Citing FEMA violation, ED imposes Rs 51 cr fine on Amnesty India, Rs 10 cr on Aakar Patel

The Enforcement Directorate said a showcause notice of penalty was issued as the funds received “violated” FEMA provisions The ED’s Adjudicating Authority has upheld this showcause notice.

“The Adjudicating Authority of Directorate of Enforcement (ED) has adjudicated a Show Cause Notice issued to M/s Amnesty India International Pvt. Ltd.(AIIPL) and its CEO Shri Aakar Patel for contravention of the provisions of The Foreign Exchange Management Act, 1999 (FEMA) and imposed penalty to the tune of Rs. 51.72 Crore and Rs 10 Crore respectively,” the ED statement said.

A showcause notice under FEMA is essentially a declaration of the completion of an investigation. Following this, the ED seeks a penalty against the accused. The matter goes to Adjudicating Authority which can then either uphold or reject the request.

The authority’s orders can be challenged in a High Court.

Amnesty India has ceased its operations. An email sent to Amnesty International did not elicit a response. Patel tweeted Friday: “The ED is the govt, not the judiciary. We will fight it (again) and win (again) in court.”

The development comes months after he was prevented from flying to the US over a CBI lookout circular (LoC). The LoC was opened after the agency filed a chargesheet against Patel and Amnesty in December over alleged violation of the FCRA.

The ED’s investigation, meanwhile, has centred on foreign exchange violations.

“ED had initiated investigation under FEMA on the basis of information that Amnesty International, UK had been remitting huge amount of foreign contribution through its Indian entities (non-FCRA companies) following FDI route, in order to evade Foreign Contribution Regulation Act (FCRA) to expand its NGO activities in India, despite denial of prior registration or permissions to Amnesty International India Foundation Trust (AIIFT) and other trusts under FCRA by Ministry of Home Affairs,” the statement said.

The showcause notice says that between November 2013 and June 2018, remittances received by AIIPL and claimed as receipts for business/management consultancy and public relations services for export of services to foreign beneficiary “is amount borrowed from an overseas remitter, thereby violating the FEMA provisions”.

“The Adjudicating Authority of ED has held that AIIPL is an umbrella entity under M/s. 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. All contentions and submission from AIIPL regarding the claim of the remittance towards the export of services to Amnesty International have been dismissed, in the absence of concrete evidence,” the ED statement said.

The Adjudicating Authority held that funds to the tune of Rs 51.72 crore have been lent by Amnesty International to AIIPL to ensure its objectives in 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 Shri Aakar Patel have been imposed under the provisions of FEMA,” it said.