Find a formula for political funding, do away with donations

British Prime Minister Rishi Sunak is under fresh pressure over his ties to Frank Hester, the Conservative Party’s biggest donor, embroiled in a race row. Tortoise Media first published a report claiming that the Conservatives have received an as-yet-undeclared £5 million sum from Frank Hester, and the Conservative Party has not denied these reports. If confirmed by the Conservative Party in the next Electoral Commission update in early June, it takes the total donation from Frank Hester in the past year to £15 million.

Frank Hester is at the centre of a raging race row after it emerged that he said Diane Abbott, the UK’s longest-serving black female MP, made him “just want to hate all black women” and that she “should be shot.” Rishi Sunak reacted to the row by stating, “The comments were wrong, and they were racist. He [Hester] has rightly apologised for them, and that remorse should be accepted. There is no place for racism in Britain, and the government that I lead is living proof of that.”

Frank Xavier Hester OBE is a British businessman and the founder and CEO of the software company The Phoenix Partnership. Hester’s contributions to Tory Party coffers in less than a year of £15 million are almost as much as the Conservatives spent in the entire 2019 general election campaign. Hester’s software firm has won lucrative NHS and prison contracts, and there is disquiet among some Conservatives about accepting donations from him.

The Guardian, in an editorial, wrote, “The pernicious influence that big money can have on politics is something voters intuitively understand and don’t like. Not all party donations are crudely transactional. Some philanthropists feel it is their duty to finance democracy. But there are all kinds of access advantages and policy favours potentially available from proximity to power that might make party funding feel like a worthwhile business investment.”

As per the electoral bond data put out by the Election Commission of India (ECI), a large number of donors are businesses ranging from mining and metals, energy, and telecom to pharmaceuticals, real estate, and construction. These businesses operate in sectors where resources are controlled by the government, require licences and clearances from various government agencies, or have work contracts awarded by the government.

Of the top five donors of electoral bonds between 2019 and 2024, three companies faced probes from the Enforcement Directorate (ED) and income tax authorities. Of the top 30 donors, 14 were raided by probe agencies. The narrative that corporates donated funds to the BJP to avoid action by central agencies in corruption cases was just an assumption, Finance Minister Nirmala Sitharaman said.

Noting that political contributions give a “seat at the table” to the contributor, the Supreme Court has said that there is a legitimate possibility that financial contributions 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 licence 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 forms 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,” the top court has observed.

Either in the UK or India, opaque political donations by racists, contract seekers, and money launderers throw up troubling questions about the nature of the relationship between capital and power. But there is no perfect system. Capitalists and wealthy individuals with incentives
to influence politics will strive to work around any regulation. Fixing the problem is not simple.

The Guardian suggests that large democratic movements should ideally be able to sustain themselves with voluntary membership fees, but the sheer cost of modern politics is such that, realistically, capping large donations would probably require more state funding.

Probably it is high time that the Indian State contemplated funding for all the recognised political parties based on some just formulae, and political donations in all forms are altogether done away with.

(The writer is a retired corporate professional)