New Delhi: The Enforcement Directorate probe into money laundering case against media portal Newsclick has revealed said that the company allegedly laundered funds up to Rs 9.59 crore in FDI "at artificially enhanced prices" which is in violation of the foreign direct investment norms for the digital news media outlets.
Neville Roy Singham, a businessman of Sri Lankan-Cuban descent and based in China, is alleged to be the key person behind pumping funds into PPK Newsclick Studio Pvt Ltd, the investigation has found. Singham is said to be associated with the propaganda wing of the Communist Party of China (CPC), a charge denied by Newsclick Editor Prabir Purkayasatha who claimed the former was an American citizen operating in software business.
The ongoing ED action is based on a Delhi Police FIR registered a few months ago for allegedly receiving around Rs 30 crore funding from abroad.
It is alleged that PPK Newsclick Studio Pvt Ltd received Foreign Direct Investment (FDI) to the tune of ₹9.59 crores from M/s Worldwide Media Holdings LLC USA during the financial year 2018-19, reported news agency ANI.
Its ED sources claimed that Singham owned company Worldwide Media Holidays LLC (WWM), registered in Delaware, USA funded PPK Newsclick and Chinese connection of CPC China infused funds in PPK via WWM.
26% FDI In Digital News Media
In September 2019, the central government had announced 26 per cent foreign direct investment (FDI) cap under the government approval route in digital news. Those holding more equity were required to lower it down. The Commerce Ministry had decided to liberalise the FDI regime for entities engaged in the News Digital Media Sector and these entities have been permitted FDI upto 26 per cent through the government approval route.
According to the norms, the entity will have to obtain a security clearance of all foreign personnel likely to be deployed for more than 60 days in a year by way of appointment, contract or consultancy or in any other capacity for the functioning of the entity prior to their deployment. If the government decides to deny or withdraw security clearance, the investee entity will ensure that the concerned person resigns or his/her services are terminated forthwith following receipt of such directives from the government.
Allegations Of Overvaluing The Shares
In the FIR, it was alleged that the investment was made by significantly overvaluing the shares of the petitioner company to circumvent the alleged cap of 26 per cent of FDI in a digital news website.
The loss-making company incorporated in 2018 issued shares of having facevalue of ₹10/share an enhanced premium of ₹11, 510/share.
It was further alleged that over 45 per cent of this investment was diverted/siphoned off for the payment of salary/consultancy, rent and other expenses, and to have been used for ulterior motives.
It was alleged that the violation has caused a loss to the government exchequer.
Newsclick Allegedly Funded Elgar Parishad Accused & CPI(M)
ED probe has found that Newsclick funded Rs 20.53 lakh each to the accused of Elgar Parishad case Gautam Navlakha, Bappaditya Sinha, IT Cell member of Communist Party of India (Marxist). The documents of the funding were seized by the agency from the residence of Prabir Purkayasatha, Editor-in-Chief and Director of PPK Newsclick in February this year.
ED sources of ANI said that the probe showed that Purkayasatha and Navlakha have allegedly incorporated a company together with an American defence supplier company. They said e-mails were "exchanged between Purkayasatha and Singham on various issues of interest of China". The emails revealed that Purkayasatha and associates were "working on activities which boost China's image".
Speaking to daily TOI, Purkayastha refuted the allegations of Sigham working for the CPC and his outlet’s links with the Chinese regime. He said Singham is a US citizen who launched and ran a software company in the US before selling it for around $700-800 million. “All our funds are from legitimate sources and well-known foundations in the US as per RBI guidelines,” Purkayastha said.