Chief election commissioner Rajiv Kumar doesn’t seem to have fully internalised the key message in the Supreme Court’s order on electoral bonds. Addressing the media after announcing the Lok Sabha election schedule, the CEC said the Election Commission “was always in favour of transparency”. In a democracy “there was no scope for hiding anything”. However, any institutional mechanism for transparent election funding should also consider “protecting donor privacy to ensure that they are not harassed”.
In articulating his position on the electoral bonds, the CEC pretty much harked back to the utter illogic of then finance minister Arun Jaitley’s proposition when the Modi government first mooted the new mechanism for election funding.
This contention has been demolished by former CEC S.Y. Qureshi, who asserts that corporates were funding political parties for the longest time with their names made public and no one ever complained of harassment. So this is an utterly specious argument.
Simply put, in a democracy transparency cannot be ensured by protecting the privacy of a political donor. They are fundamentally antithetical to each other. Chief Justice of India D.Y. Chandrachud was emphatic that the names of corporate donors and the political parties they donated to must be made public so that voters can make informed choices.
The CEC seems to disagree with this aspect of the court’s order and continues to hold that privacy must be afforded to big corporate donors. This is also the government line so far. Home minister Amit Shah has so far admitted there may be weaknesses in the scheme and suggests improvement to make it more foolproof. The government also obliquely maintains the need for privacy protection while not openly disagreeing with the Supreme Court judgment.
However, what the CEC’s motivation is for articulating the government’s position is not very clear. Especially when there is mounting evidence that transparency in politics and governance cannot be maintained if donor privacy is protected.
Also read: Why a Court-Monitored Probe on Quid Pro Quo Involving Electoral Bonds Is Needed
The privacy argument is flawed on so many levels.
In spite of privacy being afforded, many top corporate groups known to be close to the Modi regime have not appeared as direct donors. Some have used unknown subsidiaries held privately by top employees as vehicles to make donations.
So what is the outcome of giving privacy to donors? Barring a few exceptions, many are still using front companies to donate political funds. This itself makes a mockery of the CEC’s argument in favour of donor privacy.
Second, stock market-listed companies are subject to multiple governance rules under company law and the SEBI Act. A listed company cannot donate unlimited amounts to political parties as it is answerable to shareholders. For this reason alone there was a ceiling of 7.5% of the previous three years’ net profits for corporate donations to political parties before electoral bonds came into being. The new arrangement did away with the 7.5% ceiling precisely because the Modi government wanted to encourage big corporations to donate money through their private, unlisted front companies. Is this promoting transparency? Far from it.
In fact, India’s company law framework itself suffers from this weakness. Corporate groups can hide their multiple activities in many layered privately owned subsidiaries. A maze of hundreds of private family-owned companies hold shares of a bigger publicly listed entity. We all know about hundreds of unlisted subsidiaries having the same address as the main listed company. Information about these subsidiaries never appears in the main audited balance sheet of the group. This non-transparent arrangement, in some sense, has been quietly imported into the electoral bonds scheme. No wonder in the list of donors made public so far there is a company reportedly owned by the Chief Financial Officer of Reliance Retail. An employee owning a subsidiary company is by itself a bit odd. This company donated 10 times its net profit. There could be many such examples as the full list is scrutinised. There is a stockbroker who seems to have contributed very large amounts as donations. By definition, brokers hold other people’s money. No rocket science here!
So transparency and privacy can never go together in corporate funding of political parties. The CEC would do well to absorb the spirit of the Supreme Court judgment. It will only enhance the credibility of the institution he represents.
