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Interior Ministry complaint alleging Nighat Dad’s misuse of Digital Rights Foundation funds is misleading

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Claim: A complaint filed to the Ministry of Interior alleged that non-governmental organization (NGO) Digital Rights Foundation (DRF) evaded taxes and registration with the government. The complaint also alleged that DRF’s director Nighat Dad embezzled funds that were received in foreign donations.

Fact: DRF is a tax-exempt NGO registered with the government Economic Affairs Division (EAD). Complying with legal requirements outlined in the Policy for Local NGOs Receiving Foreign Contributions (NGOs Policy, 2013), DRF shares yearly audit reports with EAD and it is indeed registered with them.

On 15 December 2020 a complaint was filed to the Ministry of Interior by lawyer Adnan Ashraf Tarrar in which he alleged a number of charges against Digital Rights Foundation.

The complaint alleges that the NGO, and specifically it’s director Nighat Dad, were responsible for fraud and embezzlement of funds. It also alleges that the NGO evaded registration with the Ministry of Interior to avoid disclosing audit reports which would expose the aforementioned embezzlement. The complaint also problematized DRF’s income tax exemption status.

Soch Fact Check decided to investigate the claim because the accusations made in the complaint were widely circulated online, being shared in Twitter threads, Youtube videos, and on public interest Facebook pages.

Many extended the accusations regarding misuse of foreign funds to argue that Nighat Dad is a part of a foreign conspiracy to destabilize Pakistan.

Soch Fact Check found the claim of tax and registration evasion, as well as the news coverage surrounding it to be misleading.

The Ministry only maintains records of foreign NGOs, not local ones, and DRF is a Pakistani organisation.

This misleading claim has been supported with a picture of a Government of Punjab letter to DRF dated 10 March 2020, which states that organizations receiving funds from international donor agencies “require prior registration exclusively with the Ministry of Interior as per policy” specified in notification number 6/34/2015-PE-III.

A letter from the Registrar Joint Stock Companies to DRF stating that the NGO is required to register with the Ministry of Interior. Soch Fact Check has found that this letter was sent to DRF mistakenly.

Local NGOs must also register with the Registrar Joint Stock Companies office under the Societies Registration Act, 1860 (specified in clause 4). Digital Rights Foundation told us the letter was sent by the Registrar Joint Stock Companies office when DRF filed a routine application for a filing certificate at the Registrar Joint Stock Companies office. Soch Fact Check believes that this letter was the result of an error on the government’s part.

This letter directs DRF to register itself under government notification 6/34/2015-PE-III before the filing certificate can be issued, but the notification is clearly titled “Policy for Regulation of International Non-governmental Organizations (INGOs) in Pakistan,” which means that it does not apply to local NGOs like DRF.

This is confirmed by an INGO checklist found on the Interior Ministry’s website. Documents such as a “letter from the concerned embassy verifying the credentials of the INGO,” and “proof of registration in the country of origin” clearly pertain to international organizations only, not local ones. Furthermore, no Pakistani organizations are mentioned on the interior ministry’s website under the list of organizations registered under the policy specified in notification number 6/34/2015-PE-III.

Local NGOs that receive foreign funding, on the other hand, have to register with the Economic Affairs Division (EAD) under the Policy for Regulation of Organizations Receiving Foreign Contributions, which Digital Rights Foundation has completed.

Digital Rights Foundation told us that during the process of applying to register with the EAD, the Registrar Joint Stock Companies office was aware that DRF was registering with the EAD instead of the Ministry of Interior and no indication or notice was given that applying to the EAD as the relevant authority was not the correct reading of the law.

The Policy for Regulation of Organizations Receiving Foreign Contributions, which mandates registration with the Economic Affairs Division.

This can be confirmed on the EAD’s website where DRF has been listed against registration number 232.

List of organizations registered with the Economic Affairs Division. The Digital Rights Foundation is recorded on this list against registration number 232.

Furthermore Digital Rights Foundation shared their audit reports through the years 2018 to 2020 with Soch Fact Check. We can confirm that these yearly audit reports exist and, although not available to the public, up to 2019 have been submitted to EAD, as required by the 2013 Policy for Regulation of Organizations Receiving Foreign Contributions. DRF says the 2020 audit will be submitted soon.

An official Government letter recognizing that DRF has submitted required documents for certain projects (including an audit of the entire organization from a panel of auditors approved by the government NGO committee) to the Economic Affairs Division.

Requirement for submitting audit is included in the terms for Memorandum of Understanding with the Economic Affairs Division. Digital Rights Foundation is listed as signatory no. 232 on EAD’s website, and their MoU is valid up to 31 December 2022.

The Policy for Regulation of Organizations Receiving Foreign Funds, which mandates transparent account processes for all local NGOs that receive foreign aid.

The 2013 NGO policy (paragraph 3) also states that the role of the Ministry of Interior is to vet the documents submitted by NGOs applying for registration with the EAD. As DRF has signed an MOU with the EAD, its documents were reviewed and vetted by the Ministry of Interior already.

Some posts sharing the complaints claims mentioned that DRF deleted it’s audit reports from 2018, which were previously available on their website, to avoid scrutiny. Digital Rights foundation told Soch Fact Check that the report was never deleted but was temporarily unavailable due to technical issues. It can still be viewed on DRF’s website.

Lastly, all local NGOs are also required to obtain a tax exemption certificate before they are allowed to register with EAD, which means that registration cannot take place unless the NGO has obtained tax-exempt status.

News coverage
ARY News reported that the prime minister’s cabinet was informed there were several NGOs operating in Pakistan without registration and receiving foreign funding.

After reporting this development, they added “It is pertinent to mention here that on December 24, a complaint was submitted to the interior ministry seeking action against a non-governmental organization, Digital Rights Foundation, and its Executive Director Nighat Dad over alleged misuse of foreign funds.”

This is misleading because the report does not clarify that Digital Rights Foundation is itself a registered NGO that has disclosed its sources of foreign funding, and that its foreign funds have been declared to the government through audit reports. The report from ARY News amplifies Adnan Ashraf Tarrar’s misleading allegations in the interior ministry complaint.

Statement of response from Digital Rights Foundation
Since most news organizations and online sources have shared the allegations and complaint without affording the accused the opportunity to respond, Soch Fact Check is publishing DRF Project Manager Shmyla Khan’s statement of response to complaint filed with the Ministry of Interior

“Digital Rights Foundation (DRF), like so many other NGOs, has been receiving foreign grants through its donors and has never made any secret of this. All of these grants are utilized by DRF in accordance with its objectives, which are: creating digital awareness among the people, particularly the vulnerable and marginalized communities such as women and children. Through these grants, one of DRFs biggest projects is the Cyber Harassment Helpline through which DRF offers free-of-cost online counselling and help to victims of cyber crimes (including men and women). Through these foreign grants we have been capacity building the relevant designated agency for cyber crimes. which is the Federal Investigation Agency. FIA has also appreciated and praised our work.

DRF has been submitting its annual audited statements to the relevant government department (societies registrar/registrar joint-stock companies under the Societies Act 1860) since its inception. In 2017, the registrar directed us to obtain approval from the Economic Affairs Division (EAD). DRF accordingly applied to the EAD and has obtained the necessary registration. Please note that the registration is only accorded after approval from relevant ministries as well as securities agencies. DRF has duly submitted its annual audited statements for 2019 to GoP through EAD and for the last financial, i.e. 2020, it shall be making the submission soon to EAD.

Local NGOs are not required to register with or send any documents to the Interior Ministry, that is a requirement for International NGOs (INGO). According to the Policy For Local NGOs Receiving Foreign Contributions (NGOs Policy, 2013), local NGOs have to register with EAD. DRF has received a two-year MOU with the EAD. The details are up on DRF’s website and may be verified by any member of the public.

In light of false reports, we would like to state that we are not an INGO and therefore not required to be registered with the Ministry of Interior. We are registered with the EAD as per the law. We have submitted audit reports to the Registrar till 2017 under The Societies Registration Act, 1860, however for the year 2018 we were told that the Registrar is no longer the relevant authority and we must register with the EAD. For that, we started the process of obtaining a certificate from the Pakistan Centre for Philanthropy and the approval from the Commissioner Inland Revenue. When this process was complete we submitted our documents to the EAD in January 2020, including financial statements for Financial Year 2018 and 2019. Secondly, our audit report of 2017-18 was not deleted from our website, in fact, it is still available there.

All our funds are received transparently through normal banking channels approved by the State Bank of Pakistan. We use foreign funds, just like many other organisations e.g. Shaukat Khanum and other respected NGOs. It is all through legal channels. Use of foreign funds is not illegal, even our Government uses foreign funds and grants. A malicious disinformation campaign has been launched and we would advise all media organisations to act responsibly and not give in to a narrative created to cover up for harassment and misogyny directed towards women in our society.”

Summary: Digital Rights Foundation has compiled and submitted audit reports of its spending to the government, and has completed all registration procedures mandated by the law for local NGOs that receive foreign funding. The complaint filed to the Ministry of Interior is based on factual inaccuracies such as the assertion that local NGOs receiving foreign funds must register with the ministry. There is no evidence that Digital Rights Foundation is involved in any misappropriation of funds, embezzlement, fraud or tax evasion.

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