NGOs Want Board Members Out of Lokpal Act’s Ambit

NGO heads who fought for the transparency law are also concerned that the government is trying to dilute its strength by classifying NGO officials as ‘public servants’.

NGOs are afraid board members, who work on an honorary basis, will quit if they are required to make their assets public. Credit: Reuters

NGOs are afraid board members, who work on an honorary basis, will quit if they are required to make their assets public. Credit: Reuters

The government notification making it mandatory for directors and trustees of NGOs, including charitable organisations, to disclose their income and assets has received severe criticism from the sector. People fear that it may dissuade many board members who work in honorary capacities from keeping their position, since they would not like to disclose their assets in public domain. On the other hand, those in the sector are also worried that in the garb of diluting the provisions of the Lokpal and Lokayuktas Act 2013, under which the declarations are mandated, the Centre might end up diluting the transparency law itself.

The notification was issued on June 20, 2016 by the personnel and public grievances ministry. All board members and officers of not-for-profit organisations – including those established by the central government or government NGOs, those which receive central government grants exceeding Rs 1 crore annually and those receiving donations of over Rs 10 lakh annually from foreign sources – were covered by the notification, which required them to declare their assets by July 31.

It was also stated that all NGO functionaries will be treated as public servants and be charged under the anti-corruption law in case of financial irregularities. The home ministry subsequently issued an “order” that requires disclosure of assets and liabilities under Section 44 of the Lokpal and Lokayuktas Act by directors, secretaries, managers and other officers of foreign funded NGOs.

According to Venkatesh Nayak of the Commonwealth Human Rights Initiative, this order did not indicate which website should be used for the online submissions. “The order contains the telephone number of the director of MHA [home ministry] for FCRA [Foreign Contribution (Regulation) Act, 2010]. When I tried calling it, there was no response. The office under secretary, FCRA informed me that they also do not have any idea of which URL may be used for online filing. They said they have received several calls of this kind but have no ready answer to the queries.”

While Nayak’s concern is that unless the home ministry realises the flawed nature of its order it will be difficult for people to file their declarations, a bigger concern about the entire exercise is that it may be used to dilute the law itself.

Diluting the law?

Several NGOs which have been at the forefront of fighting for the disclosure of assets by public servants, including the bureaucracy (which after nearly two years of extensions is required to file declarations by July 31 this year), are worried by the notification. They feel that in the name of supporting the demand from NGOs, the government may postpone or dilute the terms of declaration.

Recently, Rajya Sabha MP and businesswoman Anu Aga raised this issue, asking why trustees of NGOs should be considered as ‘public servants’. She pointed out that several trustees had already resigned from the boards after the notification. Union minister Venkaiah Naidu had replied that the government could look at extending the deadline, but the final decision would only be taken in consultation with other political parties. Incidentally, Sharad Pawar of the Nationalist Congress Party and Digvijay Singh of the Congress had also sought urgent attention on the matter.

Some NGO office bearers said they felt “split” at the prospect of such an extension. “They will give us an extension and there is also the talk of bringing in an amendment to remove the NGO officers as public servants. But this can jeopardise the entire transparency law – that also covers judges, politicians and bureaucrats – as other categories can be added in the name of providing us relaxations. How can we ensure that the gains of transparency achieved through years of struggle are not compromised,” said a concerned Amitabh Behar, executive director of National Foundation of India.

Demand for excluding board members

Behar said the need of the hour was to make a distinction between the executive body of NGOs and board members. “As part of the executive, I am personally okay with the declarations. But when it comes to the board members, they are there in an honorary capacity and do not take any remuneration for their work. So it is unfair to make them file declarations for their work with the NGOs. This would only dissuade good talent from remaining in or joining the boards.”

Since the board plays two important roles of passing the annual budget and approving the annual report, he said its members also keep a tight leash on the use of funds for the purpose they are meant. “If eminent personalities stop becoming board members, it would lead to a scenario where the executive members of different companies will join each other’s boards and this would compromise this role of the watchdog that board members play.”

Behar said while there were black sheep in every sector, it would be unfair to paint the NGO sector in one brush. “As it is, NGOs already file their income tax returns, clarity commissioner returns and FCRA returns and all these are also put up on their websites. Also, just like public private players work on physical infrastructure, we provide important contributions to nation building by working on social infrastructure. But how come those taking foreign direct investment are not required to file declarations whereas those taking donations are?” he asked.

He said civil society was primarily present to channelise the voluntary energies of the community. In light of the recent developments, he added, legal advice was being taken to fight the unjustified demands of the Centre in court.

As for the board members, they have reservations not only about being asked to file declarations, but also with the practice of putting them in the public domain. “I am obviously not comfortable with the idea of declaring the assets of my children, my wife and my own especially when they are being put in the public domain. Why should people in my surroundings or others know our wealth,” said a former IAS officer, who is now on the board of several NGOs.

The fear is as much of harassment by government agencies as of becoming the target of criminal elements. The former bureaucrat said it should be remembered that it was to counter the campaign of Anna Hazare and Arvind Kejriwal for the Lokpal that officers of NGOs were brought under the ambit of the Lokpal and Lokayuktas Act 2013. He said under the law, the officers were now required to file their declarations for three years and not doing so would mean that all the wealth acquired by them was through “corrupt means”.

“There are several friends of mine who are in various boards and who have quit or now want to quit due to this notification. They probably do not realise that this will be of no good as the law applies retrospectively from 2013-14. So the only way out is through a legal battle,” said the bureaucrat, who has served in international organisations as well.

To counter the Centre’s move, about 250 NGOs came together for deliberations on July 14. They were annoyed at the government trying to enlarge the definition of “public servant” in the Lokpal Act in such a way that all trustee and employees of NGOs were covered and become liable to file voluminous details of personal assets.

The meeting decided that the voluntary sector must move swiftly and collectively to challenge the new law and seek a court injunction for its stay. It also contended that the the Act violates Article 14 of the Constitution by singling out only FCRA-registered organisations from the wider NGO community for special and adverse treatment. In a number of cases, the Supreme Court has ruled such discrimination to be unconstitutional.

The NGOs also questioned the categorisation of their officers as public servants, stating the courts have normally held that in order to be a public servant, the person should have discretionary authority, be appointed, be subject to dismissal, be remunerated and be subordinate to an authority. They said in the case of board members, none of these conditions apply as they do not have discretionary authority, they are not appointed but elected, they can be removed, they do not get any remuneration and they are not subordinate to any authority.

For the legal challenge ahead, NGOs have started pooling their funds.

At the same time, the Centre is sending out mixed signals. The latest on the issue came from minister of state for personnel Jitendra Singh on July 24, when he said there were some “contradictions“ now that the very same people and politicians who had pressed for making NGOs accountable to Lokpal were now protesting against implementation of this provision.

It seems like the final word in the matter will have to come from the courts.