Skip to main content

Electoral bonds: Dubious shell companies would divert black money to political parties, ECI warned GoI a year ago

Arun Jaitley
By Our Representative
A Right to Information (RTI) reply has revealed that the Election Commission of India (ECI) had warned the Ministry of Law and Justice, Government of India (GoI), way back in May 2017 that the electoral bond system, introduced by Finance Minister Arun Jaitley in February 2017, for donations to political parties would open floodgates for dubious shell companies mushrooming across India to redirect black money into political parties' coffers.
In its reply dated May 2, 2018 to a plea by a Pune citizen, Vihar Durve, the ECI had sent across a letter, signed by ECI director Vikram Batra, which revealed ECI's strong reservation over an amendment to the Companies Act, 2013, which seeks to remove the provision of the "limit of 7.5% of the average net profits in the preceding three financial years on contributions by companies".
"This", according to Batra's letter, "Opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties, with no other business of consequence having disbursable profits." The letter added, the ECI believed "that the abolition of the relevant provision would lead to increased use of black money for political funding through shell companies."
The letter added, "The Commission is of the view that the earlier provisions ensured that only profitable companies with a proven track record could provide donations to political panics and, accordingly, it is recommended that this provision may be reintroduced."
Batra's letter, which drew attention to the Finance Act 2017, which had introduced amendments in the income Tax Act, the Representation of the People Act, 1951, and the Companies Act, 2013, said, all of it together would have "serious impact on transparency aspect of political finance/funding of political parties."
The letter said, the amendment in the Representation of People (RP) Act, I951, kept "any donation received by a political party ... out of the ambit of reporting under the Contribution Report as prescribed under the Act, calling it "a retrograde step as far as transparency of donations is concerned", insisting, "this proviso needs to be withdrawn."
The letter underlined, "In a situation where contributions received through electoral bonds are not reported, on perusal of the Contribution reports of the political parties, it cannot be ascertained whether the political party has taken any donation in violation of provisions under Section 29B of the RP Act, l951, which prohibits the political parties from taking donations from government companies and foreign sources."
Also referring to the amendment to Income Tax Act, whereby, "no donation exceeding Rs 2,000 can be received by a political party otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bond", the letter said, ironically, the limit for receipt of anonymous donations by political parties still remained at Rs 20, 000 under the RP Act, I951.
Pointing out that "the RP Act needs to be amended to reduce the limit of anonymous/cash donations to Rs 2,000 so as to bring these two Acts in consonance with each other", the letter also took objection to a second amendment to the Companies Act, which abolished the provision that firms must declare their political contributions in their profit and loss statements.
It said, "This requirement is now reduced to only showing a total amount under this head, which again, would compromise transparency", wanting the amendment be dropped.

Comments

Uma Sheth said…
This government has been promising to unearth all black money and legalise it and we are supposed to believe them. They are just making fools of us: first it was by demonetising one-thousand rupee notes and bringing in two-thousand rupee notes--no one knows how that helped but there is no end to the black money still around; and now with these Electoral Bonds, they have found another way of encouraging black money--who do they think they are fooling? In both instances, they have made sure that their friends and supporters can get away with their hordes of black money

TRENDING

Whistle-blowing IPS officer Sanjiv Bhatt's wife suspects foul play after truck hits her car

By Nachiketa Desai*
Paranoia has seized Shweta Bhatt, wife of suspended Indian Police Service (IPS) officer Sanjiv Bhatt, after the car she was driving was rammed in broad day light. According to Shweta Bhatt, it was beacon light-flashing truck without registration number plate. The incident took place on January 7, just a day ahead of the Gujarat High Court was scheduled to take up the bail application of Sanjiv Bhatt, arrested last year for "involvement" in a 23-year-old case.

Call to support IIM-Bangalore professor, censured for seeking action against Uniliver

Counterview Desk
Sections of the Indian Institute of Managements (IIMs) across India have strongly reacted to the decision to censure Dr Deepak Malghan, a faulty at IIM-Bangalore. Prabhir Vishnu Poruthiyil, who is faculty at IIM-Tiruchirapalli, has sought wider solidarity with Dr Malghan, saying, "The administration has censured Deepak for merely suggesting a meaningful action against Hindustan Unilever for their abysmal environmental record" by “disinviting” it for campus placement.

99% MGNREGA funds "exhausted", Govt of India makes no additional sanctions: Study

Counterview Desk
A letter, addressed to Prime Minister Narendra Modi, and prepared by senior activists led by Aruna Roy on behalf of the Peoples’ Action for Employment Guarantee (PAEG), and signed, among others, by 80 members of Parliament, has regretted that, despite repeated public statements by his government promising employment and job creation that will boost the country’s growth, the country’s only employment guarantee programme, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), “is being systematically undermined.”

Morari Bapu, who has installed new statues of Ram, Laxman, Hanuman without weapons

By Sandeep Pandey*
A saint is one who can give some inner peace by his/her voice. This will happen only when s(he) will talk about love and harmony. Morari Bapu is one saint who has been conveying the message of love, peace, harmony, fraternity, etc. Today when a number of saffron clad figures with aggressive posture, spewing venom, fanning hatred to polarise voters are at the forefront of politics of Hindutva it is a relief to see Morari Bapu in a different mould.

Nuclear reactors sought from French giant "not safe": Letter to Modi on Jaitapur project

Counterview Desk
Amidst reports that the French nuclear giant EDF has submitted a “techno-commercial offer” for the world’s largest nuclear power park proposed in Maharashtra’s Jaitapur nuclear power park in Jaitapur on the Maharashtra coast, Dr EAS Sarma, India’s former Union Secretary in the Minister of Power, and an eminent voice in the civil society, has written an open letter to Prime Minister Narendra Modi, who also heads Department of Atomic Energy (DAE),  protesting the move.

World Bank clarifies: Its 26th rank to India not for universal access to power but for ease of doing business

By Our Representative
In a major embarrassment to the Government of India, the World Bank has reportedly clarified that it has not ranked India 26th out of 130 countries for providing power to its population. The top international banker’s clarification comes following Union Power Minister Piyush Goyal’s claim that India has “improved to 26 position from 99” in access to electricity in just one year.

Kaiga NPP expansion: Karnataka to get just 400 MW, but lose thick forest, fresh water

Counterview Desk
In an open letter to the chairman and members of the Atomic energy Commission (AEC) on the issue of Kaiga nuclear power plant (NPP) expansion plan in Karnataka, Shankar Sharma, well-known power policy analyst, has argued that that in case of expansion, the site will face “exponential increase in radiation emission risks”, underlining, “Nuclear safety experts identify such a scenario as enhanced risk for NPPs with multiple reactors and shared technical facilities."
Sharma says the questions that also be asked whether Karnataka should lose more than 54 hectares of thick forests and about 152,304 cubic meters of fresh water per day from Kali river for a meager benefit of 400 MW from the Kaiga NPP, for which “there are many benign alternative options available for the state at much lower overall costs to the state.”
Text of the letter: This has reference to the public hearing under the Environmental Impact Assessment (EIA) Rule 2006 of Ministry of Environment, Fore…

Uttarakhand High Court: Biodiversity boards can impose fees on Ramdev's Divya Pharmacy

By Mridhu Tandon
In a significant decision, the Uttarakhand High Court on December 21, 2018 has dismissed the writ petition filed by Divya Pharmacy founded by Baba Ramdev and Acharya Balakrishnan, challenging the demand of the Uttarakhand Biodiversity Board (UBB) imposing fees under the provisions of the Fair and Equitable Benefit Sharing (FEBS).

Modi becoming Prime Minister now appears to be an "accident" to the people of India

By Sandeep Pandey*
Anupam Kher's film 'Accidental Prime Minister' has targeted Dr Manmohan Singh who served for two terms and may be again acceptable for the job if his party regains power. But his tormentor Narendra Modi seems to be out of breath even before his first term is over. Disillusionment with him is so widespread and deep that people of India may not bear with him for another term. As the general elections approach again the difference between the two needs to be examined.

Story of a foot soldier of Gujarat riots coming from a vulnerable community, Chharas

By Rajiv Shah
He is one of the more prominent "foot soldiers" of the 2002 Gujarat riots. Suresh Jadeja, alias Langdo, alias Richard, is indeed a well-known name in the Naroda Patiya massacre case, in which 97 persons were killed on February 28, 2002, the first day of the riots that shook the nation. Ordinarily, such a person should have been subjected to sociological scrutiny. What have here is a keen journalistic account, with clear political-ideological overtone.