Will the votaries of secret political donations reveal?

Electoral Bonds (EBs) “came about after efforts to get business donors to write out cheques failed to gain traction, because these would need to be recorded in company accounts,” senior sources in government told a major English daily a few days ago. They were reacting to the recent six-part digital media exposé that revealed the government’s determination to float EBs despite being told not to do so by Constitutional bodies like the Reserve Bank of India (RBI) and the Election Commission of India (ECI). EBs are designed to maintain end-to-end secrecy of the donor’s identity from the moment he, she or it (as in a company or trust) buys them from a designated branch of the State Bank of India (SBI) and donates them to a political party. Why should the government of the day make any effort at all to get corporate donors and rich individuals to write cheques to political parties is a question that needs an answer.

While introducing the concept of EBs, in his February 2017 Budget speech in Parliament, the then Finance Minister Arun Jaitley had said that donors were reluctant to use transparent methods, like cheques, to contribute to political parties, fearing reprisals from rival parties. Further, election and tax laws were amended that year to absolve recipient political parties of the duty to report the identity of an EB donor to the ECI and the income tax authorities. The law regulating companies was also amended to remove the cap on corporate donations to political parties and do away with the duty to record details of such contributions in their balance sheets. Clearly, there was no need for EBs at all after these amendments, if the repeated justification from the finance ministry is to hold true.

Six months later, this author’s quest to discover who had persuaded the government to come up with the idea of electoral bonds began. An RTI application was filed with the Department of Economic Affairs (DEA) asking for the total number of representations received from potential donors as well as a copy of such representations beseeching a mechanism that would afford them confidentiality. Every voter has the right to know who influenced a U-turn in government policy about transparency in political funding.

Until the EBs were launched in 2018, all political parties were required to maintain an annual record of names, addresses, PAN and bank details of individuals, companies and trusts giving donations of Rs 20,000 or more, whether in cash or through cheques, bank drafts or digital transfer. The ECI proactively disclosed these details on its website after scrutiny. These methods of donating are valid even now.

However, statutory filings of income details for 2018-19 indicate that one national party and four regional parties received between 50-88% of donations through the EB route. Data obtained through the RTI Act by multiple transparency advocates reveal that there are hardly any takers for EBs of Rs 1,000 and 10,000 denominations. So clearly, the EBs are meant to facilitate large-sized donations from deep-pocketed corporates and high-net-worth individuals. In hindsight, this author’s quest for transparency appears justified.

The DEA did not bother to respond to the RTI application. After 40 days, an appeal was filed pointing out that a lack of response within the time limit of 30 days meant deemed refusal under the RTI Act. The appellate authority woke up the DEA and directed transfer of the RTI application to the ECI, the Department of Financial Services (DFS - which regulates banking affairs) and its own Coordination Section. This order was passed 49 days after the appeal was submitted -- five days past the RTI Act’s outer limit for the appellate authority to act. DFS, though, acted with amazing speed and further transferred the RTI application to RBI within 24 hours.

Later, both RBI and ECI replied that they had no knowledge of any donor’s representation demanding institution of a secret method to donate funds to political parties. The DEA’s Coordination Section did not bother to send a response. So, in January 2018, a complaint was filed before the Central Information Commission (CIC) with a simple prayer to make a determination as to which public authority held on file the alleged donor representations demanding confidentiality of their identity.

That complaint came up for hearing 22 months later. The pretence of ignorance by the DEA, ECI and RBI representatives peeved the Commission. An interim order was issued directing the Coordination Section to identify which of them held the information and send a consolidated reply to this author. A month later, the DEA replied that their Budget Division was identified as the competent unit for the subject matter of EBs. The Budget Division admitted that no representations were received from any donor “regarding their need for maintaining confidentiality while making donations to political parties”. Only a few days before the publication of this admission by the government in a news expose, another Union minister had issued a press statement repeating the claim that EBs were floated to satisfy donors’ demand for confidentiality of political donations!

Interestingly, file notings that had been obtained by transparency advocates reveal officials’ claims that the identity of EB donors cannot be made public even under the RTI Act. That claim is also due for testing before the CIC.

This author has sought copies of all documents created by the State Bank of India (SBI) while selling EBs during the first two phases launched in 2018. These sale records contain not only the names of buyers but also details of the beneficial ownership of corporations that have made such purchases. Nothing in the 2017 amendments made to the election and income tax laws, and the RBI Act that constructed the statutory framework for the EBs, require donor identity to be withheld from the people. The Scheme for sale and redemption of EBs, gazetted in January 2018, does not explicitly prohibit the disclosure of a buyer’s identity. It did not go through Parliament before notification, nor did Parliament give formal approval to the Scheme afterwards. So technically, the EB Scheme is just that -- a scheme -- not law, duly enacted by Parliament or a government-made Rule tabled before it for approval. Such a scheme cannot override the RTI Act -- a law duly passed by Parliament.

A year has passed since the submission of an appeal to the CIC against the SBI’s refusal to disclose the identity of EB buyers. The hearing is yet to take place.

Meanwhile, will the votaries of secrecy in political donations please stand up, as the government is tying itself up in knots over the origin of the EB idea? Voters have the right to know who influenced the BJP’s (and NDA’s) volte face over its 2003 position of complete transparency in political donations of Rs 20,000 and above.

(The writer is with the Commonwealth Human Rights Initiative, New Delhi)