Electoral bonds: the largest donor of them all

Before the electoral bonds cyclone burst upon the nation yesterday, not too many Indians were likely to have heard of the Prudent Electoral Trust. Now, chances are you cannot take two steps without coming up against the name if, like many, you are digging into the electoral bonds case.

The primary reason for this, of course, is that Prudent has turned out to be the single largest donor to the BJP coffers via electoral bonds, to the tune of approximately Rs 2,254 crore. Compared to that, the roughly Rs 170.71 crore that the trust disbursed to the Congress seems almost inconsequential.

Electoral trusts were introduced in 2013 by the UPA government to allow for tax-exempt contribution to political parties, with the intention of making the campaign financing process more transparent by cutting down on cash contributions, which are harder to trace.

A Reuters report published on Thursday used public records to probe the obscure Prudent Trust, based in Delhi and apparently run by just two men. “While Prudent does not disclose how donations made by individual corporate donors are distributed, Reuters used public records from 2018 to 2023 to track flows from some of India’s largest companies,” the report stated.

According to the international news agency, nearly Rs 415 crore at the very least was donated to the trust between 2019 and 2023, which issued cheques for corresponding amounts to the BJP. Among the donors are four major corporate entities — ArcelorMittal Nippon Steel, Bharti Airtel, GMR and Essar — who paid the trust and not the party directly.

Of these four, GMR and Bharti Airtel responded to queries by Reuters to state that it was Prudent that determined how their donations would be distributed.

Bharti Airtel, which created Prudent before transferring its operations to independent auditors Mukul Goyal and Venkatachalam Ganesh in 2014, told the agency that it has “no influence on the decisions, directions and mode of disbursal of funds”.

Neither the other corporates, nor Goyal and Ganesh responded to questions via email and snail mail. Asked on a brief phone call about how Prudent functioned, Goyal apparently told Reuters: “That is something we do not discuss.”

“Prudent, the largest of India’s 18 electoral trusts, is legally required to declare how much it has collected from each donor and the total amounts disbursed to each party,” said the Reuters report, but it is the only one of four of India’s largest electoral trusts to accept contributions from more than one corporate entity.

In its last public disclosure in March 2023, the BJP had declared that its available funds, including cash reserves and assets, was valued at around Rs 7,000 crore. Once again, India’s principal Opposition party, the Congress, had about a tenth of that amount as funds, despite the fact that Prudent was also the largest recorded donor to the Congress in the decade up to March 2023.

The pattern repeats itself with the Tata Group’s Progressive Electoral Trust, which gave the party roughly Rs 300 crore collected from group companies. Again, Progressive was also the Congress’ second largest donor, having given it Rs 65.5 crore.

The crucial difference? According to Reuters, Progressive’s by-laws required it to disburse funds proportionate to the number of seats held by a party in Parliament. However, Reuters’ analysis of Prudent’s donations threw up no such pattern.

In its analysis of the contribution reports filed by Prudent, the news agency identified 18 transactions (not an exhaustive list) between 2019 and 2022, in which the aforementioned eight corporate groups made large donations to the trust. Within days, Prudent issued cheques for the same amounts to the BJP.

Companies in the ArcelorMittal group were among Prudent’s most prolific donors, as per the Reuters report. To take just a single example of several, ArcelorMittal Design and Engineering Centre gave Prudent a cheque for Rs 50 crore on 12 July 2021. The next day, Prudent issued a cheque to the BJP for an identical amount.

“Reuters was unable to identify a similar pattern of funds being sent to the trust and transferred to Congress immediately afterwards,” the news report stated.

Public records and party reports show that the BJP’s coffers ballooned from Rs 780 crore in 2014, when Narendra Modi took over as prime minister, to nearly 10 times that amount by March 2023. In these nine-odd years, the Congress’ funds increased from Rs 538 crore to Rs 775 crore.

Speaking to Reuters, Jagdeep Chhokar of Association of Democratic Reforms, a Delhi-based civil society group that was the main petitioner behind the electoral bonds challenge in the Supreme Court, expressed concern at the financing gap between the BJP and Congress. “A level playing field is an essential part of democracy,” he said.