Legal Eagle: SC Verdict May Expose Corporates’ Quid Pro Quos

Legal Eagle: SC Verdict May Expose Corporates’ Quid Pro Quos

Balance sheets of companies camouflage their donations to political parties under innocuous headings such as entertainment expenses, so there is no evidence of what money they gave to which political party

Olav AlbuquerqueUpdated: Thursday, February 22, 2024, 10:57 PM IST
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Representative Image | Pixabay

Governments amend laws to ensure the people are denied information about who paid money to which political party so policies can be fabricated to suit those who make anonymous donations. This is why the Supreme Court struck down the electoral bond scheme which ingeniously converted black money into white by channeling it into the coffers of political parties which need thousands of crores in cash to woo voters who act like maggots when they cast their ballots in the general elections.

This is why democracy turns into mobocracy despite the Preamble declaring that it is the people who are the custodians of the Constitution. The people delegate their power to the legislature which forms the executive, whose policies, such as the electoral bonds scheme, are subject to judicial review. The court revoked the amendment made to the Finance Act that in turn reversed amendments made to the Income Tax Act and the Representation of the People Act which guaranteed anonymity to big builders and companies who bought electoral bonds running into crores of rupees to donate them to the government.

The five judges declared the amendments to the Companies Act, which removed the condition that companies could only donate up to 7.5% of their profit to political parties without disclosing the details of recipient parties in their profit and loss account, as “manifestly arbitrary”. The Income Tax department issued 5,000 notices to those who used such electoral bonds to political parties that had registered with the Election Commission of India but never contested any assembly or national election.

Or if they did, they failed to secure 3% of the vote share or three seats in an Assembly election. These political parties are classified as “unregistered” political parties. These “bogus” political parties financed by builders and other corporations canvass votes using the ploy of religion and language but are involved in tax evasion and money laundering. In some cases, some taxpayers have donated 80% of their income to these political parties that had not even registered their symbols with the Election Commission of India (ECI).

These amendments allowed companies to keep secret the crores of rupees they gave the ruling party which was valid for 15 days after which they would be used by the Prime Minister’s Relief Fund. The bonds would be issued only for 10 notified days in January, April, July, and October. But these dates would be extended to 30 days when the general elections to the Lok Sabha were around the corner. These amendments promoted deception before elections and defections after that, legalised by illegal laws.

Each Lok Sabha candidate is restricted to Rs 75 lakh for each election but there is no upper limit for political parties on spending during elections because putting up 500 candidates would cost each party less than Rs 400 crore, according to advocate Prashant Bhushan who argued for the petitioner, Association for Democratic Reforms. National newspapers have divulged that between 2018 and 2023 the BJP raked in Rs 6,566 crore by way of electoral bonds which is five times more than the Congress which got Rs 1,123 crore. The Trinamool Congress came in third with Rs 1,093 crore which was never divulged.

The pro-corporate and anti-farmer laws that the Supreme Court stayed and the government later repealed may have been the product of such electoral bonds. Those companies that donated money to the government through the ruling party and won a government tender in exchange or got a policy change can now be prosecuted for bribery if they won a government tender soon after donating through electoral bonds.

This is why this judgment will give rise to more petitions seeking the prosecution of companies whose directors camouflaged their donations to the government under the repealed Sick Industrial Companies Act, of 1985 which was repealed in 2003. Its provisions were incorporated in the new Companies Act, 2013.

The government can still stall nosy journalists and aggressive lawyers by introducing an ordinance that will be struck down if it violates the right to know which was why the five-judge bench struck down this pernicious electoral bonds scheme. The people’s right to know forms part of the basic structure of the Constitution like the independence of the judiciary, secularism, and sovereignty of India.

But these are theoretical concepts flouted by the ruling party, which camouflages its laws to fool the majority against the minorities by alleging they have anti-national priorities when the converse is true. When these electoral bonds were floated, the government overruled the concerns of the RBI which said the scheme would promote money-laundering.

The finance ministry said the RBI had not understood the aim of these electoral bonds which was to guarantee anonymity of the donors. Hence, the government’s need for secrecy was the kernel for enacting the electoral bonds, making it the exact opposite of the people’s right to know.

The State Bank of India (SBI) which like the RBI was created by an Act of Parliament has all the details of who paid what to whom in their computers but how long they will take to divulge this explosive data to the Election Commission of India is debatable, because the SBI chief is appointed by the government and will have to listen to its diktat despite its denials. This is why a former UTI chairman and National Housing Board chairman, Manohar Pherwani, who was alleged to be the mentor of Harshad Mehta, was found dead at his home in 1992, while some alleged it was suicide. But that was a different government and a different story.

Balance sheets of companies camouflage their donations to political parties under innocuous headings such as entertainment expenses, so there is no evidence of what money they gave to which political party. Those corporates and High Networth Individuals (HNIs) who donated crores to the government on assurance of anonymity cannot now cry foul, because they were put on notice that their identities would be divulged when the apex court decided this petition filed by the Association for Democratic Reforms.

Olav Albuquerque holds a PhD in law and is a senior journalist and advocate at the Bombay High Court

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