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Cong-BJP FCRA violation case set for interesting twist with sneaky carte-blanche-clause in Budget

Cong-BJP aligned
Cong-BJP aligned

Even as the two rival national political parties played April Fool of their actual political rivalries on 1 April by appealing together in the Supreme Court a common judgment passed against them by the Delhi high court, The Wire has exposed a little-known fact, which promises to excel the incredible phenomenon of these two rival parties coming together on a common platform to fight a common enemy.

The Wire’s story, written by one of its founding editors, Bharat Bhushan, says that the latest Finance Bill, moved by the Finance Minister, Arun Jaitley has an unnoticed clause, which retrospectively amends the FCRA, 2010, to redefine foreign companies as “Indian” companies, thus nullifying the illegality that the BJP and the Congress when they took money from Vedanta.

According to The Wire, the clever amendment to the FCRA in the Finance Bill says,

“In the Foreign Contribution(Regulation) Act 2010, in section 2, in sub section(1), in clause (j), in sub-clause(vi), the following proviso shall be inserted with effect from 26 September, 2010, namely:–

‘Provided that where the nominal value of share capital is within the limits specified for foreign investments under the Foreign Exchange Management Act, 1999, or the rules and regulations made thereunder, then, notwithstanding the nominal value of the share capital of a company being more than one half of such value at the time of making the contribution, such company shall not be deemed a foreign source’.”

The Wire’s story further reveals the following:

The FCRA bans political parties from receiving funds from any foreign source. In its original provision, the law defines “foreign source” to include any company with foreign investment of above 50%:

a company within the meaning of the Companies Act, 1956, and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following: (A) the government of a foreign country or territory; (B) the citizens of a foreign country or territory; (C) corporations incorporated in a foreign country or territory; (D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory; (E) foreign company;

Under the new definition, so long as the foreign company’s ownership of an Indian entity is within the foreign investment limits prescribed by the government for that sector, the company will be treated as “Indian” for the purposes of the FCRA

The new provision is retrospective, and is with effect from 2010, when the FCRA was introduced.

Apart from Vedanta, hundreds if not not thousands of foreign companies – from the UK and the United States but also China, the United Arab Emirates or elsewhere – will now be able to make contributions to Indian political parties – and towards “activities of a political nature” by NGOs, and others.

In other words, while legitimising the actions of the BJP (and Congress), the Modi government has opened the door wide for everyone else.

The Wire quotes Prashant Bhushan, counsel for Association for Democratic Reforms, one of the respondents in the pending appeal by the Congress and the BJP, as saying that the retrospective amendment to the FCRA is aimed at bailing out the two major political parties before the Supreme Court is even able to examine the matter. “This is a case of preempting the judiciary through a retrospective change in law.”

Legally India will report further developments in the case.

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