Enforcement directorate penalises BBC India and three directors for FEMA breaches; BBC vows to respond

The Enforcement Directorate (ED) has imposed a staggering Rs 3.44 crore fine on BBC India for violating the Foreign Exchange Management Act (FEMA). Additionally, three of the broadcaster’s directors—Giles Antony Hunt, Indu Shekhar Sinha, and Paul Michael Gibbons—have been slapped with individual penalties of Rs 1.14 crore each. The ruling, delivered on Friday, comes nearly two years after the ED initiated a case into the British media giant’s financial dealings in India.

A BBC spokesperson responded by stating that neither the company nor its directors had received the adjudication order. “The BBC is committed to operating within the rules of all countries we are based in, including India. We will carefully review any order when it is received and consider next steps as appropriate,” the spokesperson said.

The crackdown follows a show-cause notice issued on August 4, 2023, which accused BBC World Service (WS) India, its directors, and finance head of violating FEMA provisions. This development trails the February 2023 Income Tax Department survey at BBC’s Delhi office, a move that had already raised tensions between the broadcaster and Indian authorities.

Sources quoted by PTI revealed that BBC WS India was classified as a 100 percent FDI company but continued full-fledged operations despite Indian regulations restricting foreign direct investment (FDI) in digital media to 26 percent. The guidelines, set by the Department for Promotion of Industry and Internal Trade (DPIIT) under Press Note 4 of September 2019, mandate government approval for foreign investments beyond this limit.

The total fine levied amounts to Rs 3,44,48,850, with an additional Rs 5,000 penalty per day from October 15, 2021, until compliance is met. The three directors face fines of Rs 1,14,82,950 each for allegedly overseeing the company’s affairs in violation of Indian financial laws.

Earlier, the Central Board of Direct Taxes (CBDT) flagged BBC India’s financial irregularities, claiming that the reported income and profits of various BBC entities in the country did not match the scale of their operations. The agency also alleged that certain remittances had not been appropriately taxed.

Following the tax raids, the BBC had pledged full cooperation with Indian authorities, stating that it hoped to resolve the matter at the earliest. Now, with ED’s latest ruling, the broadcaster faces mounting legal and financial troubles in the country. The company’s next move remains to be seen as it awaits the official order.