Information made public by the State Bank of India and then the Election Commission of India, following orders of the Supreme Court, has revealed sordid details about the state of political funding of major parties. Placing this information in public domain is important but these revelations have raised deeper questions about corruption and the illegality that needs further investigation.
The Supreme Court would be best placed to monitor such a probe which should be conducted quickly.
There are at least seven issues that need further probing, and subsequent legal action.
1. Loss making companies donating vast sums of money through electoral bonds, or companies donating several times their profits. The February 15 order has deemed certain amendments to the Companies Act, 2013, and the Finance Act, which facilitated these contributions, as unconstitutional, and flagged concerns regarding the potential misuse of “shell companies” in making political contributions. This calls for an investigation into the source of these funds to probing if it is tantamount to cheating the shareholder of companies.
2. Newly minted – often months-old – companies, have contributed huge amounts to parties through electoral bonds. The Hindu reported that “at least 43 firms newly incorporated in the year 2018 or later have bought electoral bonds worth over Rs 384.5 crore.” Of them, four companies, all established in 2023 in Hyderabad, bought bonds worth crores of rupees, within months of being established. Nine firms in 2020 and eleven companies in 2021 were formed in the middle of the pandemic, and cumulatively purchased bonds worth close to Rs 100 crore, “in just one or two years after getting formed.” Were the firms started with the sole purpose of paying money to certain parties has to be probed.
3. Companies which were awarded major contracts coinciding with their purchase of electoral bonds. The ‘quid pro quo’ move deserves an enquiry under the Prevention of Corruption Act (POCA).
4. Companies which have donated money via electoral bonds only after they were raided by agencies like the ED, CBI and IT, and the cases against them have either stalled or withdrawn. An investigation in February found that 30 firms facing ED, IT probes “donated Rs 335 crore to the BJP.” The Wire reported on companies cited as dubious by the Ministry of Finance’s Financial Intelligence Unit (FIU), donating significant sums as electoral bonds and also coincidentally making their way out of the lists by the ministry in subsequent years.
5. Redemption of electoral bonds by a party even after their expiry. In order to allow the Bharatiya Janata Party (BJP) to encash expired electoral bonds worth Rs 10 crore, the Union government broke the official rules on the eve of 2018 Karnataka assembly elections, as per a report by The Reporters’ Collective. This needs investigation, and those who broke the law should be identified and prosecuted.
6. The claims made by SBI that it did not maintain matching data, or needed till June 30 to provide the data, deserves a probe to investigate the motives behind their attempt to mislead the Supreme Court.
As former Election Commissioner Ashok Lavasa wrote shortly before the SBI furnished the data, there were mixed signals emanating from India’s leading public sector bank. He wrote in The Hindu, that while Section 7(4) of The (now scrapped) Electoral Bond Scheme (EBS), 2018, said that information furnished by the buyer “shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of criminal case by any law enforcement agency”, the ‘designers’ of the EBS are also saying “that the bank could not have legally kept any record of the secret number on the bond issued to the purchaser (in keeping with the provision of anonymity enshrined in the EBS).
If this is the case, it would be almost impossible to establish any link between purchaser and recipient.” Lavasa is saying this inconsistency is critical. If the bank is now saying that the bond was “akin to currency”, then “how could SBI, when forced to disclosed to an enforcement agency, reveal the identity of the purchaser but limit the scope of the investigations only to the sources of funds? Does this not rule out the possibility of providing the donor-political party link, thereby eliminating the clue that would be vital to probe allegations of a quid pro quo?”
Former Finance Secretary S.C. Garg has added a double twist to this on the weekend, by castigating SBI for recording the unique alpha-numeric. He termed the bank’s actions in the electoral bonds case “completely unlawful and unexpected”. Speaking with the Indian Express, Garg said, “Doing so, it [SBI] had violated the anonymity promised to donors under the Electoral Bond Scheme, 2018.” It is the bond numbers that have enabled a match between the purchasers of the bonds with the political parties that encashed them.
The SBI must answer for inconsistencies in its position and statements to the court.
7. The Election Commission also dilly-dallied on the question of bonds. First, taking a position that the concept underpinning electoral bonds was flawed, to then saying all was well. It maintained a silence on the matter even as the Supreme Court issued its historic decision. In the press conference to announce the general elections, chief election commissioner, Rajiv Kumar, in contravention to the Supreme Court’s decision, batted to preserve the “confidentiality of the donor”.
What does that do to the institutional integrity of a key institution mandated to conduct elections?
