It started as an ideological spat last November between two sections of the Indian-American community. It turned ugly very soon and has so far embroiled a host of players, including several blue-chip corporates and the US Department of Justice. At the prodding of the US State Department, the Justice Department has launched an investigation into charges that millions of dollars raised by the Maryland-based India Development and Relief Fund (IDRF) were used to fund Hindu fundamentalism in India. The investigations are to be part of the wider scrutiny into allegations of US-based charities funding terror activities worldwide.

NEW AGE MOTIF: Tahiliani's Tees (right); and Sabina Singh's embellished kurtis

For the BJP-led Government at the Centre, it is the kind of publicity it could do without. For the Americans, the controversy is a potential embarrassment involving what it believes could be a long-term ally. So far, the Bush Administration has steered clear of the controversy even though the media has focused on it.

Across the Atlantic, a damning report by Britain's Channel 4 in December 2002 has put the spotlight on Sewa International, an NGO which did commendable work in Gujarat after the January 2001 earthquake. According to the TV report, Sewa borrowed the registration number of the RSS' overseas body, the Hindu Swayamsevak Sangh (HSS), to obtain the status of a charity outfit in Britain. In August 2002, the Charity Commission launched an investigation after concerns over Sewa's dubious links were raised by Lord Adam Patel of Blackburn, a Sewa patron in Britain who resigned subsequently. According to a commission spokesperson, an inquiry was opened on November 5.

In the US, the issue came to light last November when the Campaign to Stop Funding Hate, comprising a motley group of people, alleged in a report titled "Foreign Exchange of Hate" that the IDRF had misrepresented its aims to raise funds. The IDRF was founded in 1989 by Vinod Prakash, a former World Bank staffer, as a non-profit, non-political, non-religious and tax-exempt body. It focuses on five key areas-education, healthcare, women, children and tribal welfare-besides relief and rehabilitation. So far, the IDRF has raised about $10 million (Rs 48 crore), $3.8 million was raised as quake relief alone. In the past decade, the IDRF has remitted $1.75 million to charitable organisations in India.

IDRF officials admit some of its members are affiliated to Sangh constituents but reject charges that funds are diverted to finance sectarian activities. "The accusations are falsehoods packaged by propagandists masquerading as concerned citizens," says Vijay Pallod, a Houston-based IDRF official.

By virtue of its tax-exempt status, individual contributions to the IDRF are often matched by corporates. With the strong presence of Indian-Americans in it, some software giants are among the donors. Microsoft, for instance, has provided $55,000 since 1999. Others include Oracle, Sun Microsystems and Ciscobut. Now firms like Oracle suspended their contributions, while some like Microsoft stood their ground.

"We had no reason to believe funds would be used for any purpose other than relief," says Jennifer Glass, vice-president, corporate public relations, Oracle Corporation. The company had matched donations made by employees for the Gujarat quake relief. "Oracle has now put all funds to the IDRF on hold pending investigations," adds Glass.

Though the charges have choked up resource inflow from some quarters, IDRF is yet to take recourse to legal action. "We will take appropriate action at the right time," says an IDRF official. On the flip side, mounting criticism has actually acted as a catalyst for enhanced contributions. "In February alone we raised $45,000," says Pallod. The IDRF has also found a new ally: a group that calls itself Friends of India and comprises, among others, several academics. "There are anti-Hindu Marxist, Christian evangelical and Islamic fundamentalist forces behind the campaign against IDRF," says a Friends spokesman. " The IDRF-funded projects are exemplary and non-discriminatory approach to all."

In Britain though, Sewa has denied the Channel 4 report revealing it as the funder of the Vanvasi Kalyan Ashram in Gujarat, which is implicated in the riots. It offered "forensic" evidence (by way of an fir) that implicates a leading member of Vanvasi, who is currently "on the run from the police". It also showed how respectable organisations have unwittingly aided Sewa and, through it, the activities of the Parivar.

A 30-member team of NRIs comprising members of Sewa and IDRF visited Gujarat recently to verify the charges. Says Somnath Khedkar, who heads Sewa Bharati, which received about Rs 22 crore from Sewa for quake-related work, "The charges are completely motivated. It is a conspiracy to defame Sewa International and Sewa Bharati."

In the US, a Justice Department spokesman declined to comment on the investigations. The Indian missions in both London and Washington have downplayed the issue, preferring to treat it as a conflict within the community. But as the investigation proceeds, it is clear that what is so far an intra-community issue will assume far greater significance.