To be eligible for foreign money, an entity must be active for three years, and there must be no cases pending against any trustee. The PM CARES Fund fails on both counts. The Fund has also not, despite govt claims, disclosed donors and donations, as the law requires.
Delhi: A recent storm in Parliament over transparency in the PM CARES Fund made no mention of a recent Supreme Court decision in Centre for Public Interest Litigation vs Union of India on 18 August 2020.
In rejecting a plea for transfer of money from the PM CARES Fund (a popular acronym for the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund) to the National Disaster Relief Fund, the Supreme Court noted: first, that the PM CARES Fund is not a government fund; and, second, that there is no occasion for audit of the PM CARES Fund by the Comptroller and Auditor General of India (CAG).
These findings essentially buttress the Opposition’s contention that the PM CARES Fund has received special exemptions under, among others, the Foreign Contribution (Regulation) Act (FCRA), 2010, including exemptions on transparency provisions that apply to other non-government entities. The FCRA is a legislation familiar to most NGOs that seek foreign funding.
The PM CARES Fund has received an exemption from all provisions of the FCRA, as evidenced by its FAQs. The central government certainly has the power to exempt any entity from the provisions of the FCRA if it is of the “opinion that it is necessary or expedient in the interests of the general public so to do”.
Excused From Foreign-Funding Requirements
The government’s opinion will help the Fund avoid difficulties in registration and transparency had the FCRA applied in full, difficulties that ultimately beset thousands of NGOs, as the MHA enforced the FCRA against them.
A public charitable trust, which the PM CARES Fund is, needs a registration certificate from the government to receive foreign funds. The government inquires into compliance on seven grounds and other requirements listed in section 12(4) of the FCRA. These grounds cover everything from the character/criminal antecedents of the person or organisation to past activities in the “chosen field” to pending criminal cases to the person’s “potential impact on the sovereignty and integrity of India”.
The PM CARES Fund fails at least two requirements in this inquiry.
The first is the requirement for the organisation to have “undertaken reasonable activity in its chosen field for the benefit of society for which the foreign contribution is proposed to be utilised”. Associations must show expenditure for the last three years by this requirement (Form FC-3A, Foreign Contribution Regulation Rules, 2011, as amended in 2019).
Considering the PM CARES Fund was merely days old and could not possibly have shown any activity undertaken for public benefit on the day of its application, the government’s opinion that public interest was best served by excusing the Fund from working for public benefit violates its own eligibility for foreign contributions.
Second, the office bearers of any entity making an application should not have a conviction or a criminal case pending against them.
Of the four trustees of the Fund, Home Minister Amit Shah, by his own admission in his 2019 Lok Sabha election affidavit, acknowledged pending prosecutions also verified by the myneta.info website run by the Association for Democratic Reforms (an advocacy): for defamation, promoting enmity between different groups, causing mischief by fire or explosive substance with intent to destroy house etc, imputations, assertions prejudicial to national integration, criminal intimidation etc. Yet, the government cleared the Fund for foreign contributions.
The FCRA takes a dim view of entities receiving unauthorised foreign contributions, providing for imprisonment up to five years and fines and holding office bearers personally responsible. The office bearers in this case are the trustees of the Fund—apart from the home minister, the others are the Prime Minister, the ministers for defence and finance and three other trustees as nominated by the Prime Minister in his capacity as chairperson of the board of trustees—and likely the senior civil servants handling its administrative work.
By granting a possible section-50 exemption, in the central government’s opinion, the PM CARES Fund would better serve the public interest by not being subject to the law. Any prosecution under the FCRA would need government sanction in any case, and it would be speculative to assess whether one would be forthcoming.
The PM CARES Fund Fails Transparency Provisions
The FCRA Rules have strict transparency provisions the Fund appears to be exempt from.
At the end of a financial year, entities must publish, as the Fund did for 2019-2020, audited statements of account for money they receive from abroad. However, according to rule 13(2) of the Foreign Contribution Regulation Rules 2011 (as amended in 2015), they must also publish details every quarter of foreign money received “within 15 days following the last day of the quarter in which it was received, clearly indicating the details of donors, amount received and date of receipt”.
The first operating quarter for the PM CARES Fund finished on 31 March 2020, during which the Fund, by its own admission, received about Rs 39 lakh. The second quarter ended 30 June 30 and its 15 days following the last day of the quarter lapsed in the middle of July.
Since the PM CARES Fund, which is not a government fund as per the Supreme Court, has not published any of the details noted above for two successive quarters, there are two possible conclusions.
One, the Fund is in violation of the FCRA. Two, a trust involving the senior-most members of the government is exempt from disclosing details of foreign money and donors because the government believes public interest is better served by not disclosing what foreign entities are pouring money into a Fund meant to benefit the public.
Other than a statement on the PM CARES Fund website FAQs, there is no publicly available data on the existence and scope of exemptions, if any, given by the Central Government to this public charitable trust.
Additionally, the list of FCRA registered associations published by the home ministry does not show any entity registered with the Fund’s name in Delhi (where the registered office of the Fund is) or any other state in the country in 2020.
This has three implications: the home ministry has failed to update records six months after the fact or; the PM CARES Fund has violated the FCRA or; the Fund has got a blanket exemption from the government.
Despite its non-government status, the PM CARES Fund has evidently received broad exemptions under the FCRA. It is not apparent why the Home Ministry's munificence did not extend to thousands of other NGOs that were receiving foreign funds. Many had clearly existed longer and worked longer than the PM CARES Fund on the day the latter received its privileges.
The Home Ministry’s munificence did not, for instance, extend to the organisations prominently penalized here; or 1,142 associations in Andhra Pradesh whose registration was cancelled in March 2015 for failure to file mandatory returns under the FCRA; 8,975 associations in April 2015 for a similar offence; 5,922 associations in July 2017, 3,292 associations receiving a notice to file annual report in April 2018, 1,775 associations receiving a similar show-cause notice in November 2018, 156 associations with suspended registration in December 2018, the cancelled registrations of 1808 associations in October 2019 or the expired validity of FCRA registration of 11319 associations in November 2016.
Over the past five years, that totals more than 30,000 FCRA enforcement actions.
Questions That Need Answers
On 30 January 2020, the home ministry exempted from the provisions of the FCRA all government entities subject to audit by the CAG.
Since the Supreme Court has held that the PM CARES Fund is not a government fund and is not subject to audit by the CAG, answers to two questions will clear up some of the concerns the Fund has created:
1. What, if any, is the basis of the central government’s opinion that exempting this particular public charitable trust from registration and transparency provisions of the Foreign Contribution Regulation Act 2010 will better serve the public interest?
2. If this Fund is not exempt and has violated the FCRA, why has the government failed to enforce the Act against the PM CARES Fund despite the latter’s widely publicised activity?
Replying to the demands for greater transparency in the PM CARES Fund, Finance Minister Nirmala Sitharaman compared it to the Prime Minister’s National Relief Fund (PMNRF) and said that the former was registered and the Congress party never bothered to register the latter.
By all standards of public probity, she makes a valid point.
Both funds should be registered, and perhaps the prime minister, who chairs the PMNRF, or the finance minister, who is a trustee of the PMNRF, may also explain why neither moved for its registration over the past six years when one or the other was in a position to do so.
By the finance minister’s own admission: “Like charity, transparency should start from home.” The trustees of the PM CARES Fund own responsibility to “prepare and submit all filings, accounts and returns required under law”.
Like the PM, the public cares.
(Divyam Nandrajog is a Delhi-based lawyer.)