Skip to main content

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

Arun Jaitley
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calling it "a retrograde step as far as transparency of donations is concerned", insisting, "this proviso needs to be withdrawn."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

TRENDING

Patriot, Link: How Soviet imbroglio post-1968 crucially influenced alternative media platforms

Adatata Narayanan, Aruna Asaf Ali Alternative media, as we know it today in the age of information and communication technology (ICT), didn't exist in the form it does today during or around the time I joined formal journalism at Link Newsweekly as a sub-editor in January 1979. However, Link, and its sister publication Patriot, a daily—both published from Delhi—were known to have provided what could be called an alternative media platform at a time when major Delhi-based dailies were controlled by media barons.

Morari Bapu echoes misleading figures to support the BJP's anti-conversion agenda

A senior Gujarat activist phoned me today to inform me that the well-known storyteller on Lord Ram, Morari Bapu, has made an "unsubstantiated" and "preposterous" statement in Songadh town, located in the tribal-dominated Tapi district. He claimed that while the Gujarat government wants the Bhagavad Gita to be taught in schools, the "problem is" that 75% of government teachers "are Christians who do not let this happen" and are “involved in religious conversions.”

60 crore in Mahakumbh? It's all hype with an eye on UP polls, asserts keen BJP supporter in Amit Shah's constituency

As the Mahakumbh drew to a close, during my daily walk, I met a veteran BJP supporter—a neighbor with whom we would often share dinner in a group. An amicable person, the first thing he asked me, as he was about to take the lift to his flat, was, "How many people do you think must have participated in the holy dip?" He then stopped by to talk—which we did for a full half-hour, cutting into my walk time.

Breaking news? Top Hindu builder ties up with Muslim investor for a huge minority housing society in Ahmedabad

There is a flutter in Ahmedabad's Vejalpur area, derogatorily referred to as the "border" because, on its eastern side, there is a sprawling minority area called Juhapura, where around five lakh Muslims live. The segregation is so stark that virtually no Muslim lives in Vejalpur, populated by around four lakh Hindus, and no Hindu lives in Juhapura.

An untold story? Still elusive: Gujarati language studies on social history of Gujarat's caste and class evolution

This is a follow-up to my earlier blog , where I mentioned that veteran scholar Prof. Ghanshyam Shah has just completed a book for publication on a topic no academic seems to have dealt with—caste and class relations in Gujarat’s social history. He forwarded me a chapter of the book, published as an "Economic & Political Weekly" article last year, which deals with the 2015 Patidar agitation in the context of how this now-powerful caste originated in the Middle Ages and how it has evolved in the post-independence era.

Caste, class, and Patidar agitation: Veteran academic 'unearths' Gujarat’s social history

Recently, I was talking with a veteran Gujarat-based academic who is the author of several books, including "Social Movements in India: A Review of Literature", "Untouchability in Rural India", "Public Health and Urban Development: The Study of Surat Plague", and "Dalit Identity and Politics", apart from many erudite articles and papers in research and popular journals.

Justifying social divisions? 'Dogs too have caste system like we humans, it's natural'

I have never had any pets, nor am I very comfortable with them. Frankly, I don't know how to play with a pet dog. I just sit quietly whenever I visit someone and see their pet dog trying to lick my feet. While I am told not to worry, I still choose to be a little careful, avoiding touching the pet.

New York-based digital company traces Modi's meteoric rise to global Hindutva ecosystem over several decades

A recent document, released by the Polis Project Inc.—a New York-based digital magazine and hybrid research and journalism organization—even as seeking to highlight the alleged rise of authoritarianism in India, has sought to trace Prime Minister Narendra Modi's meteoric rise since 2014 to the ever-expanding global Hindutva ecosystem over the last several decades.

What's wrong with those seeking to promote Sanskrit? An ex-Hindi professor has the answer

Ajay Tiwari  I have always wondered why certain elite sections are so fascinated by Sanskrit, to the extent of even practicing speaking a language that, for all practical purposes, isn’t alive. During my Times of India stint in Gandhinagar, the Gujarat state capital, I personally witnessed an IAS bureaucrat, Bhagyesh Jha, trying to converse with a friend in Sanskrit.