The Enforcement Directorate has told the Supreme Court that US-based businessman Neville Roy Singham funded the news portal, NewsClick, through a network of foreign entities as part of a purported information warfare campaign aimed at undermining India's sovereignty and spreading Chinese propaganda.
The ED has alleged that transactions involving Rs 92.33 crore linked to NewsClick violated foreign exchange regulations. These included Rs 9.59 crore in foreign direct investment (FDI) and Rs 82.63 crore in software export receipts allegedly received against services that did not exist.
The central agency made these submissions to the Supreme Court last week while challenging the Delhi High Court's decision to cancel the money laundering case against the news portal and its founder, Prabir Purkayastha.
"His (Singham's) goal is to orchestrate 'information warfare' to subvert India’s sovereignty, while simultaneously indulging in physically, financially encouraging separatism across divergent, unconnected, independent ideological axis with the objective of weakening the Indian State," the agency said in its report.
The ED has argued that the High Court overlooked crucial evidence, including email exchanges and statements, and prematurely examined the merits of the case. It alleged that the funding was part of a pre-planned strategy involving foreign entities and individuals associated with Singham.
The Delhi High Court, in May, cancelled the Economic Offences Wing (EOW) FIR and the corresponding ED case, holding that the essential ingredients of cheating, criminal breach of trust and criminal conspiracy were not made out. The ED has challenged the order before the Supreme Court.
The allegations form part of multiple investigations under the Prevention of Money Laundering Act (PMLA), the Foreign Exchange Management Act (FEMA), the Foreign Contribution (Regulation) Act (FCRA) and the Unlawful Activities (Prevention) Act (UAPA).
'SINGHAM FUNDED NEWSCLICK TO PROMOTE CHINESE INTERESTS'
According to the ED, Neville Singham, an American national of Sri Lankan descent living in Shanghai, helped establish and fund PPK NewsClick Studio Pvt Ltd through Purkayastha. The agency has alleged that Singham has strong connections with the Chinese Communist Party (CCP) and funds ultra-leftist, anarchist and separatist organisations across countries through a network of entities.
The ED alleged that the funding was intended to orchestrate "information warfare" to undermine India's sovereignty and weaken the Indian state. It cited NewsClick's coverage of the Covid-19 pandemic, the farmers' agitation against the now-repealed farm laws and changes to maps of Kashmir as examples of content allegedly supported through the funding.
The agency has also cited email exchanges between Singham, Purkayastha, journalists and left-wing political figures as evidence of their alleged links. It said Singham contacted Purkayastha regarding the dubbing and subtitling of two Chinese films, Red Star Over China (2019) and The Secret of China (2019), which the ED said were produced by propaganda departments of the Communist Party's provincial committees in Sichuan and Shaanxi.
According to the agency, the communications indicated that Purkayastha and his associates were involved in events and studies intended to promote China's image.
RS 9.59 CRORE IN FDI, RS 82.63 CRORE IN EXPORT RECEIPTS
The ED alleged that NewsClick received Rs 9.59 crore in FDI from US-based Worldwide Media Holdings LLC in 2018. The company was allotted shares at a premium of Rs 11,510 per share. According to the agency, the investment violated Reserve Bank of India rules and was structured to circumvent the 26 per cent foreign investment cap applicable to digital news websites.
In a separate FEMA investigation, the agency identified Rs 82.63 crore in software export receipts linked to Singham's Justice & Education Fund, Tricontinental Limited and GSPAN LLC, all identified in its note as US-based entities. The ED alleged that the payments were received against exports of services that did not exist.
Together, the two components accounted for the Rs 92.33 crore in alleged foreign exchange violations cited by the agency.
The ED also flagged incorrect reporting of foreign investments and failure to file the required annual return on foreign assets and liabilities. The adjudicating authority imposed penalties of Rs 120 crore on PPK NewsClick Studio Pvt Ltd and Rs 64 crore on Purkayastha. Both have challenged the penalties before the Appellate Tribunal, where their appeals remain pending.
ED SAYS HIGH COURT OVERLOOKED EVIDENCE
In its Supreme Court challenge, the ED has argued that the High Court ignored emails and statements that allegedly demonstrated the pre-planned nature of the funding arrangement.
The agency also contended that the court effectively conducted a mini-trial at the writ petition stage by examining the merits of the allegations and relying heavily on material presented by NewsClick without adequately considering the submissions made by the ED and the police.
The ED pointed out that the investigation had been stalled since June 2021, when the High Court directed it not to take coercive action. It further argued that the judgment was delivered six months after the hearing concluded and failed to record important submissions made on its behalf.
The High Court, however, held that the essential ingredients of cheating, criminal breach of trust and criminal conspiracy were not present in the original case. The ED is challenging that conclusion.
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