The Enforcement Directorate says the digital news portal violated foreign exchange rules through alleged FDI misrepresentation and improper remittance reporting; NewsClick and its founder remain under multi-agency probe.
NEW DELHI (India CSR): The Enforcement Directorate (ED) has imposed a total penalty of Rs 184 crore on digital news portal NewsClick and its founder Prabir Purkayastha under the Foreign Exchange Management Act (FEMA), intensifying a long-running investigation into the organisation’s foreign funding and financial reporting practices.
According to the ED, the adjudicating authority under FEMA passed the penalty order after examining records, evidence, and submissions from the company and its director. The agency alleged that NewsClick’s parent company, PPK Newsclick Studio Pvt. Ltd, received foreign direct investment (FDI) and foreign inward remittances in a manner that violated sectoral norms and mandatory reporting rules.
The ED said Rs 120 crore has been imposed on the company, while Rs 64 crore has been imposed on Purkayastha personally, holding him liable for the conduct of business at the relevant time.
ED’s FEMA Order: What the Agency Claims
In its statement, the ED said the FEMA adjudicating authority concluded that NewsClick received FDI worth approximately Rs 9.59 crore during the financial year 2018–19 by allegedly misrepresenting the nature of its business in statutory filings.
The agency claimed that this misrepresentation enabled the company to bypass prescribed sectoral conditions and entry route requirements under FEMA. In simple terms, the ED’s allegation suggests that the company did not accurately declare its business activity while receiving foreign investment, thereby avoiding regulatory restrictions that may have applied.
The order, as described by the ED, was issued after an adjudication process — a civil legal procedure under FEMA — rather than a criminal trial.
Foreign Remittances Under Scanner: Rs 82.63 Crore in Question
A major part of the penalty stems from foreign inward remittances, which the ED said were received as payments for export of services.
The agency alleged that foreign inward remittances totalling Rs 82.63 crore, received between FY 2018–19 and FY 2023–24, were in contravention of FEMA provisions due to:
- alleged misclassification of exports
- failure to comply with reporting requirements
- non-submission of mandatory SOFTEX forms
SOFTEX forms are required for reporting software and IT-enabled service exports and are a key compliance tool for foreign exchange monitoring in India. Non-compliance can attract FEMA action, including penalties and confiscation proceedings.
The ED claimed the transactions were structured in a way that defeated the objectives of the foreign exchange regulatory framework.
Why Prabir Purkayastha Was Penalised Personally
While FEMA penalties are often imposed on companies, the ED said Prabir Purkayastha was held responsible under Section 42 of FEMA, which deals with offences by companies and assigns liability to those in charge of the business during the period of alleged violations.
The agency said Purkayastha, as the director, was responsible for the conduct of business and therefore liable for the contraventions.
The ED described the alleged violations as “substantial, deliberate, and systemic,” involving large-scale foreign exchange transactions and breach of statutory declarations.
NewsClick Faces Multi-Agency Investigation Beyond FEMA
The FEMA penalty comes amid an ongoing, wider investigation involving multiple agencies.
NewsClick and Purkayastha are currently under scrutiny by:
- the Enforcement Directorate (ED)
- the Central Bureau of Investigation (CBI)
- Delhi Police
- the Income Tax Department
The probes span a range of allegations, including possible money laundering, foreign contribution violations, and claims of anti-national activities. NewsClick has repeatedly denied wrongdoing and has said it followed proper banking channels and complied with reporting rules.
Delhi Police arrested Purkayastha in October 2023 in a case registered under stringent anti-terror provisions. He is currently out on bail.
ED Summons to Neville Roy Singham: No Response, Officials Say
The case has also drawn attention due to the mention of Neville Roy Singham, an American billionaire reportedly based in Shanghai.
According to officials cited in reports, the ED issued a summons to Singham during the probe, but did not receive a response. The agency has not publicly clarified whether further steps are being pursued to secure his statement.
Singham’s name has surfaced in the broader NewsClick investigation due to alleged foreign funding links, although NewsClick has previously denied taking instructions or publishing content at the behest of any Chinese entity or authority.
What FEMA Is and How ED Uses It
FEMA, enacted in 1999, is a civil law that governs foreign exchange transactions, overseas remittances, foreign investment, and cross-border payments. Unlike laws such as the Prevention of Money Laundering Act (PMLA), FEMA violations are typically treated as civil contraventions.
Under FEMA:
- the Reserve Bank of India (RBI) is the key regulator
- the ED enforces compliance and investigates suspected contraventions
- cases often begin with a show-cause notice
- penalties may follow after adjudication
The ED can also seek confiscation of currency or property involved in violations, depending on the nature and findings of the case.
What Happens Next: Legal Options and Industry Impact
Although the ED has imposed the penalty, NewsClick and Purkayastha have legal options available, including challenging the adjudication order before the appropriate appellate forum under FEMA.
Legal experts note that FEMA cases often proceed through prolonged appeal processes, and penalties may be stayed depending on the court’s view of compliance history, procedural fairness, and evidence presented.
The case is also being closely watched by media industry observers, as it sits at the intersection of:
- foreign funding regulation
- financial compliance
- national security claims
- press freedom debates
While enforcement agencies argue that financial laws apply uniformly to all entities, media organisations and press bodies have often raised concerns that legal actions against news platforms can have a chilling effect on independent journalism.
NewsClick’s Past Stand and Denial of Allegations
NewsClick has earlier refuted allegations against it and said it did not receive or publish information at the direction of any foreign entity.
In a previous statement, the portal said all funding was routed through legitimate banking channels and was reported to authorities as required. It also cited RBI-related proceedings before the Delhi High Court to support its claim of compliance.
As of the latest development, NewsClick and Purkayastha’s legal team have not publicly issued a fresh statement responding specifically to the Rs 184 crore FEMA penalty order.
(India CSR)
