India And Electoral Bonds: Fundamental Flaws In Formal Funding Of Franchise
The electoral funding issue has gathered enormous traction on social media because it has hit the sentiments of a large section of the population. The donors have been caught in an unholy alliance and several fundamental issues are arising concerning their conduct, irrespective of which party is the donee. The seriousness of the matter can be gauged by the fact that Harish Salve, the eminent advocate had to raise before the apex court, the ramifications of this matter, spreading in the different forms of social platforms.
With my background in management education, my 35 years of intense experience in the government at all levels and nine years of experience in the private sector, my mind has been triggered with several agitating questions, which elicit a correct, cogent, comprehensive and careful answer from all the relevant authorities.
The donor list has a large number of listed companies and several other big companies spanning many sectors of the economy. Each one has a board of directors as per the Companies Act, which encourages decision-making of any significance, to have the approval of the board. Hence, the first question to be examined in each case, in my view, is whether the concerned board of directors had approved the donee and the amount of donation each time, it was done through electoral bonds.
If the board had approved in each case, which looks unlikely, then the next issue is whether the Securities and Exchange Board of India (Sebi) was duly informed as required under the compliances, immediately after the board meeting.
If the second question is also in the affirmative, then a more serious matter arises as to what action Sebi took, seeing such large amounts being donated to political parties, anonymously and for what reason?
The board of directors in a company not only include the functional directors but also the independent directors, whose job it is to ensure that the board is functioning as a legal entity and discharging its duties as per its memorandum of association. The second question not yet posed explicitly in the media so far is, whether the independent directors of each board of the donor company, approved the donation or did they absent themselves from such decisions?
A related question is whether the audit committee which is chaired by an independent director with at least one or two more independent directors, as members, had raised any objections at any time and whether were they clarified fully.
Succinctly, did the audit committee approve such action? This is a matter which the Ministry of Corporate Affairs (MOCA) needs to handle comprehensively, confidentially, correctly and systematically, so that the truth comes out. If necessary, a special audit may also be conducted swiftly and in a legally sound manner, so that the credibility of MOCA is not jeopardised.
In common parlance and especially in the corporate world, it is often said that “there are no free lunches”. Having seen the entire list of the donors with the amount, I am aghast at the magnitudes & the names of the firms, together with the frequency of the donations from the same company on different dates.
The minimum amount of donation that I can see on the list is Rs 1 lakh at one go and the maximum is Rs 1 crore, but multiple times. My deep experience tells me that one should not agitate for smaller amounts, as these are routinely done, under pressure and to pacify. I don’t understand what cut-off could be taken, for so-called “permissible amounts”, but assuming a very optimistic non-obstructive estimate, that in these days of inflation, up to Rs 100 crore can be “allowed with impunity”.
What happens to those who have gone berserk and fall in the category of 100 crore+ donations to all parties? The crucial question that arises is that a sitting Supreme Court judge with the Central Vigilance Commissioner and Controller and Auditor General together examine each case above Rs 100 crore or above any other limit they determine to assess whether there was any quid pro quo. If such a positive result emerges, then the relevant legal provisions of the country will have to be invoked, and appropriate action initiated against the defaulters.
To dilute the culpability of certain parties, an issue has been floated in social media that the donation per MP of some parties, is much less than the of others. This seems to be a ludicrous argument because electoral funding to any party is done for future elections, where the number of MPs cannot be determined till they succeed on the ballot.
Hence, the lumpsum amount obtained by each party is the cause of action in this case, and should not be obliterated by facetious arguments. The issue is Why was it paid multiple times and who authorised it to be paid in many instalments?
Finally, the donations far exceed the ECI limit of expenditure of about Rs 95 lakhs per MP. This raises several questions. Is a rethink required on the expenditure limit set by ECI for parliamentary and assembly elections? Till this is done, how does ECI view the apparent excess of election funding available per MP, even if you take it in terms of the sitting MPs today?
ECI appoints a large number of financial observers in each parliamentary constituency to examine the expenditure details of each candidate of each party. Will ECI initiate action against all political parties who are not able to give legitimate auditable proof of confining their expenditure within the ECI limits, when the data on record clearly shows huge surplus funding through electoral bonds?
Funding of Indian elections has been under debate for decades and several committees have opined on this. The Election Commission has been conservative in fixing limits on financial expenditure for both parliamentary and assembly constituencies despite full facts visible on the ground. Pulls and pressures to fund elections, which resulted in devising an electoral bond scheme with full anonymity, have been ruled invalid by the apex court. The result of such an ill-fated scheme against the advice of the EC, has caught the corporate world in a quagmire.
What Is The Way Out?
There is no smoke without fire is an adage, but here it appears to be in the shape of a conflagration. But it is amply evident that the country and the electorate have been taken for a ride, by all political parties who are a party to this politically machiavellian move. The next move is eagerly awaited as the democratic fabric has been seriously eroded in the process.
