Piramal cos donated ₹28 crore to electoral trust that favours BJP

Piramal Group companies have been in the news after a report in The Wire on April 28 said that Piyush Goyal and his wife set up Flashnet Info Solutions (Pvt) Ltd in the year 2000 with 50,070 shares of ₹10 each. Goyal and his wife together held 99.9% of the shares, which were sold in September 2014 for ₹48 crore at a premium of 1,00,000% to Piramal Estates Pvt Ltd (PEPL). The shares were sold four months after Goyal became Union Minister in May 2014, while Goyal was a Union Minister of State with independent charge for Power, Coal, New and Renewable Energy and Mines. The Wire story raised the question of ethics and conflict of interest because the Piramal group had diversified into power and renewable energy sectors in 2013.

The Wire report further said that PEPL posted losses of over ₹100 crore in FY 2014-15, the year it bought Goyal’s firm. It added that “Ajay Piramal, his wife Swati, Nandini Piramal and Anand Piramal were directors of Piramal Estates Private Limited at the time the sale of Flashnet was effected. For some reason, the four Piramals stepped down from the board in October 2014, just days after the transaction with Goyal’s firm was complete.”

The Piramal Group responded to the The Wire report on April 28, saying the amount paid by PEPL for Flashnet was based on a valuation put forth by an “independent chartered accountant”. It denied any potential conflict of interest issues as the company’s “current nature of business” does not involve any interaction with the ministry of power; that the Piramal Group has not invested in “any entity in the power sector till date” and the company is purely in the business of lending to companies, including infrastructure companies.

However, reacting to the Piramal Group’s statement, The Wire pointed to an article in The Hindu, which showed that in March 2016, Piramal Enterprises Ltd and APG would invest $132 million in the solar arm of Essel Infraprojects (Essel Green Energy) and that the former would make the investment through its structured investment group. You can read the full story on the Piramal Group’s response to The Wire article, and The Wire and writer Rohini Singh’s response to the Piramal Group here.

Piramal companies donated generously to Prudent/Satya Electoral Trust in 2016-17; Prudent/Satya gave 89% of its disbursed collections to BJP

As filings on the Election Commission website show, the Piramals seem a generous lot. And it’s not only BJP treasurer Piyush Goyal who has benefitted from their generosity. The same year in which Piramal Enterprises announced an investment in the solar arm of Essel Infraprojects, they were very generous to Prudent/Satya Electoral Trust, which in turn is very generous to the BJP.

The Prudent Electoral Trust—formerly Satya Electoral Trust—is India’s largest electoral trust as per Election Commission records. Electoral trusts collect contributions from donors and distribute these among political parties. Donating via electoral trusts is a favoured route by deep-pocketed individuals and corporate donors keen to place a degree of separation between themselves and the political party (s) they support. Political parties have to file lists of donors above ₹20,000 with the Election Commission, as do trusts. Using electoral trusts thus affords both a certain kind of anonymity and the facility of ‘deniability’.

But when the electoral trust donates to multiple parties, can donors still manage to contribute to the party of their choice? Easily so. You only need to take a look at the disbursal record of the particular electoral fund, and which party (s) it favours.

Prudent/Satya is very efficient in both collecting and distributing funds. It has consistently distributed over 99% of funds collected, over the four years for which data is available. As per its EC filings, attested by Prudent/Satya director Mukul Goyal, in 2013-14, 2014-15 and 2015-16, respectively, Satya Electoral Trust disbursed 48%, 76% and 96% of its collections to the Bharatiya Janata Party. Evidently, the BJP is the biggest beneficiary of Prudent/Satya Electoral Trust, and by miles.

In 2016-17, contributions to Prudent/Satya shot up dramatically. From collecting just over ₹85 crore in 2013-14, it gathered over ₹2,83,73,50,000—or two hundred and eight three crore, seventy three lakh and fifty thousand rupees—in 2016-17. It distributed 99.99% of this—₹28,37,200,000, or two hundred and eight three crore, seventy two lakh—to various political parties, but not equally. Satya Electoral Trust, now renamed Prudent Electoral Trust, distributed 89% of its disbursed donations—₹25,22,200,000, or two hundred and fifty two crore, twenty two lakh —to the BJP in 2016-17. Five other political parties Prudent/Satya donated to, together received just ₹31.5 crore.

Piramal Group companies accounted for nearly 10% of Prudent/Satya’s 2016-17 collections, donating a total of ₹28 crore. Piramal Finance Pvt Ltd gave ₹3.5 crore, Piramal Fund Management Pvt Ltd ₹40 lakh, Piramal Glass ₹3 crore and Piramal Enterprises Ltd ₹21 crore. Piramal companies together were the third largest donors to Prudent/Satya Electoral Trust in 2016-17, after DLF and Essar companies.

No Piramal company has donated to any of the other electoral trusts whose details are available on the EC website, nor directly to BJP, as a perusal of BJP’s lists of contributors from 2014-14 to 2016-17, duly signed by BJP treasurer and Union Minister Piyush Goyal, showed.