘person’ under FCRA includes an individual or an association) having a definite cultural, economic, educational, religious or social programme can receive foreign contribution only after it obtains the prior permission of the Central Government, or gets itself registered with the Central Government under FCRA 2010.
In other words, MHA is of the view that Amnesty International India Pvt. Ltd., as an association has received funds from a ‘foreign source’ “for a definite cultural, economic, educational, religious or social programme” without prior permission or registration under FCRA 2010.
Amnesty International claims it is harassment
Following the raids, Amnesty International has released a statement which says: “Over the past year, a pattern of harassment has emerged every time Amnesty International India stands up and speaks out against human rights violations in India. Amnesty International India stands in full compliance with Indian and international law.“
Our analysis & advisory
Explanation 3 to Section 2(1) of FCRA 2010 states: “Any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.”
In other words, under law (FCRA 2010) commercial or business receipts, particularly fees in lieu of goods or services are not considered as “foreign contribution”.
Also, a Private Limited Company should be regulated under FEMA and not FCRA.
However, if your “association” whether registered as a for-profit private company or a non-profit (trust, society or section 8 company) is into advocacy related activities (in the eyes of the government, there is only a fine line that divides advocacy activity and political activity) and happens to be in the bad books of the government of India or against prevailing government policy; even fees or FDI received by a private company may be viewed as “foreign contribution for a definite cultural, economic, educational, religious or social programme” and if such an entity (whether registered or not and regardless the form being for-profit or non-profit) is not registered or has prior permission under FCRA, it would be deemed violation of the law.
Noshir H. Dadrawala