Electoral bonds: The hunt that should be on

Every day, new exposés of the issues linked to the electoral bonds scheme are appearing in the media. With the vast majority of the bonds bought in denominations of Rs 10 lakh and Rs 1 crore, it is clear that these were purchased by the wealthy and by businesses. Businesses work to maximise profit by minimising costs. So, expenditure is incurred by businesses to enhance profit. How do donations lead to more profits? Via quid pro quo manipulation of policies.

Returns from donations to the ruling party take many forms: lucrative contracts, manipulation of policy to favour the business, freedom from prosecution for some illegality and over-looking of illegality committed in business. There can also be arm-twisting of businessmen to extract donations. Examples of each have been revealed by the data on the bonds.

Ruling party leaders seem unperturbed by these revelations. The prime minister, in an interview to Thanthi TV on 1 April 2024, exuded confidence. He made several points: first, electoral bonds were a mechanism to trace the origins of funding to political parties and bring about transparency in electoral funding.

Second, the issue has neither embarrassed the party nor led to a setback for the BJP. Third, the opposition will regret the exposés that have appeared. Fourth, before 2014, no one could tell where a political party’s funding was coming from; now they can. Finally, he said the scheme was good but if there were deficiencies, they could be removed.

What stands out is that he feels that the opposition needs to worry, not the ruling party. Why is that, when more than 50 per cent of the donations went to the ruling party? The implication is that the opposition will be investigated, but not the BJP.

Further, the scheme was designed to keep the names of donors a secret. So how could the scheme be a transparent mechanism for funding political parties? The names of the donors have only come out consequent to the Supreme Court judgement declaring the scheme ‘unconstitutional’ and directing the State Bank of India to reveal all the data. In fact, according to those who designed the scheme, not only the names of donors but even the trail of funds was not to be made public.

Soon after the Supreme Court judgement came, the Union home minister in an interview said that from now on, elections would be funded with black money. He implied that electoral bonds were bought with white money, so electoral funding was being done with legitimate funds. He also justified the large funds received by the ruling party by comparing proportionate amounts received by other political parties. He argued that per MP in Parliament, the BJP had received less funds than some opposition parties.

The home minister also said that once all the details of the bonds are out, the opposition will not be able to show its face. The implication is that he already knew who got how much from whom. But surely that is contrary to the initial claim? The SBI also implied in its initial response that it did not have this record and would require three months to collate the data, which was held in two separate silos.

S.C. Garg, a secretary in the ministry of finance who was apparently in charge of the design of the scheme in 2018, had also said there was no way the donors and recipients could be matched. This has proved to be incorrect.

The critics and the opposition parties had feared from the start that only the government would get to know who donated how much to which party. The implication was that not only was the scheme opaque to the public, it was open to manipulation by the ruling party alone. It could squeeze the funding of opposition parties by threatening their donors.

What next?

Thanks to independent media, several quid pro quo cases and intriguing money trails have been exposed. The official agencies should by now have started to investigate and prosecute. Money donated by loss-making companies and instances where the donation is far higher than the company’s profits could be cases of money laundering. Donations by unknown companies could be larger interests using shell companies. Investigations and prosecution should be quickly launched in these cases.

But can the official agencies be trusted to carry out independent investigations against the ruling dispensation? There is a need for an independent committee monitored by the courts. While the recent experience with the court-appointed committee on the Hindenburg–Adani episode was not very encouraging, there is no other option.

According to a 27 March report in Scroll.in, "Eutelsat OneWeb, which is in a prime position to get satellite spectrum without an auction, is owned by Bharti Enterprises, [the] UK government and SoftBank, among others".

The data shows that the Bharti Group donated a total of Rs 150 crore to the BJP before and after the government introduced the new Telecommunications Bill in December 2023. The Bill was hurriedly passed and became law on Christmas Eve.

Bharti Airtel bought bonds worth Rs 100 crore and donated them entirely to the BJP. On 21 November, OneWeb got authorisation from the space regulator to qualify for the satellite spectrum. Bharti bought another Rs 50 crore worth of bonds which were cashed by the BJP on 12 January 2024. The data shows that other Bharti group companies, Bharti Infratel and Bharti Telemedia, also donated funds.

There is more. Bharti Airtel is the biggest loss-making company donating to the ruling party. Its cumulative losses were Rs 76,954 crore; it received a tax refund of Rs 8,250 crore and donated Rs 198 crore — of which 99.7 per cent went to the BJP. Did the company also pay to receive the tax refund?

Just as the Delhi liquor scam has been under investigation by official agencies for the past two years, shouldn’t the agencies also pursue the Bharti Airtel case? Similarly, just as in the case of the Aam Aadmi Party, shouldn’t businesspersons and political leaders be arrested to uncover the truth, since the money trail is evident in black and white in the accounts, unlike in the case of the AAP?

The argument that the electoral bonds — declared unconstitutional by the apex court — were brought in for transparency or for financing the elections is incorrect. The data reveals possible quid quo pro situations, with policymakers granting favours to businesses in telecom, pharmaceuticals, infrastructure, and so on. All such cases need to be actively pursued now that the money trail has been laid bare by the data.

Arun Kumar is an economist and author of The Black Economy in India