The union home ministry has placed Ford Foundation, the US philanthropy organisation, on watch list in "national interest and security", after it was found that the NGO it was funding did not use the funds for which it was intended, NDTV quoted sources as saying.
Home ministry officials said the step was taken after it was found that NGOs set up by social activist Teesta Setalvad and her husband Javed Anand, which has been receiving funds from Ford Foundation, had not filed the mandatory documents, including balance sheets and annual reports.
Following investigations into the embezzlement of funds, the Gujarat government has accused Ford Foundation of Foreign Exchange Management Act (FEMA) violation and ''direct interference by a foreign NGO in the internal affairs of the country and abetting communal disharmony in India''.
The Gujarat government had, on 10 March, written a letter in this regard to the union home ministry, requesting it ''to look into the matter and investigate further''.
Over the last few months, the government had blocked millions of dollars of grant from the Ford Foundation to NGOs, sources said.
Now, all funds coming from the US arm of the Foundation will have to be cleared under the Section 46 of the Foreign Contribution Regulation Act. The section states that all funds coming to India have to be approved by the home ministry.
The Reserve Bank of India has been asked to rope in all banks to ensure that the due process is being followed.