After being pulled up by the Delhi High Court for not initiating any action against the Congress and the Bharatiya Janata Party, which received foreign funds from two subsidiaries of Vedanta, a U.K.-based company, the Home Ministry will seek the Attorney-General’s opinion to amend the repealed Foreign Contribution Regulation Act (FCRA) 1976, which barred foreign donations to political parties.
The Representation of the People Act and the FCRA bar political parties from receiving foreign funds.
Definition changed
Last year, the NDA government had amended the FCRA through the Finance Bill route, which allowed foreign origin companies to fund NGOs here and also cleared the way for donations to political parties by changing the definition of “foreign companies.”
The glitch was that although the amendment was done retrospectively it only made valid the foreign donations received after 2010, the year when the 1976 Act was amended.
Contempt petition
The retrospective amendment did not apply to donations prior to 2010 and the Association for Democratic Reforms, a political watchdog, moved a contempt petition against the Home Ministry in March pointing out that the directives of the High Court against the two political parties which received foreign funds were not followed.
Both the Congress and the BJP have been charged with illegally receiving foreign funds for political activities from Vedanta from 2004 to 2012. The ADR filed a PIL plea against the two parties for violating the FCRA. The Delhi High Court had held that the donations were illegal in 2014, but the two parties challenged the order in the Supreme Court but later withdrew the petition. In March this year, the ADR moved the contempt petition. The offence attracts an imprisonment of five years and fine or both to persons who assisted the political parties to receive the funds.
A senior Home Ministry official said that after the Foreign Direct Investment (FDI) norms were progressively relaxed, there have been anomalies regarding the definition of “foreign companies” under the FCRA which were never corrected. The original FCRA provision, which declared that any company with over 50 per cent FDI was a foreign entity, was inconsistent with the view of the Finance and Commerce ministries, which treated companies based in India and having Indian directors and employees as Indian subsidiaries.
“There are anomalies in the FCRA law and corrective measures need to be taken. We would write to the AG seeking an opinion on a way out since the original 1976 FCRA Act is already repealed,” said a senior Home Ministry official.
Jagdeep Chhokar of the ADR said, “How can you make changes to a dead legislation? It is to only justify an earlier wrong. It’s like saying that we will amend the abolished Sati Act.”
In another development, the Home Ministry asked as many as 5,845 NGOs and organisations to open their accounts in banks having core banking facilities and furnish details for real time access to security agencies.
In a communication, 3,768 NGOs have been told that their bank accounts are not available as per core banking format while 2,077 NGOs have been asked to furnish bank account details as no such data is available with the Ministry.
The move came after it was detected that many NGOs have their bank accounts in cooperative banks or State government-owned apex banks or banks which do not have core banking facilities, an official said.
