The Enforcement Directorate (ED) on Tuesday conducted massive raids at George Soros-backed Open Society Foundations (OSF) and its associated entities in Bengaluru. OSF, pushed by US billionaire and hedge fund manager George Soros, has been blamed by the BJP for pursuing actions against the interests of India.

The ED move is in response to a probe into suspected FEMA (Federal Emergency Management Agency) violations by OSF. The authorities suspect that OSF raised Foreign Direct Investment (FDI) in India in contravention of FEMA regulations.

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Since 2016, the Ministry of Home Affairs (MHA) has included Open Society Institute (OSI), which is a part of OSF, in the Prior Reference Category (PRC). This classification indicates OSI has to get prior reference from the ministry prior to sending money to FCRA-registered organizations in India.

Funds Received by Indian Companies

Investigators found that the Soros Economic Development Fund (SEDF), OSI’s social impact investment arm, transferred nearly ₹25 crore to three Indian companies between 2020-21 and 2023-24.

These companies are:

  • Rootbridge Services Pvt Ltd (RSPL)
  • Rootbridge Academy Pvt Ltd (RAPL)
  • ASAR Social Impact Advisors Pvt Ltd (ASAR)

FDI Suspected to Be a Bypass for PRC Restrictions

SEDF invested in RSPL via compulsorily convertible preference shares. Officials believe that as SEDF was not able to directly make foreign donations to Indian NGOs without MHA clearance, it resorted to other means to circumvent PRC restrictions. “RAPL, incorporated in 2019, received Rs 2.7 crore from SEDF as commission agent services without rendering any services. This suggests RAPL acted as an agent for SEDF to bypass FCRA provisions for funding NGOs in India,” a source disclosed to TOI.

Role of ASAR in the Alleged Diversion of Funds

Investigators believe that SEDF disguised ₹2.9 crore as donations to NGOs, falsely labeling the payments as ‘service fees’ to ASAR, a company incorporated in 2016.

The OSI group also formed an investment firm, Aspada Investment Company (AIC), in Mauritius to make it easy to transfer funds to India. Aspada Investment Advisors Pvt Ltd was formed in Bengaluru to handle SEDF’s investments. Investigators, however, discovered that Lightrock Investment Advisors Private Limited, which currently oversees Aspada, did not know about ₹300 crore of funds SEDF had given to 12 NGOs.

Political Backlash Against George Soros

George Soros is currently facing backlash in the US since Donald Trump’s election as President, making the ED’s move timely. The billionaire hedge fund manager has publicly been a thorn in Trump’s side, resisting him and joining hands with hardline liberal factions.