1. SC Garg, the Economic Affairs Secretary when the Electoral Bonds were rolled out and later the finance secretary, has said on record that the “we” were not aware that the SBI was “clandestinely” recording the unique numbers of the bonds at the deposit and encashment stages. This admission/disclosure is nothing short of an earthquake that throws up several other questions. Yet, how many of you read it in how many newspapers? 

2. Is Garg saying that the largest bank in the country went rogue behind the government’s back? Can the finance ministry just wash its hands of?

3. Or does his disclosure mean that the finance ministry was kept in the dark and some other government department with overriding powers and asked SBI to record the numbers? If so, would this mean the breakdown of the Cabinet System and the clearest indication yet of the operation of a deep state? Besides, if a section of the government told SBI to record the details, how does it make the business hotshots who swear by Modi look? Have the barons been taken for a royal ride and information was being collected on the suckers for future and perpetual blackmail?

4. Only the SBI’s standard operating procedure (SOP) can shed light on whether someone empowered it to record these details without telling the finance ministry. But SBI has apparently cited third-party interest to keep the SOP under wraps. This is nonsense because we already know about the donors and recipients. Who is this third party? How can third-party confidentiality be cited for information already known? All that is being asked is the process through which the information was recorded.

5. If someone or some group in SBI acted on its own and recorded the details on its own, the issue enters uncharted territory. Garg calls it unlawful, and the question does arise if the government had given this kind of autonomy to the SBI. We also cannot escape the question whether this individual or group is the biggest whistle-blower in the world after Snowden. Should the person/group be rewarded or punished?

6. Garg makes some questionable claims. That the Bond Scheme actually did such a meticulous job that we should be thankful! He also says Jaitley should be congratulated. Garg conveniently glosses over the fact that these details would have remained unknown had not the Supreme Court come down hard. The role of the Teflon-coated bureaucrats who can justify and rationalise anything has not been examined. Garg sounds like a character out of “Yes, Prime Minister”. Smooth-talking, self-effacing and keen to blame SBI and defend his political bosses.

7. This brings us to the role of Jaitley. Newspapers are strangely silent on this. He is no more but that does not mean that the role he played in the Bonds should not be put under the microscope. Two of his pet themes (which he would have wanted to be his legacy) now stand discredited: his crusade against pre-retirement decisions vulnerable to post-retirement inducements and the electoral bonds.

Besides, if he really did not know that SBI was secretly recording the details, isn’t this another instance of him being allegedly kept in the dark after demonetisation? What does it speak of his role in the Modi dispensation? What does it speak of journalists and editors who ate out of the hands of some ministers who projected themselves as those who knew it all?

A story is crying to be done. We can only wait and pray when newspapers will bless us with such a story.

8. The SBI: Hero or Villain? No story yet on how the bank collated data in three days after seeking time till after the elections. No story on the drama behind the scenes, who took the decisions.

Imagine if such a thing had happened if a non-BJP government was in power. We know Gujral was sleeping when he was named PM, we know how many times Shivraj Patil changed clothes daily, we know what was served at UPA meetings but we don’t know about the biggest U-turn in India since independence by a behemoth bank!

(The author is a senior journalist; this is from his social media post)

The post PSST! Shall we inform the reader or let sleeping bonds lie? appeared first on SabrangIndia.

One such is a revelation laid out in the press statement issued by the AIKS. It has also come to light that the leading tyre monopolies have directly paid the ruling Bharatiya Janata Party (BJP), amounts of Rs 6 crores and 15 lakhs in what appears to be to obtain government silence on “illegal cartelisation.

According to the data released by the Election Commission, BJP, the ruling party has received 6 crore rupees from CEAT and 15 lakh rupees from MRF, both monopoly manufactures. According to the AIKS, these three tyre monopolies—which were fined by Competition Commission of India (CCI) for cartelisation— have made these donations during 2019 Lok Sabha elections. The AIKS alleges that this is a quid-pro-quo arrangement to facilitate profiteering by the tyre cartel at the expense of millions of rubber farmers. “The BJP Government led by the Prime Minister Narendra Modi is culpable of being a wilful colluder to policies at their behest and detrimental to farmers”, states the press release. President of AIKS, Ashok Dhawale and Secretary, Vijoo Krishnan are signatories to the press release.

The other two major players of the tyre cartel—JK Tyre and Birla Tyre—are conspicuously absent in the list. However, sister concerns of JK and Birla Conglomerate have donated handsome amounts to both BJP and Congress. Notably, the amount donated by the MRF, the mainstay of the tyre cartel, is comparatively smaller when compared to CEAT and Apollo. An in-depth scrutiny of the data is needed to ascertain whether MRF deployed the “Reliance method” of using shell companies and trusted individuals for transactions.

Besides, says the AIKS, it is clear that monopolies leading the notorious tyre cartel made these donations to the ruling party to “gag them from acting against the cartel” which is devastating the livelihood of millions of rubber farmers, plantation workers, small and medium traders, and MSMEs. The CCI judgment had disturbing insights to the market manipulation practiced by the tyre cartel. Parties that represent dominant economic and power interests have been strong votaries of the India ASEAN Free Trade Agreement which is ruining rubber farmers. Unfair trade policies are leading to import of rubber from highly subsidised ASEAN countries resulting in price crash and acute distress for rubber farmers. Cryptically states the press note, “The Prime Minister Narendra Modi who sheds crocodile tears on the plight of rubber farmers and the BJP Government actively supported the manipulations by the tyre cartel. The complicity of BJP in the whole affair needs to be exposed and their accountability has to be ensured.”

Kerala Karshaka Sangham, affiliated to the AIKS in Kerala had recently organised a siege of MRF and Apollo factories against the tyre cartel. The Kerala Karshaka Sangham-led Samyukta Karshaka Samithi, a joint forum of 11 farmers’ organisations is leading the anti-cartel struggle. One of the major demands of the struggle is to ensure that the Rs. 1788 crores fine imposed by CCI on the five tyre monopolies should be used to benefit the rubber farmers. AIKS warns the tyre cartel and the subservient ruling class parties that a powerful movement of the farmers will expose the corporate-communal nexus in the rubber sector. AIKS also salutes the LDF government in Kerala for constituting an Expert Committee to inquire about cartelisation and price formation. AIKS will exhaust all options to expose the tyre cartel and their unholy nexus.

Related:

Supreme Court rejects SBI plea for extension in electoral bond case, pulls up the bank for the delay

On March 5, 18 days after the SC stuck down electoral bond scheme, directing full disclosure of donor details, SBI fails to comply

ECI must announce elections only after SBI provides details of corporate purchase of electoral bonds: Ex-Civil servants

The post Tyre cartel pays ruling BJP for govt’s connivance in ruining rubber farmers, plantation workers, small and medium traders & MSMEs alleges AIKS appeared first on SabrangIndia.

On March 11, hearing the contempt petition filed by the Association for Democratic Reforms (ADR) and Communist Party of India (Marxist) while simultaneously hearing the extension application filed by State Bank of India (SBI), the court rejected the arguments of the bank that it requires further time to comply with its February 15 order, and demanded urgent compliance of the same. It sternly asked SBI to disclose all the details about the bonds, including date of purchase, denomination of each bond purchased as well as information on the purchasers of the bonds and the political parties who encashed it.

The CJI led bench directed SBI to comply with its order latest by March 12, 2024, and asked Election Commission of India (ECI) to compile the information and publish the same on its website by March 15, latest by 5 PM. Furthermore, the court warned that while it is not considering contempt proceedings against the bank at this stage, the failure to comply with the its order may incline the court to proceed against SBI  for wilful disobedience. Notably, the court also observed that it will ask ECI to disclose the information about electoral bonds that it had received in a sealed cover from political parties and which it has since kept in safe custody following the interim order of this court on 12 April 2019.

Brief Background

On February 15 this year the Supreme Court of India in a significant ruling stuck down the electoral bond scheme and accompanying amendments made to the Companies Act, Income Tax Act, and the Representation of People Act, as unconstitutional for violating Article 14 (due process) and 19(1)(a) (freedom of speech and expression – right to information being part of it) of the Indian Constitution by permitting anonymous and unlimited political funding, thus affecting the integrity of free and fair elections and the right to information of voters. The court had noted in its order that “The statutory amendments and the Scheme are manifestly arbitrary because (i) large scale corruption and quid pro quo arrangements would go unidentified due to the non-disclosure of information about political funding; (ii) they enable capture of democracy by wealthy interests; and (iii) they infringe the principle of ‘one person-one vote’ because a selected few overpower the voice of the masses because of their economic wealth”. The bench also held that voters have the right to information which is essential for them to exercise their freedom to vote.

In the same order it had ordered State Bank of India (SBI), the authorised bank under the scheme, to disclose the details of the bonds purchased and encashed by political parties for the duration of April 12, 2019 to February 15, 2024. It had order SBI to disclose the details by March 6, 2024 to ECI, which would publish it by 13 March, but SBI failed to disclose the details, resulting in the contempt petition against the bank. The interim order on April 12, 2019, as aforementioned, had already asked parties to submit the bonds details to ECI.

The interim order of April 12 authored by the then CJI Ranjan Gogoi, Deepak Gupta, and Sanjeev Khanna read, “…according to us, the just and proper interim direction would be to require all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover, detailed particulars of the donors as against the each Bond; the amount of each such bond and the full particulars of the credit received against each bond, namely, the particulars of the bank account to which the amount has been credited and the date of each such credit.” It continued, “The above details will be furnished forthwith in respect of Electoral Bonds received by a political party till date.”

The interim order may be read here:

Why did the SC reject the extension plea by SBI

Harish Salve, appearing for the State Bank of India, requested that the extension be granted by the court till June 30 to comply with its February 15 order, as it is a complex and laborious exercise to compile and match the information stored in two different silos (for donors and recipients respectively). He explained that the SOP made sure that there was no name of the purchaser in core banking system and the bond number. Questioning the stance taken by SBI, the Chief Justice observed that the court had not asked for the matching exercise and so to seek time saying that a matching exercise is to be done is not warranted, we have not directed you to do that, Live Law reported. When Salve responded that the co-relation exercise is suggested in a particular passage, Justice Gavai riposted that don’t go by what is suggested, go by what is stated. Justice Sanjeev Khanna also questioned the delay, and said, “For what 26 days, something must have happened.”

When the CJI observed that it will direct the registry to open the sealed covers right away and will ask ECI and SBI to divulge whatever is with them, the SBI counsel seemed taken aback, and asked the court not to hurry, saying, “We don’t want to create any havoc by making any mistake.” Responding back, Justice Khanna assured the counsel and said that “There is no question of any mistake. You have the KYC. You are the number 1 bank in the country. We expect you to handle it.” The CJI also exclaimed over the fact that assistant general manager of SBI had filed an affidavit seeking modification of the judgment of a Constitution Bench of the Court.

While Salve had assured that SBI can provide details about the bonds in 3 weeks if no matching exercise had to be undertaken, the bench rejecting the proposed timeline ordered SBI to provide a full disclosure of the details by March 12, 2024 to ECI, which in turn will compile the information and upload it on its website by March 15, latest by 5 PM.

Strictly warning the SBI to comply with its order the court observed, “The SBI shall file an affidavit of its Chairman and Managing Director on compliance with the directions issued above. While we are not inclined to exercise the contempt jurisdiction at this time, we place SBI on notice that this Court may be inclined to proceed against it for wilful disobedience if SBI does not comply with the directions by the timelines indicated in this order.”

Now it is to be seen in what format SBI discloses the details to ECI and how accessible will it be for a voter to make an informed voting decision. There still remains some lack of clarity whether information will personally identify donors with parties or not, but whatever will be the outcome, the court has sent a strong message to the State and the public that anonymous political funding has no place in democracy and voters right to information cannot be supressed under any guise.

SC order may be read here.

(The author is part of the CJP’s Legal Research Team)

Related:

Electoral Bonds: A Democracy’s Trojan horse

Supreme Court unanimously hold Electoral Bond scheme to be unconstitutional, violative of right to information

Is India’s democracy being sold through electoral bonds?

Electoral Bonds Case Live Updates : Supreme Court Hearing Of SBI’s Time Extension Plea, Contempt Petitions Against SBI Chairman

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Reading out parts of the 232-page judgement, adjudged historic even though it was delivered over six years after the Electoral Bonds Scheme had been challenged in 2017, the CJI DY Chandrachud stated in open court

“Crucial aspect of expansion of right to information is that it is not confined to state affairs but also includes information necessary for participatory democracy. Infringement to the right to information is not justified by the purpose of curbing black money.” (Para 22; Para 65 Part F, Page 55 of the Concurrent Judgement of CJI Chandrachud, Justices BR Gavai, Pardiwala and Manoj Mishra).

Now that India’s largest public sector bank has, on March 5, 2024, a day before it had to ensure compliance with the SC Order of February 15 has pleaded for over 110 days to deliver, the lead petitioner, and the ADR has filed a contempt petition against the SBI. The Supreme Court on March 5, 2024 dismissed the SBI’s application for extension and has directed them to disclose the details by the close of business hours March 12, 2024.“While we are not inclined to exercise the contempt jurisdiction at this time, we place SBI on notice that this Court may be inclined to proceed against it for wilful disobedience if SBI does not comply with the directions by the timelines indicated in this order.”

The majority concurring judgement delivers its conclusions and directions at Page 149 Part H

“219. In view of our discussion above, the following directions are issued:

1. The issuing bank shall herewith stop the issuance of Electoral Bonds;
2. SBI shall submit details of the Electoral Bonds purchased since the interim order of this Court dated 12 April 2019 till date to the ECI. The details shall include the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased;
3. SBI shall submit the details of political parties which have received contributions through Electoral Bonds since the interim order of this Court dated 12 April 2019 till date to the ECI. SBI must disclose details of each Electoral Bond encashed by political parties which shall include the date of encashment and the denomination of the Electoral Bond;
4. SBI shall submit the above information to the ECI within three weeks from the date of this judgment, that is, by 6 March 2024;
5. The ECI shall publish the information shared by the SBI on its official website within one week of the receipt of the information, that is, by 13 March 2024; and
6. Electoral Bonds which are within the validity period of fifteen days but that which have not been encashed by the political party yet shall be returned by the political party or the purchaser depending on who is in possession of the bond to the issuing bank.

The issuing bank, upon the PART H 152 return of the valid bond, shall refund the amount to the purchaser’s account. (Para 219)”

Justice Sanjiv Khanna judgement is a separate judgement running into 74 pages and while concurring with the majority view on the unconstitutionality of the Schemes on several crucial counts, is even more specific and direct in its directions. At pages 213-218 of the judgement, Justice Sanjiv Khanna elaborates these aspects thoroughly.

He then goes further.

In examining one accept that was argued but not pressed by the lead petitioner, Association for Democratic Reforms (ADR), Justice Khanna outlines the coercive elements at the heart of the scheme that require further examination and study. This includes the argument that there should be a cap on the quantum of donations and further, that the law should stipulate that the funds thus collected through electoral bonds should be utilised for political purposes alone given that the income of the political parties is exempt from income tax

“74. In consonance with the above reasoning and on application of the doctrine of proportionality, proviso to Section 29C (1) of the Representation of the People Act 1951, Section 182(3) of the Companies Act 2013 (as amended by the Finance Act 2017), Section 13A(b) of the Income Tax Act 1961 (as amended by the Finance Act 2017), are held to be unconstitutional. Similarly, Section 31(3) of the RBI Act 1934, along with the Explanation enacted by the Finance Act 2017, has to be struck down as unconstitutional, as it permits issuance of Bonds payable to a bearer on demand by such person. (Para 74) 

“75. The petitioners have not argued that corporate donations should be prohibited. However, it was argued by some of the petitioners that coercive threats are used to extract money from businesses as contributions virtually as protection money. Major opposition parties, which may come to power, are given smaller amounts to keep them happy. It was also submitted that there should be a cap on the quantum of donations and the law should stipulate funds to be utilised for political purposes given that the income of the political parties is exempt from income tax. Lastly, suggestions were made that corporate funds should be accumulated and the corpus equitably distributed amongst national and regional parties. I have not in-depth examined these aspects to make a pronouncement. However, the issues raised do require examination and study. (Para 75)”    

Justice Khanna further elaborates on the interim order of the Supreme Court in this matter, delivered on March 26, 2021.

“76. By an interim order dated 26.03.2021, this Court in the context of contributions made by companies through Bonds had prima facie observed that the voter would be able to secure information about the funding by matching the information of aggregate sum contributed by the company as required to be disclosed under Section 182(3) of the Companies Act, as amended by the Finance Act 2017, with the information disclosed by the political party. Dr. D.Y. Chandrachud, Hon’ble the Chief Justice, rightly observes in his judgment that this exercise would not reveal the particulars of donations, including the name of the donor. (Para 76) 

“77. By the order dated 02.11.2023, this Court had asked for ECI’s compliance with the interim order of this Court dated 12.04.2019. Relevant portion whereof is reproduced below:

“In the above perspective, according to us, the just and proper interim direction would be to require all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover, detailed particulars of the donors as against the each Bond; the amount of each such bond and the full particulars of the credit received against each bond, namely, the particulars of the bank account to which the amount has been credited and the date of each such credit.” (Para 77)

“The intent of the order dated 12.04.2019 is that the ECI will continue to maintain full particulars of the donors against each Bond; the amount of each such Bond and the full particulars of the credit received against each Bond, that is, the particulars of the bank account to which the amount has been credited and the date of each such credit. This is clear from paragraph 14 of the order dated 12.04.2019 which had directed that the details mentioned in paragraph 13 of the order dated 12.04.2019 will be furnished forthwith in respect of the Bonds received by a political party till the date of passing of the order. (Para 77)

“78. In view of the findings recorded above, I would direct the ECI to disclose the full particular details of the donor and the amount donated to the particular political party through Bonds. I would restrict this direction to any donations made on or after the interim order dated 12.04.2019. The donors/purchasers being unknown and not parties, albeit the principle of lis pendens applies, and it is too obvious that the donors/purchasers would be aware of the present litigation. Hence, they cannot claim surprise. (Para 78)

“79. I, therefore, respectfully agree and also conclude that:

• the Scheme is unconstitutional and is accordingly struck down;
• proviso to Section 29C(1) of the Representation of the People Act, Section 182(3) of the Companies Act, 2013, and Section 13A(b) of the Income Tax Act, 1961, as amended by the Finance Act, 2017, are unconstitutional, and are struck down;
• deletion of proviso to Section 182(1) to the Companies Act of 2013, thereby permitting unlimited contributions to political parties is unconstitutional, and is struck down;
• sub-section (3) to Section 31 of the RBI Act, 1934 and the Explanation thereto introduced by the Finance Act, 2017 are unconstitutional, and are struck down;
• the ECI will ascertain the details from the political parties and the State Bank of India, which has issued the Bonds, and the bankers of the political parties and thereupon disclose the details and names of the donor/purchaser of the Bonds and the amounts donated to the political party. The said exercise would be completed as per the timelines fixed by the Hon’ble the Chief Justice;
• Henceforth, as the Scheme has been declared unconstitutional, the issuance of fresh Bonds is prohibited;
• In case the Bonds issued (within the validity period) are with the donor/purchaser, the donor/purchaser may return them to the authorised bank for refund of the amount. In case the Bonds (within the validity period) are with the donee/political party, the donee/political party will return the Bonds to the issuing bank, which will then refund the amount to the donor/purchaser. On failure, the amount will be credited to the Prime Ministers Relief Fund. (Para 79)

Brief Background

The electoral bond scheme was first introduced in 2017 through the Finance Act, 2017, with the sole purpose of funding political parties while maintaining anonymity of donors and purchasers of the bonds. The apparent aim of the scheme was to curb black money by reducing cash money in the election funding and “to cleanse the system of political funding in the country.”[1]

Electoral bond is similar to a promissory note that is issued to the purchaser of the bond in various denominations (1,000, 10,000, 1,00,000, 10,00,000 and 1,00,00,000) by the selected branches of the State Bank of India, the only authorised bank to issue electoral bonds. Thereafter, the purchased bond has to be encashed by the eligible political party through a designated bank account with the authorised bank. The identity of the purchaser of the bond will remain privy to the authorised bank, and needs to be kept confidential and anonymous. It is argued by the government that donor privacy is required to protect the donor from political witch hunt for supporting a political party or a cause.

Prior to the introduction of the scheme, the Union Government also amended various provisions of the laws to remove the cap on political funding by the companies, and to do away with the requirements of disclosing particular details of the funding provided and received by the companies and political parties, respectively. The Finance Act, 2017, introduced as a money bill, amended the Representation of People Act, 1951 (RoPA), the Companies Act, 2013, the Reserve Bank of India Act, 1934, and the Income Tax Act, 1961. None of these amendments were thoroughly discussed or deliberated upon in Parliament nor the opinions of citizens sought. In essence the scheme was steamrolled through the Legislature.

How the Finance Act was amended

The amendment by the Finance Act, 2017, omitted the first proviso to Section 182(1) of the Companies Act, which, before the amendment, restricted a company’s total contribution to a political party to 7.5% of its average net profit calculated on the basis of the last three (consecutive) financial years. In addition, it amended Section 182(3) of the same Act to do away with the requirement to disclose the details about the particular amount and name of the party that the company contributed to from its profit and loss account. After the amendment, only the total contribution donated to political parties needs to be disclosed without providing particular details or name of the parties. Similarly, amending Section 29C of the Representation of People Act (RoPA), it exempted the political parties from disclosing the particular details of the donations received through electoral bond.

How the RBI Act was amended

Making changes to the RBI Act, Parliament unilaterally –without deliberation– amended Section 31 of the said Act, to allow the Central Government to authorise any scheduled bank to issue electoral bond. Earlier, only the RBI or the Central Government as authorized by the RBI Act were allowed to draw, accept, make, or issue any bill of exchange or promissory note. Lastly, it changed Section 13 of the Income Tax Act to exempt political parties from keeping and maintaining a record of (voluntary) contribution and the name and address of the person who has made such contribution, if the said contribution was received through electoral bond.

Scheme and amendment to Laws challenged

The Electoral Bonds Scheme was immediately challenged as unconstitutional on the grounds that it promotes unlimited corporate funding of the elections, increasing money power and corruption in the elections, and violating the right to information of the voters by ensuring anonymity of significant political funders and donors.

The lead petition challenging the Scheme was first filed on September 4, 2017 by Association for Democratic Reforms and Common Cause. Though interim orders were passed in 2019 and 2021, the final judgement took over six years in coming and was finally delivered on February 15, 2024. The Judgement struck down the scheme and the amendments brought in through the Finance Act, 2017, as unconstitutional.

Who has benefitted most from the electoral bond scheme?

According to the RTI data analysed by Association for Democratic Reforms, one of the petitioners in the case that challenged the validity of the scheme, 28,030 electoral bonds worth Rs. 16,518 crores were sold from March 2018 to January 2024[2]. Indian Express reported that since the beginning of the scheme in 2017 till the financial year 2023 more than half of the funds collected through electoral bonds have gone to the ruling Bharatiya Janata Party (BJP), which received bonds worth Rs. 6565 crores while the Indian National Congress came a distant second with Rs. 1123 crores[3]. TMC, BJD, and DMK, received bonds worth Rs. 1093 crores, 774 crores, and 617 crores, respectively. Smaller parties received substantially lesser share in the scheme, with the bottom five parties receiving less than Rs. 100 crores each during the same duration.

Challenge to the electoral bond scheme

Though the petition was filed as early as 2017 by ADR and Common Cause, the list of petitioners increased with Communist Party of India (Marxist), Jaya Thakur and Spandan Biswal also challenging the scheme. The Supreme Court clubbed the petitions and started hearing the case in a substantial manner only in 2023.

On October 16, 2023, the three judge bench of the Supreme Court consisting of Chief Justice of India, Justice J B Pardiwala, and Justice Manoj Misra maintained that, “In view of the importance of the issue which is raised and having due regard to the provisions of Article 145(3) of the Constitution, we are of the considered view that the batch of petitions be listed before a bench of at least five-Judges.”[4]

The Constitution bench comprising of Chief Justice of India, J B Pardiwala, Manoj Misra, B R Gavai, and Sanjiv Khanna finally heard the matter in which the scheme was found to be unconstitutional.

Grounds behind Scheme being struck down

Initially the petition challenged the introduction of Finance Bill 2017 as a money bill, through which the electoral bond scheme first came into existence, alleging that the nature of Bill revealed that it encompassed areas beyond financial matters. The SC did not go into the question of the passage of the Finance Bill as a money bill in this judgement, and decided the matter on the merits of the case concerning the scheme per se.

When the Union raised the objection that the court cannot look into the legality of Electoral Bond Scheme as it is covered under the ambit of economic policy, the Chief Justice rejected the argument, saying, “The Union of India has itself classified the amendments as an “electoral reform”. Thus, the submission of the Union of India that the amendments deal with economic policy cannot be accepted.” (Paras 41-42, Part D, Page 41)

Close nexus between money and power

Using the law and society approach the judgement notes that money creates entry-barriers to politics by limiting the candidates and political parties, especially parties representing the cause of marginalised communities, who can participate in the electoral fray. Though not having a directing bearing on the case, the bench also pointed out the dichotomy present in the existing legal regime as enunciated in Section 77 of the Representation of People’s Act said,

“Part E. The close association of politics and money

46. The law does not bar electoral financing by the public. Both corporates and individuals are permitted to contribute to political parties. The legal regime has not prescribed a cap on the financial contributions which can be received by a political party or a candidate contesting elections. However, Section 77 of the RPA read with Rule 90 of the Conduct of Election Rules 196161 prescribes a cap on the total expenditure which can be incurred by a candidate or their agent in connection with Parliamentary and Assembly elections between the date on which they are nominated and the date of the declaration of the result. The maximum limit for the expenditure in a Parliamentary constituency is between Rupees seventy five lakhs to ninety five lakhs depending on the size of the State and the Union Territory.62 The maximum limit of election expenses in an Assembly constituency varies between rupees twenty eight lakhs and forty lakhs depending on the size of the State.63 However, the law does not prescribe any limits for the expenditure by a political party.

Section 77 stipulates that the expenditure incurred by “leaders of a political party” on account of travel for propagating the programme of the political party shall not be deemed to be election expenditure. Thus, there is an underlying dicohotomy in the legal regime.

The law does not regulate contributions to candidates. It only regulates contributions to political parties. However, expenditure by the candidates and not the political party is regulated. Be that as it may, the underlying understanding of the legal regime regulating electoral finance is that finance is crucial for the sustenance and progression of electoral politics. (Para 46)

47. It is believed that money does not vote but people do. However, studies have revealed the direct and indirect influence of money on electoral politics. The primary way through which money directly influences politics is through its impact on electoral outcomes. (Para 47)

The judgement also observed that

“The ability of a company to influence the electoral process through political contributions is much higher when compared to that of an individual…Contributions made by individuals have a degree of support or affiliation to a political association. However, contributions made by companies are purely business transactions, made with the intent of securing benefits in return.” (Para 212, Page 147)

The Union Government argued that the 7.5% cap that was put on companies’ donation to political parties was removed to prevent corruption and growth of shell entities, as the companies who wanted to donate more would otherwise resort to illegal means.

The bench debunked such claim, and said that the argument is counterproductive, for

“If the ostensible object of the amendment, as contended by the learned Solicitor General, was to discourage the creation of shell companies, there is no justification for removing the cap on contributions which was included for the very same purpose: to deter shell companies from making political contributions”. (Para 207, Page 144)

Right to Informational Privacy of donors vs Right to Information of voters

The most contentious issue that the scheme raised was regarding the right to (informational) privacy of donors vs right to information of voter, both being fundamental rights under the Constitution.

Importantly, the SC revealed another discrepancy in the argument of the Union with regard to the role of privacy in the scheme.

It questioned the stand taken by Solicitor General of India, Tushar Mehta, and observed that the then Finance Minister,

“Mr. Jaitley stated that the main purpose of the Scheme is to curb black money in electoral financing and this purpose could be achieved only if information about political donations is kept confidential. That is, donor privacy is a means to incentivize contributions through the banking channel. However, Mr. Tushar Mehta argued that protecting donor privacy is an end in itself.” (Para 108, Page 80)

The judgement further noted that the scheme only grants de jure and not de facto confidentiality vis-à-vis the political party, it is still open to the political party to coerce persons to contribute.

The CJI led concurrent judgment argued that when the question before the court is to balance between the two rights, it must apply double proportionality standard, that is, to deploy the said standard to “both the rights (as purposes) to determine if the means used are suitable, necessary and proportionate to the fundamental rights.”  (Paras 161,162,163 at Pages 115-116)

Referring to Puttaswamy judgement, the bench noted that

“this Court did not trace the right to privacy only to Article 21. This Court considered privacy as an essential component for the effective fulfillment of the all entrenched rights.”  (Paras 132-134 at Pages 96-98 onwards)

Thus, right to privacy is to be read along with other fundamental rights and not to their exclusion. Furthermore, the bench significantly noticed that

“the right to privacy of political affiliations does not extend to contributions which may be made to influence policies.” (Para 167 at Page 118)

On the right to information of voters, the SC relied on the series of judgments, including Union of India v. Association for Democratic Reforms, PUCL vs Union of India, State of Uttar Pradesh v. Raj Narain, and S P Gupta vs Union of India, to argue that just as the voters have right to information about the credentials and electoral expenditure of the candidates, the same would also apply to political parties, as they are also political units.

The bench held that a voter has a right to information which is essential for them to exercise their freedom to vote. Additionally, the order read that the purpose of curbing black money is not traceable to any of the grounds in Article 19(2). (Para 77 at Pages 62-63)

Ensuring free and fair elections

The 232 page final judgement referred to the basic principles of republican and democratic form of government and free and fair election, citing the precedents of Kesavananda Bharati v. State of Kerala, Indira Nehru Gandhi v. Raj Narain, Kuldip Nayar v. Union of India, and PUCL v. Union of India.

The bench emphasised that the integrity of the election process is pivotal for sustaining the democratic form of government, and

“permitting unlimited corporate contributions (including by shell companies) authorizes unrestrained influence of companies on the electoral process. This is violative of the principle of free and fair elections and political equality captured in the value of ‘one person one vote’”. (Paras 95, 96, 97 at Pages 73-74)

“97. Second, the Constitution ensures that socio-economic inequality does not perpetuate political inequality by mandating reservation of seats for Scheduled Castes and Scheduled Tribes in Parliament118 and State Assemblies. (Para 97)

“98. The Constitution guarantees political equality by focusing on the ‘elector’ and the ‘elected’. These two constitutional precepts foster political equality in the following two ways. First, the Constitution mandates that the value of each vote is equal. This guarantee ensures formal political equality where every person’s vote is accorded equal weightage. Second, the Constitution ensures that members of socially marginalized groups are not excluded from the political process. This guarantee ensures (a) equality in representation; and (b) equality in influence over political decisions. (Para 98)

99. However, political inequality continues to persist in spite of the constitutional guarantees. One of the factors which contributes to the inequality is the difference in the ability of persons to influence political decisions because of economic inequality. In a politically equal society, the citizens must have an equal voice to influence the political process. We have already in the preceding section elucidated the close association of money and politics where we explained the influence of money over electoral outcomes. However, the influence of money over electoral politics is not limited to its impact over electoral outcomes. It also spills over to governmental decisions. It must be recalled here that the legal regime in India does not distinguish between campaign funding and electoral funding. The money which is donated to political parties is not used by the political party only for the purposes of electoral campaign. Party donations are also used, for instance, to build offices for the political party and pay party workers. Similarly, the window for contributions is not open for a limited period only prior to the elections. Money can be contributed to political parties throughout the year and the contributed money can be spent by the political party for reasons other than just election campaigning. It is in light of the nexus between economic inequality and political inequality, and the legal regime in India regulating party financing that the essentiality of the information on political financing for an informed voter must be analyzed. (Para 99)

100. Economic inequality leads to differing levels of political engagement because of the deep association between money and politics. At a primary level, political contributions give a “seat at the table” to the contributor. That is, it enhances access to legislators. This access also translates into influence over policy-making. An economically affluent person has a higher ability to make financial contributions to political parties, and there is a legitimate possibility that financial contribution to a political party would lead to quid pro quo arrangements because of the close nexus between money and politics. Quid pro quo arrangements could be in the form of introducing a policy change, or granting a license to the contributor. The money that is contributed could not only influence electoral outcomes but also policies particularly because contributions are not merely limited to the campaign or pre-campaign period. Financial contributions could be made even after a political party or coalition of parties form Government. The possibility of a quid pro quo arrangement in such situations is even higher. Information about political funding would enable a voter to assess if there is a correlation between policy making and financial contributions. (Para 100)

Manifestly arbitrary nature of the scheme

Employing the test of proportionality and manifest arbitrariness, both the concurring judgements concluded that the scheme and the accompanying amendments failed the test of proportionality and is found to be arbitrary, thus violating Article 14 and 19(1).

They noted that electoral bond scheme is neither the least restrictive means employed to curb black money nor proportionate or connected to the objective being sought to be achieved.

The order highlighted that

“The statutory amendments and the Scheme are manifestly arbitrary because

• large scale corruption and quid pro quo arrangements would go unidentified due to the non-disclosure of information about political funding;
• they enable capture of democracy by wealthy interests; and
• they infringe the principle of ‘one person-one vote’ because a selected few overpower the voice of the masses because of their economic wealth”.

Conclusion

On the basis of these conclusive reasons, the court struck down the electoral bond scheme and the accompanying amendments made to the Representation of People Act, the Income Tax Act, and the Companies Act.

Furthermore, it directed SBI to disclose the details of donors to Election Commission of India (ECI) by March 6, 2024, and ordered ECI to publish the details of the same by March 13, 2024.  Justice Khanna’s sole separate judgement had put the responsibility on the ECI to disclose details of bonds’ funds

The order detailed that the information should include the name of the purchaser of the bond, denomination of the bond purchased, and details about the encashment of each bond by political parties. It also directed un-encashed bonds to be returned back to the bank.

In a late surprise move, the SBI on March 5, a day before the deadline, informed the SC that there is a practical difficulty complying with the March 5 deadline, as the process of verifying the data and determining the identity of the purchaser in a complex process which would require more time.

It has asked SC for an extension till June 30, 2024 to comply with its order, by which time the 2024 Lok Sabha election would be over, thereby depriving the citizens of their fundamental right to informed voting.

The judgement may be read here:

(The author is part of the CJP’s Legal Research Team)

[1] Introduction of the Scheme of Electoral Bond, Department of Economic Affairs, Ministry of Finance, 2 January 2018. https://www.dea.gov.in/sites/default/files/Electoral%20Bonds_Press%20RELEASE_2-1-2018.pdf

[2] https://adrindia.org/sites/default/files/Updated_Data_on_Electoral_Bonds_Part_1.pdf

[3] Damini Nath and Anjishnu Das, “57% vs 10%: BJP vs Congress share in electoral bond funds”, Indian Express, 16 February, 2024. https://indianexpress.com/article/political-pulse/bjp-congress-electoral-bonds-funds-9162973/

[4] Writ Petition (Civil) No.880/2017, Item No. 801. https://main.sci.gov.in/supremecourt/2017/27935/27935_2017_1_801_47700_Order_16-Oct-2023.pdf

Related:

Electoral Bonds: A Democracy’s Trojan horse

Supreme Court unanimously hold Electoral Bond scheme to be unconstitutional, violative of right to information

Is India’s democracy being sold through electoral bonds?

The post On March 5, 18 days after the SC stuck down electoral bond scheme, directing full disclosure of donor details, SBI fails to comply appeared first on SabrangIndia.

The open letter points out that when the SBI could give Thomas Franco, former General Secretary, All India Banking Officers Confederation (on an RTI reply) details of bond purchases in just six days, (see letter below for details) the SBI affidavit before the Supreme Court of India (SC) asking for over 110 days to submit details as per the SC’s verdict on the issue was dishonest and defies requirements of transparency and accountability under a functioning democracy.

The entire communication may be read here:

hri Rajiv Kumar

Chief Election Commissioner

Shri Arun Goel

Election Commissioner

Dear Shri Rajiv Kumar and Shri Arun Goel,

We are a group of former civil servants of the All India and Central Services who have worked in the Central and State Governments during our careers. As a group, we have no affiliation with any political party but believe in impartiality, neutrality and commitment to the Constitution of India.

​We are writing to you with reference to the extraordinary request of the State Bank of India (SBI) to the Supreme Court of India (SCI) to extend the time to submit information regarding electoral bonds till June 30, 2024, by which time the elections to Parliament would be over. We note with dismay that it took SBI seventeen days to inform the Court on 4^thMarch that they are not in a position to collate the data by 6^thMarch. For India’s largest bank with 48 crore accounts and boasting high levels of digitization, a pathetic excuse has been proffered that records were kept manually and hence the extension sought. Thomas Franco, former General Secretary of the All India Banking Officers Confederation, has pointed out that SBI had asked the Government of India by a letter of June 2018 for a sum of more than Rs 60 lakhs for development of IT systems for the electoral bond scheme. In the same piece, Franco has also published an RTI reply that gives, in just a period of six days, details of bonds sold over six years. Subhash Chandra Garg, Finance Secretary at the time of finalization of the scheme (and a defender of it), has said in interviews that it should not take more than tenminutes to get the information sought. He also makes the important point that the SCI has not asked for details linking the purchase of bonds with the political parties to whom they have been given; so, the demand for time is wholly unjustified.

​While striking down the scheme of electoral bonds as unconstitutional, the SCI had flagged both the right to information of the citizens of India to know about funding of political parties and how there would be no level playing field if one party got undue financial advantage. The SBI’s denying this information and indicating that it would not be available before the general elections seems to indicate that the SBI is shielding the Government in power from any criticism that there was a quid pro quo between the bonds and favours given to some firms or raids/intimidation to pressurize the corporates to fall in line. The media portals Newslaundry and News Minute have already published material linking thirtycorporates and their purchase of bonds worth about Rs 335 crore in the previous five years to the blatant misuse of enforcement agencies to make these corporates fall in line.

​We would like to reference the letter of March 6, 2024, written by EAS Sarma, a former Secretary to the Government of India, in which he has requested the ECI not only to freeze any unspent funds of political parties from the scheme but also not to publish the schedule of elections till the SBI gives the information ordered by the SCI. We note that the term of the present Lok Sabha is up to June 16, 2024, and to complete the election in time, the ECI could announce the schedule by March 27, or even earlier. The SBI should give the electoral bonds data much before the announcement of the elections.This is an opportunity for the ECI to reclaim its reputation and its integrity by using its powers under Article 324 of the Constitution. As Shri Sarma has suggested, it should direct the SBI to immediately release the information. The ECI should also make it clear that it will not announce the schedule for the 2024 general elections till the SBI furnishes this information. If the ECI remains quiescent, it will not live up to its Constitutional mandate of respecting the right to information of Indian voters and of holding free and fair elections on a level playing field. That would be a death blow for democracy in India as we know it.

SATYAMEVA JAYATE

Yours faithfully,

Constitutional Conduct Group (79 signatories, as below)

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India today is on the brink! There are fascist, fundamentalist and fascist forces at work, determined to take the country back to the ‘dark ages’ of history. At stake are India’s pluralistic traditions and democratic ethos! ‘Good governance’ is pathetically lacking! Article 19 (which guarantees freedom of speech and expression), Article 21 (the right to life and liberty) Article 25 (which guarantees freedom to preach, practice and propagate one’s religion), for that matter, all fundamental rights- are consistently denied to citizens.

At the receiving end are the poor and the vulnerable, the marginalised and the minorities, the excluded and the exploited, the Adivasis, the Dalits and the OBCs; the small farmers and migrant workers; women and children; the differently-abled and other sexually-oriented persons; human rights defenders, journalists and all those who take a visible and vocal stand to protect and promote the idea of a democratic, pluralistic and secular India!

There is a serious lack of political will to address systemic burning issues; there are hurried legislation and draconian, prejudiced policies (all designed to decimate the Constitution) like the National Education Policy, the Citizenship Amendment Act, the anti-conversion laws, the anti-farmer (pro-Corporate) farm laws, the four labour codes, the Forest Conservation Amendment Act, the recent Uttarakhand Universal Civil Code, the ‘One Nation, One Election.’ Constitutional bodies like the Election Commission, the Enforcement Directorate, the Central Bureau of Investigation, the NIA, the police and even the judiciary are compromised; they have become ‘Caged Parrots’.

Corruption is the new normal; we have the most corrupt government since independence! First, it was demonetization; then, the scam of the Electoral Bonds. Fortunately, the pathbreaking judgement on the Electoral Bonds by the Supreme Court on 15 February, has exposed the corruption, the lack of transparency and accountability of this current Government.

The State Bank of India (SBI) had to furnish the complete details to the Apex Court by 6 March. In a blatantly corrupt manner, on 4 March, the SBI petitioned the SC – for an extension of time till 30 June to provide these details! Only an absolute moron will be unable to see the nexus between the SBI and the regime! Let’s see what the decision of the SC is and whether they will be openly complicit in this corrupt act!

Communalism is everywhere! ‘Hindutva’ is mainstreamed: from the proliferation of temples to the ascendancy of the RSS in every sector. The pluralistic fabric and the rich diversity of the country is being destroyed systematically. Early December, in Jaipur, one of the newly elected MLAs went round closing down non-vegetarian restaurants run by Muslims. On 22 January, with much fanfare, it was the launch of the Ram Temple by the BJP /RSS, using official Government of India machinery.

There are numerous instances of minorities (Muslims, Christians and Sikhs) being targeted and attacked. In Manipur and elsewhere, Christian personnel and institutions are being attacked almost daily! The farmers and the ordinary labourers are on the warpath. Thousands of them, who at this moment, are outside Delhi are being forbidden to enter the capital city. The Government is using every ruse in the book to quell their protest.

On 26 November 1949, We the People of India, gave to ourselves a visionary and pathbreaking constitution. Thanks to all the members of our Constituent Assembly, eminent women and men, from every section of India’s society, led by stalwart Dr BR Ambedkar. On, 25 November 1949, the eve of the enactment of the Constitution, Dr Ambedkar gave a long but very passionate speech to the Constituent Assembly.

His speech set the vision and the spirit of what the new Constitution should be for the people of India. Ambedkar said:

“If we wish to maintain democracy not merely in form, but also in fact, what must we do? The first thing in my judgement we must do is to hold fast to constitutional methods of achieving our social and economic objectives…. where constitutional methods are open, there can be no justification for (..) unconstitutional methods. These methods are nothing but the Grammar of Anarchy and the sooner they are abandoned, the better for us.

“The second thing we must do is to observe the caution which John Stuart Mill has given to all who are interested in the maintenance of democracy, namely, not “to lay their liberties at the feet of even a great man, or to trust him with power which enable him to subvert their institutions in politics, Bhakti or hero-worship is a sure road to degradation and to eventual dictatorship. The third thing we must do is not to be content with mere political democracy. We must make our political democracy a social democracy as well. Political democracy cannot last unless there lies at the base of it, social democracy”.

Ambedkar’s final words in that path breaking speech, sums up his views on the measure of responsibility owed to preserve the idea of India, as envisioned in the Constitution:

“If we wish to preserve the Constitution in which we have sought to enshrine the principle of Government of the people, for the people and by the people, let us resolve not to be tardy in the recognition of the evils that lie across our path and which induce people to prefer Government for the people to Government by the people, nor to be weak in our initiative to remove them. That is the only way to serve the country. I know of no better.”

It looks as though, the visionary he was, Ambedkar was actually visioning and speaking of India 2024, when the Constitution is truly at stake! The sacred Constitution of India today, is not only being trampled upon and desecrated, but being torn to shreds. The Constitution guarantees fundamental rights (rooted in the Universal Declaration of Human Rights of 1948) to every single citizen of India; they are based on the four non-negotiable pillars of justice, liberty, equality and fraternity.

These fundamentals which are enshrined in the Preamble with the pledge to constitute India into a Sovereign, Socialist, Secular and Democratic Republic; where dignity, unity and integrity are paramount. The promotion and the protection of human rights for all and the respect for pluralism and diversity, is sine qua non for good governance. Sadly, in the past few years we have witnessed the systematic erosion and the destruction of human rights, by those in power.

It is imperative that we the people, mainstream Constitutionality today, which could include:

• to promote and protect the Constitution in every way
• to study the Constitution: developing an ownership of it in letter and spirit;
• to organise in-depth training in social analysis and advocacy;
• to ensure that all official policies / legislation which are draconian anti- people, anti- poor and anti- Constitutional which go against the democratic and pluralistic fabric of the country be rescinded immediately and unconditionally;
• to ensure that all eligible voters are on the electoral rolls and exercise their franchise freely, for democratic, secular parties/individuals. It means that a regime which is fascist, fundamentalist and fanatic and is unable to ensure constitutional rights to all, must be voted out!

Many Constitutional challenges indeed! But only when we the citizens of India realise and exercise our Constitutional mandate will we be able to guarantee to our beloved nation the change we want to see! In the meantime, we need to pray and act in the words of Rabindranath Tagore, “Into that heaven of freedom my Father, let my country awake!”

*Human rights, reconciliation and peace activist/writer

Courtesy: Counter View

The post SBI ‘openly complicit’ in Electoral Bonds scam? Apex Court’s Constitutional dilemma appeared first on SabrangIndia.

The Electoral Bonds scheme has been the single legitimate way of funding to political parties, as introduced by the Bharatiya Janata Party (BJP) government in 2017. From the year 2017 to 2023, the BJP received 54.7% of the total contributions via electoral bonds, while the principal opposition Congress and the ruling party in Bengal-All India Trinamool Congress receiving approximately 9% each.[2] More about the Electoral Bonds scheme can be read here. Now that Electoral Bonds have been declared as unconstitutional, it becomes necessary to discuss ways to make campaign finance more transparent and its details- more accessible. This article explores various steps different countries across the world have adopted to make their campaign finance more transparent.

Before going further, it is important to keep in mind that there is a nexus between big money sources and the politicians across the world. This therefore presents a rather universal problem. However, the responses to this problem have been on the spectrum, ranging from lenient to stringent.

There are usually three pillars of campaign finance, across the world.

One is the cap on contributions/spending’s and restrictions on contributors i.e., limiting the amounts of money that one can give to a candidate or a party, or banning some persons from contributing to parties or candidates. Second is the regulation of spending, which sets limits on how much money candidates or parties can spend during an election cycle. And thirdly, transparency measures, which aim to ensure that the sources of campaign funds are disclosed to the public, allowing for scrutiny and accountability.

United Kingdom

In UK, as far as individuals and companies are concerned, they have to be in UK Electoral Rolls and UK registered respectively. The company should be registered as a company in UK, incorporated in UK, and should be carrying on business in UK i.e., all three conditions should be met with.  Any donation over £50 is required to be from a permissible donor. The candidates are required to keep the records of donors who give more than £50 and report them in the short campaign donations return. Short Campaign Period is the period beginning from the day of dissolution of Parliament whereas Long Campaign Period is the period that begins once the Parliament has sat for 55 months. There is a different allowance for the long campaign period.

The Political Parties, Elections & Referendums Act 2000(PPERA) governs the spending limits of parties. Under the PPERA, party (as opposed to the candidate spending limits in India) were introduced. Under this legislation, a formula was created for parties based on the number of constituencies in which a party fielded a candidate.[3] These limits only apply to the parties for 365 days prior to the polling day-the period being called the Regulated Period. While any party can spend approximately just over £1.458,440, for the region of England, and collectively an amount of £ 324, 090 for the regions of Scotland and Wales, irrespective of the number of seats they contest, parties are mandated to spend no more than £54, 010 per each constituency their candidate is contesting in for Great Britain.[4] Therefore, there are strict limits on spending of political parties Great Britain.

Within campaign spending, the items or services bought before the regulated period begins but used during it, or items or services given to the party free of charge or at a non-commercial discount of more than 10% and are used in campaign are also included. Political Parties are mandated to submit weekly donation reports to the Electoral Commission once the Parliament is dissolved. And after the election, Political Parties will have to report the spending and are mandated to keep invoices or receipts for any payments over £200.  Parties have 3 months to submit returns, or they get 6 months if they have spent more than £250,000.

European Union[5]

Anonymous Donations: Most countries don’t allow anonymous donations, especially large ones. Austria, Denmark, Germany, Italy, the Netherlands, and Romania are the exceptions with varying limits on how much can be given anonymously.

Foreign Donations: The majority of countries prohibit donations from outside their borders. Belgium, Denmark, Germany (small amounts), Luxembourg, the Netherlands, and Sweden are exceptions.

State-Owned Companies: Most countries ban donations from companies owned or controlled by the government.  Belgium, Denmark, Ireland, the Netherlands, and Sweden don’t have this restriction.

Additional Restrictions:  Over half of the countries in the EU have additional rules such as bans on donations from companies with government contracts or even bans on donations from any non-individual entities.

This is important since in India, the major issue about anonymity of Electoral bonds was due to the chance for Quid Pro Quo (a favour for a favour) being high.

Does a blanket Ban on Corporate funding work?

In 2015, Brazil banned corporate contributions to restrict the influence of big money on politics.[6] However, it was found that this reform did not stop individuals from donating money, although there was a limit of 10% of their last annual declared income.[7] This enabled super-rich individuals to dominate the campaign funding, which was not the intention.

For Political Parties’ funding, Brazil enables Special Fund for Financial Assistance to Political Parties- to transfer money to political parties.[8] The fund is made of federal budget allocations, fines, penalties and other donations and other financial resources allocated to them by law.

What would work for India?

During the run of the Electoral Bonds Scheme, even foreign companies could buy bonds and give those to parties for the latter to encash and no one would know. Therefore, the state of affairs in India, as far as political campaign finance is concerned, is dire. From here, any reform in terms of restricting contributions from certain people or ensuring that there is transparency in ‘who funds which party’ would be a forward step provided the government does not explore other innovative options to deteriorate the situation further.

In a conversational interview of former Election Commissioner SY Quraishi, former Supreme Court judge Justice M.B. Lokur and former BJP MP Subramanian Swamy and Senior Advocate Kapil Sibal- it was suggested that there could be a Corporate Cess or that the Election Commissions could maintain a fund-accepting donations from anyone from permissible-and later distribute it according to a formula.[9]

While these are workable suggestions, the first step would be to undo the loss the electoral bonds have done. That would be to examine the data that Election Commission will hopefully disclose owing to the Supreme Court’s directions in the judgement within the timeframe as directed by the Court. This exercise will give ways for further steps to be taken, like restriction on people who get government contracts from contributions, restrictions on contributions from those who have no profits etc. Only with these initial steps can we pave a path for better laws on Electoral campaign finance laws.

(The author is a legal researcher with the organisation)

[1] ADR vs. Union of India, 2024 INSC 113

[2] Nath, D. and Das, A. (2024). 57% vs 10%: BJP vs Congress share in electoral bond funds. [online] The Indian Express. Available at: https://indianexpress.com/article/political-pulse/bjp-congress-electoral-bonds-funds-9162973/

[3] The Constitution Unit (2023). Election spending limits: we’re going to spend, spend, spend (or are we)? [online] The Constitution Unit Blog. Available at: https://constitution-unit.com/2023/10/05/election-spending-limits-were-going-to-spend-spend-spend-or-are-we/

[4] Electoralcommission.org.uk. (2024). The spending limit. [online] Available at: https://www.electoralcommission.org.uk/party-spending-uk-parliamentary-general-election/spending-limit

[5] Financing of political structures in EU Member States, European Parliament, https://www.europarl.europa.eu/RegData/etudes/STUD/2021/694836/IPOL_STU(2021)694836_EN.pdf

[6] The Wire. (2018). In Blow to Big Money, Brazil Bans Corporate Donations to Parties, Election Campaigns. [online] Available at: https://thewire.in/external-affairs/in-blow-to-big-money-brazil-bans-corporate-donations-to-parties-election-campaigns

[7] Carolina, A., Burle, F. and Joaquim, M. (2023). In brief: political finance in Brazil. [online] Lexology. Available at: https://www.lexology.com/library/detail.aspx?g=f4af9afa-06c7-41f5-aba5-43da242fa552

[8] Tribunal Superior Eleitoral, Partisan Fund, https://international.tse.jus.br/en/partidos/partisan-fund.

[9] Dil Se with Kapil Sibal (2024). Electoral Bonds Illegal but BJP Now Has Rs 6500 Cr; SC Delay, Secrecy Give Modi Unfair Advantage. YouTube. Available at: https://www.youtube.com/watch?v=Hjr9gwxn-jI

Related:

Supreme Court unanimously hold Electoral Bond scheme to be unconstitutional, violative of right to information

‘Electoral Bond Scheme must be abrogated, favours ruling party, threats of money laundering,’: Coalition Report tells FATF

Electoral Bonds: A Democracy’s Trojan horse

Is India’s democracy being sold through electoral bonds?

SC expresses concern over the possible misuse electoral bonds, reserves its order on the matter

Centre Allowed Electoral Bonds Sale for 15 More Days Despite Official Objection: ADR

The post Electoral Bonds Scheme ‘Unconstitutional’: How do countries across the world deal with Campaign Finance? appeared first on SabrangIndia.

As per a report in LiveLaw, the CJI stated “Crucial aspect of expansion of right to information is that it is not confined to state affairs but also includes information necessary for participatory democracy. Infringement to the right to information is not justified by the purpose of curbing black money.”

The constitution bench, also comprising Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra, had dealt with two major issues in the said case- whether the non-disclosure of information on voluntary contributions to political parties in accordance to the electoral bond scheme and the amendments to Section 29C of Representation of the People Act, Section 183(3) of the Companies Act, Section 13A(b) of the Income Tax Act should be held violative of the right to information under Article 19(1)(a) of the Constitution, and second, whether unlimited corporate funding to political parties as envisaged by the amendment to Section 182(1) of the Companies Act violates the principle of free and fair elections.

Observing the scheme to be unconstitutional, the bench also quashed the amendments made to the Income Tax Act and the Representation of People Act which had made the donations anonymous. In furtherance to this, the bench observed that the amendment to Section 182 of Companies Act becomes otiose in view of the unconstitutionality of the electoral bonds scheme.

While delivering the judgment, CJI said “A company has graver influence on the political process than contributions by individuals. Contributions by companies are purely business transactions. Amendment to Section 182 Companies Act is manifestly arbitrary for treating companies and individuals alike.”

The bench further held that the union was unable to satisfy the court on the restrictive means test and that means other than electoral bonds can be used to achieve the purpose of curbing black money.

The CJI stated “Union has been unable to establish the measure adopted in clause 7(4)(1) of the electoral scheme is the least restrictive measure.”

Furthermore, the court directed that the issuing bank, i.e., the State Bank of India, shall forthwith stop the issue of electoral bonds and will have to furnish the details of donations through electoral bonds and the details of the political parties which received the contributions. The said details have been directed by the Court to be submitted to the Election Commission of India (ECI) by March 6, which shall then be published by the ECI on their official website by March 13. In view of the principle of proportionality, the political parties have been directed by the Supreme Court to thereafter refund the Electoral bonds amount to the purchaser’s account.

With this, the Court observed that while the privacy of donors is important, transparency in political funding cannot be achieved by granting absolute exemptions. Notably, a total of two judgments have been written in the case, with the lead judgment having been penned down by CJI Chandrachud and a concurring judgment with a slightly different opinion by Justice Khanna. The judgment authored by CJI Chandrachud was on the behalf of Justices Gavai, Pardiwala, and Misra as well.

What are electoral bonds?

In the month of February 2017, as the Union Budget was unveiled, the Former Finance Minister Arun Jaitley voiced his unease about the glaring absence of a transparent mechanism for financing political parties. He lamented that even after seven decades of independence, this vital component crucial to ensuring equitable and just elections continued to elude the nation.

To tackle this challenge head-on, he had introduced the Electoral Bonds Scheme with an aim to “cleanse the system” and revolutionize political funding.

An electoral bond is like a promissory note. The Union unveiled the Electoral Bond Scheme, 2018 through a notification sent out on 2 January 2018. Interestingly, an electoral bond does not reveal the identity of the buyer or payee, adding an element of secrecy to donor transactions. Anyone who is a citizen of India or incorporated/established in India can acquire bonds individually or team up with other individuals for this clandestine contribution. Authorized branches of the State Bank of India hold the privilege to issue these electoral bonds. To partake in this covert transaction, one must either visit an authorized SBI branch in person or make use of their online portal.

However, the privilege of electoral bonds is restricted to only a political party, which had secured more than 1 percent of votes in the previous general election to the Legislative Assembly. The party must also encash the issued bond within15 days, discrepancy in doing this will lead to the donation of the amount to the Prime Minister Relief Fund.

Challenges to the scheme 

Shortly after the amendments were unveiled, in January 2018, a coalition of Non-Governmental Organizations—Association for Democratic Reforms and Common Cause—alongside the Communist Party of India initiated legal proceedings in the Supreme Court to contest the amendments. The petitions contended that the Finance Acts were deceptively enacted as money bills to evade thorough examination by the Rajya Sabha. This contentious issue is intertwined with broader debates surrounding the use of money bills under Article 110. Petitioners also argued that the scheme perpetuated a culture of secrecy in political funding and sanctioned widespread electoral malpractice on an unprecedented level.

Procedural background

On April 12, 2019, a panel headed by Chief Justice Ranjan Gogoi and comprising Justices Deepak Gupta and Sanjiv Khanna instructed all political parties to provide information about their donations, donors, and bank account numbers in a sealed cover to the ECI. The panel chose not to halt the implementation of the scheme but emphasized that these significant matters would need careful consideration

Subsequent to the Order, the petitioners made their way to the Court time and again. They first presented an urgent plea in November 2019, and then returned for another attempt in October 2020 just before the buzz of the Bihar elections.

In the beginning of 2021, Association for Democratic Reforms made a move by approaching the Court to halt the scheme before a fresh round of bond sales. The application was thoroughly reviewed by a Bench led by Chief Justice S.A. Bobde flanked by Justices A.S. Bopanna and V. Ramasubramanian. On March 26, 2021, the Bench decisively rejected any stay on the scheme application, dismissing concerns about foreign corporate influence on electoral processes as “misconceived.” Furthermore, they firmly advised against repetitive applications seeking identical relief from the Court.

The case was referred to a five-judge Constitution Bench led by the CJI Chandrachud, accompanied by Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra. On October 3, 2023, the Bench gathered to deliberate over the case for a course of three days. The petitioners presented concerns about the electoral bonds scheme fostering corporate funding and black money, and corruption. They asserted that voters deserved insight into political parties’ financial sources as it illuminated the very essence of those parties’ policies and perspectives. On the other hand, the Union put forth an unexpected defense – claiming that this cloak-and-dagger scheme was devised to protect donors’ confidentiality and right to privacy from potential retaliation by ungrateful political entities they chose not to support.

The main issues before the bench were as follows:

1. Is the electoral bond scheme constitutional?
2. Does the electoral bond scheme violate the voters’ right to information?
3. Can the Scheme allow anonymity with the view to protect donors’ right to privacy?
4. Does the electoral bond scheme threaten the democratic process, and free and fair elections?

The petitioners’ team, consisting of Senior Advocates Prashant Bhushan, Nizam Pasha, Kapil Sibal, Vijay Hansaria, Sanjay Hegde and Advocate Shadan Farasat put forth compelling arguments, such as:

1. Suppression of Right to Information and lack of transparency

Arguments have been put forth in the courtroom questioning the Electoral Bond scheme’s infringement upon citizens’ fundamental right to information under Article 19 a regarding political parties. Bhushan drew upon precedent from previous court rulings to emphasize that if individuals are entitled to knowledge about candidates, then they unequivocally possess the right to transparency concerning political party funding as well.

In an assertion before the Supreme Court, Solicitor General of India Tushar Mehta emphasized the paramount importance of safeguarding the confidentiality of bond buyers. He underscored that this protection is crucial in preserving donors’ privacy and guarding against retaliation or victimization by any opposing political factions. Additionally, he asserted that only the receiving party should have access to donor information. Rebutting this, Shadan Farasat stated, “Right to privacy of individuals cannot extend to shadow the entire political system and affect the public interest.”

2. Provides pathways to shell companies

Under the proposed scheme, the government revoked the limit od 7.5 percent annual profit limit for company donations to political parties and has allowed for Indian subsidiaries of foreign companies to make contributions, shell companies could also be utilized for making donations. In fact, with amendments to the FCRA, a circumstance wherein a loss-making company that does not operate for business purposes, or does no business can also dole out funds.

3. Adds to the problem of corruption

Sibal argued that the proposed scheme instead of combating the issue of corruption provides leeway to circumvent getting prosecuted under the Prevention of Corruption Act (PCA) and Prevention of Money Laundering Act, PMLA. The anonymity promised by the scheme leads to a situation wherein it become difficult to trace the corrupt components and to determine the transaction that may have transpired.

4. Allocation of donations is inequitable

Bhushan pointed towards the discrepancy that the electoral bonds are creating. The donated amount may exceed the allocated budget for candidates for the Lok Sabha. Moreover, the difference between the amount donated to one party may exceed the donations to the other, affect our democracy negatively.

Substantiating this, in an article for BBC, Soutik Biswas mentions, “Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) appears to be the main beneficiary, cornering three-quarters of the bonds in 2019-20, compared with just 9% for the main opposition Congress.”

5. Paves way for backdoor lobbying and quid pro quo

Bhushan revealed that circumstantial evidence that points to illicit kickbacks funnelled through electoral bonds from corporations to the ruling political parties in exchange for lucrative favours. Such a case can deduced from the circumstances befalling the Vedanta Limited. This particular corporation, amid reports of financial crunch, made hefty donations to electoral and then was subsequently declared to be the preferred bidder for several mining licences. Bhushan banks on several vase studies to illustrate that the scheme serves as a cloak for clandestine corporate lobbying efforts.

6. Usage of the electoral bonds cannot be determined

Sibal contended that the title “Electoral Bond” is deceiving, for once withdrawn, the funds can be utilized without any accountability or transparency regarding their usage by political parties.

Sibal mentioned, “There is nothing in the scheme which connects the donations made to the participation in the electoral process. It’s a means for political parties to be enriched.”

Deliberating on this, the CJI inquired if there was any spending required. Sibal, in support of his argument stated that, “None! You can spend this money, however. You can build your office. You can set up a whole internet network throughout the country.”

7. Trading of electoral bonds

Sibal stated that there may develop a system operating to trade electoral bonds. With regards to trading, the CJI observed that although trading is restricted there is no way to ensure a complete termination. A person could assume the position of an aggregator and may distribute the bond to multiple people.

What does the Election Commission of India say about the Electoral Bond Scheme?

The Election Commission of India (ECI), one of the respondents in the above-mentioned petitions, presented a and affidavit opposing the Electoral Bond Scheme (EBS). The affidavit painted a vivid picture of how the scheme undermines transparency in political finance. It alleged that the ECI had sent a cautionary letter to the Union Government on May 26, 2017, emphasizing the potential adverse effects on transparency in political finance and funding. Moreover, it argued that shielding political parties from disclosing contribution details would shroud foreign funding information in secrecy. The affidavit raised concerns about unchecked foreign funding influencing Indian policies through foreign companies.

Subsequent to this, on April 1, the Union government put forward a rejoinder stating that the EBS marked an initiative towards electoral reform, aiming to uphold transparency and accountability in political funding. The government asserted that cash donations had been causing an unchecked influx of black money into political parties’ funds, but with only one authorized bank—the State Bank of India—issuing these bonds and thorough KYC details required for transactions, such issues would no longer pose a threat to political funding.

Electoral Bonds in numbers by ADR

In seventeen phases spanning from March 2018 to July 2021, a whopping total of Rs 7380.638 crore adorned in the form of 14,363 Electoral Bonds found their way into the political arena. The sum of Rs 7360.3545 crore was redeemed by claiming ownership of 14,217 bonds during this period. 49.075% of the resplendent electoral bond treasure was fervently acquired within two months: March and April 2019 as part of the grand general elections.

In the ever-evolving Indian political landscape, a staggering 2,628 political parties now exist as of September 30, 2020 – flourishing from the count of 1,500 back in January 2017. This surge triggers thoughts about the potential impact of electoral bonds and clandestine corporate contributions. Most intriguingly, many among these swelling ranks have no intention to partake in elections; raising suspicions of involvement in money laundering or transforming illicit funds into legitimate assets through their party status

Critiques of Electoral Bonds

Association for Democratic Reforms (ADR) informs that the lack of transparency is “unconstitutional and problematic” because it conceals from the taxpayers the source of donations. Moreover, the bonds advertised as being completely anonymous are not clandestine entirely. The SBI keeps the record of donors and done, making it easily accessible to the ruling parties.

Additionally, as per ADR, electoral bonds contain unique alphanumeric characters that remain invisible to the naked eye and can only be revealed under ultraviolet light. Despite the government’s insistence on their inclusion for security purposes, numerous experts have discredited this claim. Investigations by ‘The Quint’ and various other sources have exposed the true intent behind these hidden features – a covert means for the ruling government to clandestinely monitor donors. The supposed anonymity of these bonds does not extend to the government, which retains access to donor details through SBI. This leaves the Indian public and opposition parties in unilluminated uncertainty regarding the origins of these contributions.

Milan Vaishnav, belonging to Carnegie Endowment for International Peace, a think-tank situated in Washington, says that electoral bonds had “set the fight for campaign finance reform back by decades.” He also mentions that, “With electoral bonds, government has essentially legislated opacity” while talking about transparency.

Vidhi Centre for Public Policy adds, “The introduction of the electoral bond scheme is part of what appears to be a growing trend away from transparency and accountability, two values which were already sparse in relation to Indian political parties.”

For opposition parties, the electoral bond scheme represents a veil shrouding large anonymous donations to political parties, posing a direct threat to the heartbeat of democracy. The CPI(M) petition echoed these sentiments, emphasizing the critical need for transparency in political funding within a thriving democracy. Since its inception in 2018 following crucial amendments, the Electoral Bonds Scheme has seen an overwhelming influx of anonymous contributions that strike at the heart of our democratic essence.

According to the revelation made by the Former Election Commissioner of India Mr. SY Quraishi in an interview, “While buying an electoral bond, one needs to finish their KYC details. The serial number of the bond, matched with the KYC details, will clearly reveal who donated how much money to which political party.”

What does ADR Recommends as an advocate for democracy? 

The organization advocates for the complete elimination of the scheme, emphasizing transparency in political funding. In case the scheme persists, ADR suggests that –

1. The anonymity of bond donors should be eradicated. They propose that all political parties receiving electoral bond donations disclose detailed information about each donation in their financial reports to provide full transparency to the public eye.

2. A list of all political parties eligible to receive donations through electoral bonds should be available. This list must be regularly updated based on the vote share secured by the parties in the last General Election to the Legislative Assembly contested. It must be made available in public domain through various mediums including websites, SBI branches authorized for sale of electoral bonds, and hard copies for easy access and transparency.

3. The ECI should be the guardian of integrity, ensuring that only eligible political parties should be empowered to cash in on the electoral bonds as per the rules laid out in the Electoral Bond Scheme of 2018.

4. With a view to promise transparency, every National and Regional political party should provide details about the funds they receive via electoral bonds through the Right to Information Act. A including full disclosure of donors’ identities should be open for the public under the lens of RTI

For reference:

• The pdf of the electoral bonds scheme can be viewed here.
• A synopsis of the writ petition filed by Association for Democratic Reforms can be viewed here.
• Written Submissions on behalf of Senior Advocate Kapil Sibal can be viewed here.
• Counter affidavit filed by the ECI in the matter can be viewed here.
• Rejoinder by Ministry of Finance in the matter can be viewed here.
• A synopsis of the writ petition filed by CPI(M) can be viewed here.

(The backgrounder to this article  has been researched by CJP’s legal interns team including Karishma Jain)

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Centre Allowed Electoral Bonds Sale for 15 More Days Despite Official Objection: ADR

The post Supreme Court unanimously hold Electoral Bond scheme to be unconstitutional, violative of right to information appeared first on SabrangIndia.

Recommending that an immediate risk assessment of the scheme needs to be conducted, the report states that a serious threat of money laundering, terrorist financing, corruption and other threats of flow of illicit money through the EBS. Hence, the recommendations include the implementation of measures to enhance transparency by removing the anonymity of the donors in the EBS; the enforcement of stricter regulations for political parties to disclose and let the ECI examine the donation and make observations regarding both bonds and expenditure. The report, compiled by anonymous civil society actors, looks at the complex threat that the electoral bond scheme poses in a democracy and can be read here:

The electoral bond scheme (EBS), the report finds, most importantly curtails an individual’s constitutional right to know and in this case- right to know your candidate.  A citizen can make an informed choice based on the full and complete information about their candidate’s credentials which includes their source of funds. But electoral bond doesn’t allow such disclosure.

The FATF, is an inter-governmental organisation established in 1989 by the Group of Seven (G-7) countries, leads a global action to tackle money laundering, terrorism and proliferation financing. The Mutual Evaluation Review (MER) of the FATF is scheduled today, November 3, to evaluate anti-money laundering laws and financing of terrorism in India.

The Global NGO Coalition, along with its other study on India’s attempt to weaponise terror laws, is pushing the intergovernmental organisation to look into the threats posed by the electoral bond scheme in the country.

The report and the FATF meeting also came at the time when the Supreme Court, after a three-day hearing starting October 31, reserved its verdict in the batch of pleas challenging the legal validity of the electoral bonds scheme that allows anonymous donations to political parties.

“[The] electoral bond scheme is not merely opaque and non-transparent but opens a floodgate for money laundering through legal means,” the report argues. The anonymity that the scheme allows leads to “mysterious and indefinite donations which will be impossible to track down”, the report says.

The Global NPO Coalition has only stressed and reiterated what the Reserve Bank of India has already flagged way back in 2017. In a letter addressed to the Union finance ministry, the RBI had objected to the introduction of a electoral bond scheme on the ground that it does not disclose the identity of the intervening persons/entities buying the bonds and, therefore, the said scheme will affect the principles and spirit of the Prevention of Money Laundering Act (PMLA).

Emphasising the money laundering risk, the then Governor of the RBI wrote a letter stating “electoral bonds in physical form may exchange hands several times before reaching the political party, which would leave no trail of the transactions and in the process of providing anonymity to the contributor and to the political party, anonymity will be provided to several others in the chain of transfer of the electoral bonds. This can render the scheme open to abuse by unscrupulous elements”.

Similar concerns were raised by the Election Commission of India in 2018 during the first term of the Modi regime. In a separate letter addressed to the Ministry of Law and Justice, the ECI had stated:

“This (electoral bond) opens up the possibility of shell companies being set up for the sole purpose of making donations to the political parties, with no other business of consequence having disbursable profits”. The government not only overlooked these warnings but the minister of state for finance allegedly lied on the floor of the parliament that the ECI had not raised any concerns regarding the electoral bond.

Now, the Global NPO Coalition has found specific violations of the FATF, it says in the report. The ‘Recommendation 3’ of the FATF requires countries to take effective measures to criminalise money laundering and give a wider meaning to the offence by including predicate offences. Recommendation 3 also designates counterfeiting currency as a predicate offence for money laundering. The report states that the anonymity granted to the donor in the electoral bond scheme clearly violates the FATF’s recommendation.

FATF, in its report ‘Money Laundering and Terrorist Financing Related to Counterfeiting of Currency’, notes that counterfeiting is also a growing method of terrorist financing. Criminal groups have been active in using their covert network to introduce counterfeit currency into the financial system. The electoral bond, through its opaque design, is prone to the risk of counterfeiting and channelling of illicit money in India’s financial system, the Global NPO Coalition claims.

Corruption, although not explicitly covered by the FATF, time and again concerns have been raised and acknowledged by the intergovernmental organisation. The FATF also acknowledges the risk of money laundering through politically exposed persons, with the NPOs coalition points making it binding on the government to make the identities of the funding identities (to the political parties) public.

Other laws amended, ruling party ’empowered’

Earlier, the Companies Act, 2013 (‘Companies Act’) and Representation of People’s Act, 1951 (‘RP Act’) mandated the political parties to reveal the details of their donations. But as the electoral bond scheme came into being, both the Companies Act and the Representation of People’s Act were amended making it “completely opaque” and the information about the donour of the bonds and the source of their donations is not revealed. This controversial amendment virtually rendered the ECI powerless, as it no longer has “the power to seek information about donors of the bonds from political parties,” the Coalition finds in its study.

The Coalition has also significantly inferred that the electoral bond scheme favours the ruling party.

It states, “While no information regarding the electoral bonds is provided to the citizens, the said anonymity does not apply to the government, which can easily retrieve the donor details.” The practice, the report says, is that “the enforcement agencies are frequently misused by the ruling party to achieve political goals”.

Also, since the banks are largely under the control of the Union finance ministry, therefore, the details of the donors can also be accessed by the ruling party. This “exclusive access to the donors’ details”, the Coalition says, “allows the ruling party to track donations made to opposition political parties and arm-twist donors, and force them to make donations to the ruling party only, creating an uneven playing field”.

Among extraneous other issues, the electoral bond scheme also facilitates foreign funding within Indian electoral processes, which is not permissible under the law, the report has found. This, when, section 29B of the Representation of the People Act prohibits political parties from accepting political donations from foreign sources. In 2014, the Delhi High Court found both the BJP and the Indian National Congress guilty of accepting donations from foreign sources in violation of Section 2 (e) of the erstwhile Foreign Contribution (Regulation) Act, 1976. But interestingly, to bypass the said judgment and to further facilitate political donations from foreign sources, the electoral bond scheme promptly amended the provision relating to foreign donations under the Foreign Contribution (Regulation) Act, 2010, with retrospective effect i.e. 1976.

The Coalition, in its report comments, “It is pertinent to note that the electoral bond scheme as it stands today facilitates foreign companies to make donations through their subsidiary companies in India, but in the absence of such an amendment, the judgment of the Delhi High Court would have been binding, and political parties would have faced punitive consequences.”

As a part of its recommendation, the Coalition has sought risk assessment of the electoral bond scheme and assessment of the threat of money laundering, terrorist financing, corruption and other threats of flow of illicit money through the scheme.

The entire report may be read here:

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Electoral Bonds: Non-Transparent and Unaccountable

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The post ‘Electoral Bond Scheme must be abrogated, favours ruling party, threats of money laundering,’: Coalition Report tells FATF appeared first on SabrangIndia.

The RTI was filed by activist Venkatesh Nayak in 2017 seeking information on total number of and photocopies of representations received by government from donors for maintaining their anonymity while making donations to political parties, as also the draft Electoral Bond Scheme prepared by Department of Economic Affairs (DEA) in consultation with Reserve Bank of India and election Commission of India.

At first instance, after filing RTI, Nayak did not receive any response from DEA so he filed the first appeal after which he received a response from DEA with which he was dissatisfied as they were “false and misleading” hence he filed the second appeal. RBI had informed vide a letter that it did not have any information in this regard. Even the ECI said that they do not have the information sought by Nayak.

At the appeal stage, the application was also passed on to other departments like Department of Financial Services, Department of Revenue to provide the information sought by Nayak.

The CIC held that the response of RBI was incomplete while also holding that the responses of DEA and ECI were vague and misleading. The Commission also observed that the CPIO (Chief Public Information Officer) of DEA had “not discharged his responsibility with true spirit”.

The CIC directed that a show cause notice be issued to CPIOs of DEA, Department of Financial Services, Department of Revenue, ECI to show cause why penalty under section 20(1) of the RTI Act for giving incomplete, misleading and vague replies to the applicant and sought written explanation within 3 weeks.

The suspicion arises if these nodal agencies related to electoral bonds claim that they do not have information on names of donors who requested anonymity while making donations to political parties, there is something they wish to keep in secret. What is the government trying to hide?

The complete order may be read here

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Electoral bonds: Why the BJP is batting so hard for it
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