Simplified Laws Guide to Taxation and Legal Concern “With funds drying up, Greenpeace India stares at shutdown; asks ‘who’s next on chopping block?’ was in the headlines of a leading English daily. Are you following up this case? If not, let me run you through the issue and FCRA regulations in brief.
About Greenpeace: Greenpeace is a global environmental group with a presence in 40 countries across Europe, America, Asia and the Pacific. Greenpeace India is a Non-Profit, Non-Governmental Organisation (NGO) operating in India. Greenpeace India is focused on four broad campaigns namely, stop climate change, sustainable agriculture, preserving the oceans and preventing another nuclear catastrophe. Over the years Greenpeace India has built a strong base of supporters spread across the country
From where do they get the funds (donations)
Greenpeace does not accept donations from governments or corporations but relies on contributions from individual supporters and foundation grants. So, the funding of this NGO comes from Indian donors (about 70%) and the rest from overseas Greenpeace foundations.
About Foreign Currency Regulation Act(FCRA)
The prime objective of the Act is to regulate the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest.
Organizations seeking foreign contributions for definite cultural, social, economic, educational or religious programmes may either obtain registration or prior permission to receive foreign contribution from Ministry of Home Affairs (MHA). In short, FCRA has laid down the rules and regulations for acceptance and utilization of foreign funds brought to Indian trusts, NGO and voluntary organizations.
Greenpeace India is FCRA registered organization. Now, the Central Government has suspended such registration for a period of 6 months and frozen the bank accounts citing various violations committed by them. Let’s understand the violations cited in the suspension order.
Rule 9 (1) (e) reads as “The person may open one or more accounts in one or more banks for the purpose of utilizing the foreign contribution after it has been received and, in all such cases, intimation on plain paper shall be furnished to MHA…”
Violation # 1 as per the Order – foreign contribution received in FCRA designated bank account is transferred to other bank accounts without informing the authority
Section 33 reads as “Any person, subject to this Act, who knowingly, — (a) gives false intimation under sub-section (c) of section 9 or section 18; or (b) …….. or registration by means of fraud, false representation or concealment of material fact, ………………….”
Violation # 2 as per the Order Greenpeace has under-reported and repeatedly mentioned incorrect amount of foreign contribution.
Section 8(1)(b) – reads as “Every person, who is registered and granted a certificate or given prior permission under this Act and receives any foreign contribution……..shall not defray as far as possible such sum, not exceeding fifty per cent of such contribution, received in a financial year, to meet administrative expenses: Provided that administrative expenses exceeding fifty per cent of such contribution may be defrayed with prior approval of the Central Government.”
Violation # 3: Greenpeace has incurred more than 50% of the Foreign Contribution on administrative expenditure, without obtaining the prior approval of the Central Government.
Section 8( 1) (a) reads as “………….shall utilise such contribution for the purposes for which the contribution has been received………..”
Violation # 4: Greenpeace has funded legal costs, not only for seeking bail, but also for filing writ petitions of an associated Indian NGO and activists of the association.
Section 7 reads as “No person who — (a) is registered and granted a certificate or has obtained prior permission under this Act; and (b) receives any foreign contribution, shall transfer such foreign contribution to any other person unless such other person is also registered and had been granted the certificate or obtained the prior permission under this Act”
Violation # 5: Greenpeace paid to Greenpeace Environment Trust, a separate Trust with a different PAN. FCRA prohibits transfer of Foreign Contribution from an FCRA registered NGO to a non-FCRA registered NGO without the prior approval of the Central Government.
Section 9(1)(a) reads “………false reporting….”
Violation # 6: Greenpeace willfully suppressed and not disclosed the payment of salary Euro 56951 pa by Greenpeace International to Greg Muttitt, a foreign Greenpeace activist who worked on secondment in India. So, the trust has not reported the details in the return filed with the government. Similarly, the trust has not reported or obtained prior permission with respect to shifting of office from Chennai to Karnataka and replacing 50% or more of the executive committee members.
Section 12(4)(f) (iii) and Section 13 – considering the above violations, the central government is satisfied that the acceptance of foreign contribution by Greenpeace has prejudicially affected the public interest and has prejudicially affected the economic interest of India. Thus, the NGO has violated the conditions of grant of Certificate of Registration. Therefore, in exercise of the power conferred u/s 13 of FCRA, central government suspended the registration.
Greenpeace has submitted a comprehensive rebuttal of the home ministry’s show-cause notice and demanded immediate unblocking of its domestic bank accounts. So, What next? Will wait and see.
Thought for the day
Everyone makes mistakes, but admit your own before you point out someone else’s.
