Concerns remain over electoral bonds

After the electoral bonds scheme was notified in 2018, a total of 12,924 electoral bonds worth Rs 6,534.78 crore have been sold in 15 phases between March 2018 to January 2021. The sale of these bonds peaked in the run up to the Lok Sabha polls of 2019, and 55.43% of the total value of electoral bonds were purchased in March and April 2019.

The anonymity promised by electoral bonds have made it the most popular mode of donations to political parties. The law does not require political parties to mention the names of those contributing through these bonds.

Post-independence, during the 65 years period from 1952 to 2017, about 1,800 political parties were registered in India. After the introduction of electoral bonds, in barely a four-year period, an additional 900 political parties got registered themselves.

Election watchdog Association for Democratic Reforms (ADR) says, “Definitely points the needle of suspicion towards the government’s controversial electoral bonds and unlimited and anonymous corporate donations.” ADR says “a vast majority of these parties will never contest elections”. It believes these parties “may be involved in money laundering activities or may simply be using their status to turn black money into white”.

More than 52% of the total income of national parties and 53.83% of the total income of regional parties analysed by ADR for FY 2018-19 came from donations received through electoral bonds. Given the opacity of the scheme, there can be no guarantee against political parties receiving funds from foreign sources, even foreign government-owned companies.

Dismissing the two stay applications moved by ADR, filed in 2019 and earlier this month, a three-judge bench of the apex court headed by Chief Justice of India S A Bobde noted that the sale of the electoral bonds, which began in January 2018, have continued “without any impediment” in 2018, 2019 and 2020. The Supreme Court found no justification to block their sale over concerns of anonymity. The court cleared the next tranche of sale of the electoral bonds ahead of elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry.

‘Judgement disappointing’

In April 2019, the Supreme Court introduced an interim “safeguard” by directing all political parties to submit details of receipts of the electoral bonds to the Election Commission of India (ECI) in a sealed cover. The bench said, “Certain safeguards have already been provided by this Court in its interim order of April 12, 2019, (and) we do not see any justification for the grant of stay at this stage.”

The interim safeguard directed by the apex court in 2019 is not a fool-proof safeguard. Even after all the political parties do submit details of receipts of the electoral bonds to the Election Commission in a sealed cover, ECI cannot know the true identity of real donors. Any number of shell companies can be created, and their bank accounts used for making anonymous contributions. KYC compliance by such shell companies is a routine process.

The audited accounts and the cumulative figure of amounts received through the bonds declared by political parties cannot be easily matched with the statutory filings of numerous donor companies. Such safeguards or counterchecks are far-fetched to do in practice.

While information about the identity of the donors is kept away from citizens, it is accessible to the government of the day. The government can access the details of donor/s by demanding the data from the State Bank of India, which is authorised to sell these bonds.

ADR Founder Jagdeep Chhokar said, “The judgement is disappointing. The interim arrangement on which the Court has relied is unworkable. The EC cannot know the donors of these bonds received by political parties. Further, the Court has said that information about the donors can be known by making a little effort. If this information can be found, why can’t it be made available in public domain? We hope this order does not impact our petition pending on the larger questions of law challenging these bonds.”

(The writer is an alumnus of IIM, Ahmedabad, and a retired corporate professional)