NGOs seek clarity as centre brings them under ambit of Lokpal Act3 min read . Updated: 14 Jul 2016, 11:56 PM IST
While the motivation behind the notification is increased transparency, some non-profits are seeing it as another manifestation of centre's battle with NGOs
Over 200 non-profits met in Delhi on Thursday to understand the implications of a government notification issued on 24 June that equates senior executives at such organizations with government employees and requires them to disclose details of assets held by themselves and their families.
While the motivation behind the notification is increased transparency—in a sector that is renowned for its opaqueness— at least some non-profits are seeing it as another manifestation of the government of the day’s battle with non-governmental organizations.
The Lokpal and Lokayuktas Act, 2013, commonly referred to as the Lokpal Act, which was born from the 2010 anti-corruption movement led by Anna Hazare, came into force in January 2014 but the notification for its implementation was issued in the last week of June.
Among other directives, the notification states that senior functionaries of organizations receiving more than ₹ 10 lakh as foreign contribution or more than ₹ 1 crore from the government will be treated the same way as government employees (or ministers). This requires them to declare details of their family members, positions (if any) held by them in non-profits, and assets.
The notification was followed by an internal office memorandum of the government, requiring all non-profits that met these conditions to disclose the information by 31 July.
Most non-profits are confused. “The institution to implement and monitor the Lokpal Act is yet to be put in place… so it is not quite clear to whom we are required to go and declare the information," said Amita Joseph, member of the governing body of not-for-profit Business and Community Foundation. She added that while her organization is happy to share the information, “the question is the lack of clarity in the Act as it stands today. And the possibility of the misuse of this information, given the prevailing anti-non-profit sentiment, is huge."
Joseph’s reference is to the fight between the government and activist organizations such as Lawyers Collective, Citizens for Peace and Justice and Greenpeace India. The government says these organizations have violated the Foreign Contribution (Regulation) Act, 2010. The non-profits say they are being targeted on account of their activism which isn’t always aligned with the state’s interests. Some non-profits have had their bank accounts frozen.
That opinion is seconded by Rajesh Tandon, founder president of PRIA (Participatory Research in Asia), which works in the area of local administration and rural development. “Voluntary development organizations have strong systems of transparency and accountability today. These include reporting to the home ministry on foreign grants, public disclosure of audited annual accounts and annual filing of income tax returns to justify non-profit status. The Reserve Bank of India’s regulations have resulted in annual ‘know your customer’ filings by all board members who are signatories to financial instruments." But the new law appears to have intentions that go beyond transparency, he added.
Legal experts say the lack of clarity in the law will make it hard to implement at short notice. According to Alok Prasanna Kumar, who leads the judicial reform vertical at Vidhi Centre for Legal Policy, a think-tank, there are a number of legal challenges with the Act being extended to non-profits and the manner in which it has been extended.
“The Lokpal Act says that asset disclosures should be made to the ‘competent authority’. For the purposes of those who are officers of NGOs (non-governmental organizations), the ‘competent authority’ is defined under the Board/Management of the NGO. But the office memorandum mandating the disclosure of assets to the MHA (ministry of home affairs) is contrary to the Lok Pal Act itself and therefore illegal," he said.
He also added that extending the law to non-profits that do not receive any government money is unconstitutional.
There are also practical issues.
“The provisions of the Lokpal Act mandating disclosure of information about assets is so vague and unclear that compliance is difficult, yet criminal penalties follow for non-compliance," said Sanjay Patra, a chartered accountant and executive director of Financial Management Service Foundation, who works with several non-profits.