The Enforcement Directorate (ED) is intensifying its investigation into the funding connections between the US Agency for International Development (USAID) and hedge fund manager George Soros, focusing on three Bengaluru-based companies. These firms have come under scrutiny due to allegations of violating the Foreign Exchange Management Act (FEMA) amid significant foreign financial transactions.
According to reports, the ED is examining how these companies received substantial funding from Soros’s Economic Development Fund (SEDF), which has been under the radar since the Trump administration criticized USAID for allegedly promoting a "left, liberal, and woke" agenda internationally. The ED's inquiry centers on a transaction involving Rs 25 crore from SEDF, which is believed to have been funneled into these companies between 2021 and 2024.
One of the companies, ASAR Social Impact Advisors, is particularly noteworthy as it also received Rs 8 crore from USAID as a foreign inward remittance during the 2022-23 period. Sources indicate that ASAR claims this funding was a reimbursement for services rendered to a Delhi-based public policy think tank, the Council on Energy, Environment and Water (CEEW). This organization, according to its website, aims to understand global challenges and their implications for India's development.
CEEW's board of trustees includes Montek Singh Ahluwalia, the former Deputy Chairman of the Planning Commission. However, ASAR officials have yet to clarify the specific services they provided to CEEW or how USAID became involved in these transactions. In a statement, CEEW emphasized that they have no link to George Soros or the Open Society Foundations, stating, "ASAR Social Impact Advisors was contracted by CEEW to provide specific services for a USAID project related to cleaner air. This project has already ended. CEEW has no current relationship to ASAR at this stage. We have no reason nor have any basis on which to comment on any ongoing investigation concerning a third party."
In addition to ASAR, two other Bengaluru-based companies—Rootbridge Services Pvt Ltd and Rootbridge Academy Ltd—are also implicated in this investigation for having received funding from SEDF. The ED is actively probing the motives and purposes behind these payments made by USAID, as well as whether the Open Society Foundations complied with mandatory requirements set by the Indian government.
In 2016, the Union Home Ministry categorized the Open Society Foundations under the "prior reference category" due to concerns over "undesirable activities," which means they require prior approval to contribute funds to any Indian non-profit organization. The ED's investigation will delve into whether this protocol was followed in the funding provided to ASAR and the other Bengaluru-based entities.
As the investigation unfolds, the ED is also scrutinizing Soros's financial support for various Indian civil rights organizations and think tanks, which are suspected of being funded under the guise of foreign direct investments. The agency's findings have raised alarms about potential violations of the Foreign Contribution (Regulation) Act and Foreign Direct Investment norms.
The ED has uncovered that SEDF provided funds to Rootbridge Services Pvt Ltd and Rootbridge Academy Ltd under the pretense of foreign direct investment or consultancy fees. Reports indicate that RSPL received Rs 18.64 crore through Compulsorily Convertible Preference Shares (CCPS), which were valued at inflated rates based on the Discounted Cash Flow method. This arrangement is suspected to be a strategy to bypass FCRA restrictions, as SEDF is barred from directly donating to NGOs in India without the Home Ministry's approval.
Rootbridge Academy Ltd, incorporated in 2019 to offer fundraising services for non-profits, reportedly received Rs 2.70 crore as "commission agent services" from SEDF, but the ED found that it had not provided any actual services in return, suggesting it acted merely as a conduit to circumvent FCRA regulations. Similarly, ASAR, established in 2016 to engage in public outreach and capacity building for NGOs, received Rs 2.91 crore from SEDF as service fees, which the ED flagged as another attempt to funnel disguised donations to Indian NGOs.
The investigation has also traced OSI-linked investments to Aspada Investment Company (AIC), a Mauritius-based entity that allegedly funneled funds into India. The ED's probe revealed that Aspada Investment Advisors Pvt Ltd (AIAPL), which was incorporated in Bengaluru in 2013, managed SEDF’s investments in India, which reportedly exceeded Rs 300 crore across 12 companies. However, the ED noted that Lightrock Investment Advisors Private Limited, the official investment advisory firm overseeing SEDF’s Indian portfolio, was not informed about these transactions, raising further suspicions.
George Soros remains a controversial figure globally, often accused of using his wealth and philanthropy to influence political landscapes and regime changes through his Open Society Foundations. In India, Soros's name has been linked to various political and financial controversies, particularly regarding the Adani Group. In 2023, allegations surfaced that the Adani Group utilized opaque Mauritius-based funds for investments in its own companies, with Soros's foundations being implicated as donors to organizations that made these claims.
As the ED continues its investigation, the implications of these findings could have significant repercussions for the companies involved and for foreign funding practices in India. The scrutiny of Soros's financial activities and the ED's findings could reshape the landscape of foreign investments in Indian civil society.
