5 questions on electoral bonds for the Attorney General

The union government’s stout defence of the controversial electoral bonds scheme launched in 2018 appears to be based on a set of twin arguments: One, that citizens and voters do not have a fundamental right to know the source of a political party’s funding; and second, even more important, that the scheme is not only transparent but ‘clean’, because the bonds are not cash and the bonds are traded through banking channels.

There is understandable outrage at the brazen statement that people have no right to know — especially since the electoral bond scheme has no parallel in the democratic world.

Not a single country has opted so far for an opaque system facilitating anonymity for donors backing specific political parties. For what public interest can such a scheme possibly serve?

What is, however, even more important for the five-judge constitution bench of the Supreme Court — which begins the final hearing on petitions challenging the scheme today, 31 October — is to determine how 'clean' the electoral bonds really are.

Here are five questions that the court may like to put to the attorney general, R. Venkataramani. The answers may provide clues to the scheme’s cleanliness.

1. Since anybody can buy an electoral bond, what prevents the actual contributors from incentivising 'dummy buyers' to buy the bonds? The actual donors can remain entirely out of the picture, cash having quietly exchanged hands, and the bonds are handed over to political parties by a third person. What is the guarantee that this is not happening? (Or does the attorney general think this, too, does not matter?)

2. Does anything prevent foreign governments, foreign companies or intelligence agencies from buying the bonds from the original contributors — at a premium, if necessary — and gifting them to a specific political party?

3. Is there anything in the scheme to prevent shell companies, loss-making companies and fly-by-night operators from floating new companies for the express purpose of buying electoral bonds and then shutting down that latter company? Does anybody know how many donor companies have actually shut shop during the last five years?

4. Corporate bodies and electoral trusts have made donations to political parties even before this scheme was launched. But such donations had to be declared in their annual reports and tax return statements, and the political parties identified. The electoral bond scheme, through amendments in the Companies’ Act, has freed the donor companies from this obligation. They now need to mention only the total amounts donated. Does the Election Commission know how many companies till now have bought such bonds and the amount they have declared in their accounts? Is there any way to find out if the figures match, between the actual sales proceeds of the bonds (that surely the RBI should have on record) and the amounts declared by various Indian citizens and companies? And who is responsible for maintaining this tally and oversight?

5. How is the electoral bond scheme an improvement on the previous system, which called for a full declaration from donors? While before 2014, corporate donations amounted to a total of a few hundred crores, since 2018 electoral bonds worth Rs 16 thousand crore have been purchased, 99 per cent of which were in denominations of Rs 1 crore or Rs 10 lakh. What is the explanation for this astounding jump?

As a legal officer, the function of the attorney general of India does not call for the incumbent to be an expert in finance or banking.

Arguably, they might also have no notion about how money is commonly laundered.

But surely even law officers of the government should be able to answer these questions and set some basic doubts from voting citizens at rest?

And then let the banking experts and Election Commission assess the data, help the Supreme Court to decide whether electoral bonds are in the interest of the people in this democracy — because any other answer would be against their interest.