E-Paper
ED imposes penalty of ₹184 crore on NewsClick and founder Prabir Purkayastha under FEMA
Of the ₹184 crore, ₹120 crore penalty is on the NewsClick while Purkayastha has been penalised for ₹64 crore.
The Enforcement Directorate (ED) has imposed a penalty of ₹184 crore on the newsportal NewsClick and its founder Prabir Purkayastha for allegedly violating the foreign exchange management act (FEMA), the agency said in a statement on Monday.
Of the ₹184 crore, ₹120 crore penalty is on the NewsClick while Purkayastha has been penalised for ₹64 crore.
NewsClick and its founder are under investigation by multiple agencies including the ED, the Central Bureau of Investigation (CBI), the Delhi Police and Income Tax department for violations ranging from anti-national activities to money laundering and violation of the foreign contribution regulation act (FCRA).
Delhi Police had arrested Purkayastha in October 2023. He is currently out on bail.
As part of its probe against NewsClick, ED had issued summons to Neville Roy Singham, an American millionaire currently based in Shanghai but it never heard back from him, according to officials who didn’t want to be named.
A 2023 report in The New York Times alleged that the portal was part of a global network that received money for pushing Chinese propaganda. The American newspaper said that Singham funded NewsClick, among other outlets across the globe, to sprinkle its coverage with Chinese government talking points.
ED said in a statement on Monday that the adjudicating authority under FEMA “has passed an order in an adjudication proceeding in the case of M/s PPK Newsclick Studio Pvt Ltd relating to violations of foreign exchange law involving foreign direct investment and foreign inward remittances.”.
The agency said that “after detailed examination of records, evidence, and submissions of the noticees, the adjudicating authority held: “Foreign direct investment (FDI) amounting to approximately ₹9.59 crore was received during FY 2018-19 by misrepresenting the nature of business activity in statutory filings, thereby bypassing prescribed sectoral conditions and entry route requirements under FEMA”.
Similarly, the statement said, “foreign inward remittances aggregating to ₹82.63 crore, purportedly received between FY 2018-19 to 2023-24 towards export of services, were found to be in contravention of FEMA provisions due to misclassification of exports and failure to comply with mandatory reporting requirements, including submission of SOFTEX forms”.
“The transactions were deliberately structured in a manner that defeated the objectives of the foreign exchange regulatory framework. Prabir Purkayashta, the Director of the company was found to be in charge of and responsible for the conduct of business at the relevant time and was therefore held liable under section 42 of FEMA,” the statement said.
The agency said “the contraventions were substantial, deliberate, and systemic in nature, involving large-scale foreign exchange transactions and breach of statutory declarations furnished to regulatory authorities”.
Therefore, in exercise of powers under section 13(1) of FEMA, penalties of ₹120 crore on PPK Newsclick Studio Pvt. Ltd and ₹64 crore on Prabir Purkayastha, have been imposed, it added.
HT has reached out to NewsClick and Purkayastha’s legal team for a comment.
FEMA 1999 is a civil law which was enacted to consolidate and amend the laws relating to facilitate external trade and payments and to promote the orderly development and maintenance of foreign exchange market in India.
The Reserve Bank of India (RBI) is the sole regulator of foreign exchange in India while ED is entrusted with the implementation of the law. The central agency initiates investigations and issues Show Cause Notices (SCN) in cases where the allegations of contravention of provisions under FEMA are noticed. These SCNs, upon adjudication, result in imposition of penalty as well as confiscation of currency/property involved.
While registering a case under anti-terror laws, the Delhi Police said in 2023 that NewsClick founder Prabir Purkayastha was part of a conspiracy to disrupt India’s sovereignty and territorial integrity, cause disaffection and threaten the country’s unity and integrity.
NewsClick had refuted the charges against it saying it never published any news or information at the behest of any Chinese entity or authority. It denied taking any directions from Singham.
“All funding received by NewsClick has been through the appropriate banking channels and has been reported to the relevant authorities as required by law, as substantiated by the Reserve Bank of India in proceedings before the high court of Delhi,” the portal said in a statement in 2023.
