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SC to bleed swindling NGOs dry

Wednesday, 11 January 2017 | Abraham Thomas | New Delhi
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The Supreme Court on Tuesday directed the Centre to crack down on non-governmental and voluntary organisations, which have never bothered to submit balance sheets and utilisation certificates of huge amounts of public funds received from various Government departments and Ministries. About 32.97 lakh NGOs fall within the list of recipients.

According to a status report submitted in the court by the Central Bureau of Investigation (CBI), out of 32,97,044 NGOs and voluntary organisations, which received public funds, only 3,07,072 organisations are filing balance sheets and utilisation certificates for funds received. The court asked the Centre to audit all these NGOs/voluntary organisations by March 31, 2017 and even launch criminal prosecution against those found guilty of misappropriating Government funds.

While the Government has cracked down on foreign funding received by NGOs, this is the first time ever that the Centre has got the approval to audit NGOs for funds received from Government departments and Ministries. A Bench of Chief Justice JS Khehar, Justices NV Ramana and DY Chandrachud, while passing the order, said, “All this is public money. Why does the Government give public money in a manner that it does not know what happens with it?”

What sparked concern of the court was a PIL, filed by advocate ML Sharma, which depicted how certain NGOs in Maharashtra failed to submit an account of funds given to them by Council for Advancement of People’s Action and Rural Training (CAPART), an autonomous body functioning under the Ministry of Rural Development. Senior advocate Rakesh Dwivedi, who was appointed to assist the court in the matter as Amicus Curiae brought out startling revelations contained in a report prepared by the Asian Centre for Human Rights. As per tentative figures gathered from Central and State departments, between 2002 and 2009, funds amounting to Rs 4756 crore was disbursed by Centre while States (not including all) gave away Rs 6,654 crore without receiving any account on how the money was spent.

Alerted by this largescale drain of public money, the Bench sought response from the Centre. Interestingly, the Centre filed an affidavit on January 1, 2013 claiming there was no mechanism to audit or seek accounts of funds given by it to NGOs and voluntary organisations.

To Government’s embarrassment, Dwivedi produced the General Financial Rules (GFR) of 2005 prepared by Ministry of Finance mandating audit of funds given to NGOs and voluntary societies. The Court remarked, “The Government seems to be slow else they should have a mechanism in place by now. The fact is that the Government is not aware of its responsibility of audit of NGOs as depicted in GFR 2005.”

Removing this misconception that even NGOs are under the ambit of public audit, the Bench allowed the Centre time till March 31 to audit the non-governmental beneficiaries of funds and even to initiate civil and criminal cases for recovery of dues.

To ensure such instances do not repeat in future, the Bench directed the Centre to frame Guidelines for Accreditation of NGOs that should contain rules mandating maintenance of accounts by NGOs, audit of funds granted, procedure for recovery of dues, and criminal prosecution in the event of misappropriation. The guidelines will be presented to court on the next date of hearing fixed on April 5.

 
 
 
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