At the heart of the multi-agency probe against news portal Newsclick is the infusion of foreign funds worth Rs. 38.05 crore within three years, by a carefully constructed web of foreign entities to disguise the funding as Foreign Direct Investment and hide huge losses. According to documents with Delhi Police, the digital news portal not only violated laws for illegal gains but was also found pushing online content under the garb of news to suit certain foreign agendas.
The probe against Newsclick first began with the registration of an FIR in August 2020 under Sections 406 (criminal breach of trust), 420 (cheating) 120-B (criminal conspiracy) of the Indian Penal Code by the Economic Offences Wing of the Delhi Police. The police claimed that it had unearthed a conspiracy by arrested accused Newsclick editor-in-chief Prabir Purkayastha and others to receive funds for undertaking activities on the directions of foreign-based benefactors.
As per court documents, the police investigation revealed that in order to run the news website, Purkayastha followed a “well thought device” to fund the operations by disguising the funds received as Foreign Direct Investment. As part of the conspiracy, the police alleged, the accused converted their “entity into a private limited company and got their valuation inflated through manipulation of the valuation criteria and process, so as to use the inflated valuation to get foreign investment, and this was done purportedly in lieu of dilution of their shareholding in favour of the foreign investors”.
The police said Purkayastha’s company was incurring huge losses varying from Rs. 37.80 lakh in the financial year 2017-18 to Rs. 6.61 crore in the financial year 2018-19. But it received Rs 9.59 crore as FDI during the financial year 2018-19 in lieu of allotment of 8,333 equity shares of Rs.10 each at a premium of Rs. 11,510 per share.
The Worldwide Media Holding LLC of the United States became a shareholder of 7.69 per cent shares whereas Prabir Purkayastha held 91.38 per cent of the shares, said police officials. Police records show that Worldwide Media is owned by the US-based Neville Roy Singhan who, according to a New York Times, report is a front of the Chinese Communist Party.
The police alleged that Purkayastha’s company earned a total revenue of only around Rs. 27 lakh in the financial year ending March 31, 2018 but the valuation process was manipulated to show it as Rs.124.7 crore.
After the registration of the FIR by the Delhi Police, the Enforcement Directorate (ED) jumped into fray and registered a money laundering probe in the matter in September 2020. The agency conducted searches on the Newsclick premises in February 2021. After the searches, the ED alleged that scrutiny of evidence revealed an infusion of foreign inward remittance of Rs. 9.59 crore by way of FDI and Rs. 28.46 crore by way of export of services.
It was then that the ED delved into the details of the Purkayastha company - PPK Newsclick Studio Pvt. Ltd. The ED found that the company was incorporated on January 11, 2018 with a registered office in Saidulajab in New Delhi. As on March 31, 2019, Purkayastha had 99,000 shares with face value of Rs 10, as per the ED. Other shareholders included Amit Sengupta (500) (he has since passed away), D. Raghunandan (100), Bappaditya Sinha (100), Gautam Navlakha (100), Githa Hariharan (100), Amit Chakraborty (100) and Worldwide Media (8,333).
The unexplained FDI of Rs. 9.59 crore continues to remain a matter of scrutiny as documents revealed that the amount was received in April 2018 by way of subscription of shares of PPK Newsclick Studio Pvt. Ltd. (a loss making company) at a premium of Rs. 11,510/- per share (face value of share was Rs. 10/- per share) from a non-existent company (registration cancelled) namely US-based Worldwide Media Holdings.
During interrogation, Purkayastha is learnt to have told sleuths that he did not know anything about Worldwide Media Holdings. But the well-planned scheme allegedly devised by him and his close associates like Singham to infuse opaque foreign fund in PPK Newsclick Studio Pvt. Ltd remains the focus of investigations.
