New Delhi: The Enforcement Directorate (ED) on Tuesday carried out searches at eight locations in Bengaluru in connection with a foreign exchange violation probe against American billionaire George Soros founded Open Society Foundations and its impact investment arm Soros Economic Development Fund (SEDF), people familiar with the development said.
The searches, for potential violations of the Foreign Exchange Management Act or FEMA, were carried out at NGOs and other firms funded by OSF and SEDF, and at Aspada Investments Private Limited, which is the holding company of SEDF. ED said Aspada is the investment advisor/fund manager of SEDF in India and is wholly owned subsidiary of a Mauritius-based entity.
The agency found a money trail of ₹25 crore from Soros’ companies to several NGOs in India, officials said, adding funds worth ₹300 crore sent by OSF through its subsidiaries through automatic FDI route are under the scanner. It is learnt that SEDF funded more than 12 companies in India to the tune of ₹300 crore.
The financial crimes probe agency, according to senior officers, launched a FEMA probe against Soros and his companies recently. “Our teams carried out raids at eight locations on Tuesday in Bengaluru to investigate contraventions in foreign direct investment rules by SEDF and OSF in investments in various entities/individuals in India and subsequent utilization of those funds,” said one officer who asked not to be named.
According to this officer, “preliminary investigation has revealed that OSF was put under the prior reference category by the ministry of home affairs (MHA) in 2016, thereby restricting it from giving unregulated donations to NGOs in India”.
“However, in order to bypass this restriction, OSF set up subsidiaries in India and brought in funds in the form of FDI and consultancy fees, and these funds have been used to fund activities of the NGOs which is a FEMA contravention”, the officer added.
A second officer added that ED is also examining “the end use of other FDI funds brought in by SEDF and OSF in India”.
OSF and SEDF did not respond to queries seeking comment.
SEDF invested ₹50 crore in its impact-focussed subsidiary Aspada Investments’ first fund Aspada Fund 1 in 2013, according to VCCEdge, the data platform owned by HT Media.
Aspada Fund 1 went on to raise a total of around ₹271 crore, through which it invested in more than a dozen companies, including quick commerce platform Dunzo Digital, WayCool Foods and Products, and NeoGrowth Credit.
However, Soros Economic Development Fund said it sold a controlling stake in Aspada to LGT, the private banking and asset management group owned by the Princely House of Liechtenstein, according to a press note at the time. In 2021, this entity was renamed as Lightrock, which continues to make impact-focussed investments in India. Impact investors typically aim for positive social and environment impact, in addition to financial returns.
OSF is one of the world’s largest private funders of groups supporting human rights, advocacy, impact investment, strategic litigation, justice and accountable government. It started working in India in 1999 but officials familiar with its activities said the organisation doesn’t have any office in India.
On its website, OSF says “since mid-2016, our grant making in India has been constrained by government restrictions on our funding for local NGOs.”
Soros hit THE headlines when, in February 2023, ahead of the Munich security conference, he claimed that Prime Minister Narendra Modi and business tycoon Gautam Adani are ‘close allies’ and that their fate is intertwined. His statement came after shares of Adani group companies plunged following US short-seller Hindenburg’s allegations of “brazen stock manipulation and accounting fraud” by group companies. Adani group denied wrongdoing and called the report a calculated attack on India.
The ruling Bharatiya Janata Party (BJP)-led government at the Centre has linked former Congress president Sonia Gandhi and her son Rahul Gandhi with George Soros.
In December 2024, BJP leader Nishikant Dubey levelled a slew of allegations against the Congress and accused the party of working with the Organized Crime and Corruption Reporting Project (OCCRP), a global journalism project backed by Soros’s Open Society Foundations on efforts to disrupt Parliament and derail the government. BJP Lok Sabha MP Sambit Patra also alleged that Gandhi was part of a “triangle” with Soros and OCCRP aimed at destabilising India.
The Congress said in January in a statement that it was the BJP that was relentlessly trying to save Adani. “… if George Soros is indeed running an anti-India agenda, what are you doing to shut him down in India? Why are you contributing to the UN Democracy Fund which actually aids 68 projects of George Soros around the world?” party spokesperson Supriya Shrinate said in January this year.