Home Ministry Put Soros-Backed Open Society In Prior Reference Category Over Undesirable Activities: ED Sources | Exclusive

Last Updated:March 18, 2025, 19:37 IST

Since then, they added, Open Society Institute (previously Open Society Foundation) needs prior sanction from the ministry for sending money to FCRA-registered organisations in India. Soros Economic Development Fund (SEDF) is the social impact investment arm of the OSI

The ED conducted searches on Tuesday in Bengaluru as part of a foreign exchange violation probe against alleged beneficiaries of the OSI. (File images)

The Enforcement Directorate during its investigation has found that the Open Society Institute, USA (OSI, previously Open Society Foundation-OSF) was placed under the Prior Reference Category (PRC) by the ministry of home affairs (MHA) through an order dated May 30, 2016, on account of undesirable activities, sources told CNN-News18 on Tuesday. Since then, they added, OSI needs prior sanction from the ministry for sending money to FCRA-registered organisations in India. Soros Economic Development Fund (SEDF) is the social impact investment arm of the OSI.

The ED conducted searches on Tuesday in Bengaluru as part of a foreign exchange violation probe against alleged beneficiaries of the OSI. The raids were carried out under the Foreign Exchange Management Act (FEMA) and targeted entities, including those linked to international human rights organisations.

According to the sources, it is seen that SEDF provided funds for various activities linked to the NGO sector in the garb of FDI or consultancy/service fee to three Indian Companies, viz M/s Rootbridge Services Pvt Ltd (RSPL), M/s Rootbridge Academy Pvt Ltd (RAPL), and M/s ASAR Social Impact Advisors Pvt Ltd (ASAR). These three companies received approximately Rs 25 crore during the period FY 20-21 to FY 23-24 from SEDF, they added.

The sources said that RSPL received Rs 18.64 crore from SEDF by issuing compulsorily convertible preference shares (CCPS) at a premium of approximately Rs. 2.5 lakh to Rs. 2.6 lakh per share based on the DCF (discounted cash flow )method. Since SEDF could not make foreign donations directly to NGOs in India without the prior approval of the MHA, it explored alternatives to bypass the PRC restrictions, they said. The FDI in RSPL is suspected to be a colourable arrangement violating FDI norms, the sources added.

RAPL was incorporated in 2019 and is in the business of providing fundraising services to non-profit organisations. Sources said it received Rs. 2.70 crore from SEDF as commission agent services “without rendering any services to SEDF, which shows that RAPL acted as an agent of SEDF to bypass the FCRA provisions for funding NGOs in India".

M/s ASAR Social Impact Advisors Pvt Ltd (ASAR), incorporated on February 26, 2016, is in the business of public engagement and outreach services, such as communications strategy development, capacity building, research, etc, to NGOs in India, said the sources. “ASAR has received Rs 2.91 crore from SEDF as service fees. It appears that, prima facie, the funds received against purported service exports are nothing but donations in disguise to be used for the benefit of NGOs in India without rendering any services to SEDF," said a source.

As per the information on record, OSI set up an investment firm Aspada Investment Company (AIC) in Mauritius to channelise funding in India, said the sources. Further, they added, Aspada Investment Advisors Pvt Ltd (AIAPL) was established in Bengaluru on February 4, 2013, to manage/advise SEDF’s investment in India. It is learnt that SEDF funded more than 12 companies in India to the tune of Rs 300 crore, said the sources.

“The most astonishing fact is that the investment arm of SEDF in India M/s Aspada Investment Advisors Private Limited (now Lightrock Investment Advisors Private Limited), which was advising SEDF for their investments in India during the material period was not kept in the loop," a source said.

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