‘With Electoral Bonds, transparency has been lost’

‘With Electoral Bonds, transparency has been lost’

V.S. Sampath

Former chief election commissioner V S Sampath tells DH’s Pranshu Rathee that the EC is helpless when the law itself is made or amended to suit corporate donors and political parties receiving foreign funds. Excerpts from an interview:  

The recent report by the Association for Democratic Reforms shows that electoral funding is becoming ever more anonymous. Is it a cause of worry?

 Electoral funding has always been a ticklish issue. Around 8-10 years ago, every donation of more than Rs 20,000 had to be reported to the Election Commission and to the Central Bureau of Direct Taxes in order to qualify for tax exemption.

One party in North India, whom I do not wish to name, had got Rs 500 crore in donation, but it did not disclose this to the EC.  When questioned, the party said it had all come in units less than Rs 20,000. So, whatever is the regulation, whatever the disclosure norm, parties always found ways to circumvent them.

Later, they (the UPA government) brought in the electoral trust approach. So, a corporate can contribute to an electoral trust or set up its own trust and contribute to political parties through it.

Under this, when companies contribute to a trust, they also mention which political party their contribution should go to (and these were reported to the Election Commission, and the path the money travels from the donor to the recipient party can be traced: Ed’s note).

In 2015, we, the Election Commission, during the last few months of my tenure, came out with guidelines on fundraising for political parties. One of the things we suggested was that every political party should maintain a record of every donor, irrespective of the amount donated.

They need not disclose it to Election Commission, but they should maintain that record. We also said that parties should issue a receipt for each donation. When people come home to collect money for religious purposes, they give a receipt for even the Rs 5, Rs 10 donated. Then, what is the difficulty for political parties to give receipts?

But, as you know, it is only the government that can make the law and the rules. The Election Commission does not have that power. We can only give guidelines. We thought over time, we could make the application of those guidelines more rigorous. But, in the meantime, you know, other things happened…   

You mean, Electoral Bonds, brought in by the Modi government in 2017?

Yes. You see, the claimed advantage of contributions through Electoral Bonds is that they would help do away with cash donations. Electoral Bonds are bought through banks and money is transferred into the bank accounts (of political parties when they redeem the bonds). The bonds are an option, but they do not stop anyone from making cash payments, too, to parties. On the other hand, the major drawback of Electoral Bonds is that the identity of the donor is not disclosed, is never made public. There is no need to disclose (under the rules of the scheme).

Earlier, when you got cash donations of Rs 20,000 or more, you had to report them. So, sooner or later, the public at large would come to know who is donating money to the political parties. With these bonds, the public will never know. Perhaps the only people who might come to know is the government of the day as they control the banks. Nobody else will know.

The very soul of purity in election funding is transparency and disclosure. Contributions through Electoral Bonds do not satisfy those requirements. Thus, when corporates need to get something done by the government, they can contribute to the ruling party through Electoral Bonds and obtain favours without the public ever coming to know. So, earlier, when a corporate made a big contribution, under rules, it had to be made public. If the government did anything that seemed to favour that corporate, the public could link the donation and the favour. Whereas now, with this kind of lack of transparency, that opportunity is lost.

But former finance minister Arun Jaitley said that donors had to be kept anonymous because corporates were not comfortable making donations otherwise.

Why should you (corporates) want to make contributions in anonymity? What is the guarantee that it’s not quid pro quo for some favour? I really don’t think that argument works. In any case, all political funding has to be transparent. Otherwise, there is a lot of scope for misuse. The rule should be that you can’t make donations in anonymity, that above a minimum threshold, all contributions must be disclosed. We claim to be a progressive democracy. How can we have such anonymous donations? Is it important what the corporates are comfortable with? Ultimately, the purity of the polity and the purity of the system is important.

Three other former chief election commissioners have also spoken out against Electoral Bonds. So, if the EC does not approve of Electoral Bonds, why can’t it stop the scheme from operating?

No, the EC cannot do so. When something is introduced by legislation, the EC cannot do anything to stop it. The EC is not above (what’s been made into) the law of the land.  

The government also passed amendments to the Foreign Contributions Regulation Act, hiding them in a Money Bill, making the BJP, Congress and CPM immune to prosecution for foreign funding irregularities, that too with retrospective effect from 1976. Can the EC, given its mandate to ensure the sanctity of elections, not move against the amendments or petition the Supreme Court on the matter?

The legal position is that the government is obliged to consult the EC only when making or amending rules. There is no requirement for it to consult the EC to make laws or amend them. Of course, it would be good practice for the government to take into account the views of the EC, but they are not obliged to.  

Secondly, what is the background of this amendment? About a decade ago, some cases (of foreign funding of political parties) were brought to the notice of the government and the EC. A case was filed before the Delhi high court, where the matter was pursued and questions were asked about which foreign company was involved, what was the actual flow of money that had taken place, etc. These are not reported to the EC, and so the commission made a reference to the union home ministry. Under the FCRA Act, the home ministry is the competent authority to take action.

Some major political parties of the country were alleged to be recipients of the foreign contributions in violation of the Representation of People Act. So, the matter was in court. The amendments to the law were made, and with retrospective effect. I don’t think EC can do anything in the matter.

The EC cannot pursue the matter any further. Whether it (the amendment) is right or wrong, whether we should allow our democratic process to be influenced by foreign money, is for the people to decide.