New Delhi: A Money Laundering case against Newsclick revealed that the company allegedly laundered funds up to 9.59 crore in foreign direct investment ‘at artificially enhanced prices’, in violation of the foreign direct investment norms for digital news outlets.
The investigation has found that Neville Roy Singham, a businessman of Sri Lankan and Cuban descent based in China, was the primary person responsible for pumping funds into PPK Newsclick Studio Pvt Ltd. It is alleged that Singham is associated with the propaganda wing of the Communist Party of China (CPC), a claim denied by Newsclick Editor Prabir Purkayasatha who claimed the former was an American citizen involved in the software business.
Based on a Delhi Police FIR registered a few months ago, the ED is investigating alleged foreign funding of around Rs 30 crore.
The media reported that PPK Newsclick Studio Pvt Ltd received Foreign Direct Investment (FDI) worth Rs 9.59 crores from Worldwide Media Holdings LLC USA during the financial year 2018-19.
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According to ED sources, Singham’s company Worldwide Media Holidays LLC (WWM) registered in Delaware, USA funded PPK Newsclick and its Chinese connection, CPC China, infused funds into PPK via WWM.
In September 2019, the central government set a cap of 26 percent on foreign direct investment (FDI) for digital news. Those with more equity were required to lower it. The Commerce Ministry has liberalized foreign direct investment (FDI) rules for entities engaged in news, digital media, and these are allowed to invest up to 26 percent of their capital through government approval.
In accordance with 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, before they are deployed. After receiving such instructions from the government, the investee entity will ensure that the concerned person is promptly terminated from the organization if the government decides to deny or withdraw security clearance.
According to the FIR, the investment was made by significantly overvaluing the shares of the petitioner company in order to circumvent the FDI cap of 26 percent in a digital news website.
In 2018, the loss-making company issued shares of face value Rs 10/share with an enhanced premium of Rs 11,510/share.
Additionally, it was claimed that over 45 percent of the investment was diverted/siphoned off for the payment of salary/consultancy, rent, and other expenses, and used for ulterior purposes. The government claimed that this violation has resulted in a loss to its exchequer.
An ED investigation found that Newsclick funded each of the defendants in the Elgar Parishad case with Rs 20.53 lakh: Gautam Navlakha, Bappaditya Sinha, members of the Communist Party of India (Maoist). In February of this year, the agency seized funding documents from Prabir Purkayasatha, Editor-in-Chief and Director of PPK Newsclick.
In the probe, ED sources, quoting the media, claim that Purkayasatha and Navlakha allegedly established a company together with a multinational defence firm. They found that e-mails had been ‘exchanged between Purkayasatha and Singham discussing various issues of interest to China’. Purkayasatha and associates were ‘working on activities that boost China’s image’, according to the email.
As reported by daily TOI, Purkayastha refuted claims that Sigham was working for the CPC and that his outlet was connected to China’s regime. Singham is a US citizen who built a software company in the US before selling it for about $700-800 million. ‘All of our funding comes from reputable foundations in the US, in accordance with RBI guidelines,’ Purkayastha said.
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