The Election Commission has come across instances of suspected violations of the Foreign Contribution Regulation Act by Congress and the BJP in their acceptance of donations from subsidiaries of multi-national firm Vedanta group.
An investigation by the EC, carried out with the help of the I-T department, has found that both the parties had received about Rs 5 crore each from two subsidiaries of the Vedanta group -- Sterlite Industries and the Sesa Goa group. The donation, prima facie, violates section 29 B of the Representation of the People Act which states that "no political party shall be eligible to accept any contribution from any foreign source defined under clause (e) of Section 2 of the Foreign Contribution (Regulation) Act, 1976," official sources said.
The entire transaction, the EC has said in its complaint to the Home Ministry, should be investigated and probed under the FCRA as they have been made by the firms, which are part of the UK-based group, that makes them a "foreign source".
Vedanta Resources, according to its annual report of 2011-12, had paid $69 million (about Rs 28 crore) to political parties in India in last three years.
Without disclosing the identity of the beneficiaries, billionaire Anil Agarwal-promoted Vedanta has stated on the report that it paid $2.01 million to political parties during 2011-12.
While there were no no comments available from BJP, Congress sources denied it had received any "foreign" donation. The sources said Congress had received from Sterlite Industries, India, a donation of Rs. 5 crore in 2009.
When contacted, a Vedanta spokesperson said "we will like to confirm that all political donations made by Sterlite Industries India Ltd ( SIIL) and Sesa Goa Limited (Sesa) in specific years, were strictly in accordance with the provisions of Section 293A of the Indian Companies Act, 1956 after taking due approval of the respective Board of Directors and Audit committees and full disclosures have been made as per law."
The EC has found violations in these two instances and hence has asked the ministry of Home Affairs to take action as it is the nodal ministry in-charge of enforcing the FCRA in the country, official sources said.
The FCRA states that it has been formulated "to ensure that the foreign contribution and foreign hospitality is not utilised to affect or influence electoral politics, public servants, judges and other people working in the important areas of national life like journalists, printers and publishers of newspapers among others."
The Association of Democratic Reforms (ADR), an NGO in the field of promoting good electoral practices, had reported publicly that "Sterlite Industries, a subsidiary of the Vedanta Group, has donated Rs 6 Crores to INC during FY 2004-05 and FY 2009-10 while The Madras Aluminium Co Ltd, also a subsidiary of the Vedanta Group had contributed Rs 3.5 Crores to BJP."
Vedanta said that as regards Foreign Contribution (Regulations) Act, 1976 ("FCRA") and 2010 is concerned, the company believed that the provisions of FCRA do not get attracted to these contributions as they are not "foreign contributions" at all.
Therefore, the question of alleged violations of the provisions of FCRA does not arise. The political donations made by SIIL and Sesa as above have been made from P and L accounts of respective entities with full disclosures after complying with law as applicable, the company said.
"We have been legally advised that the FCRA provisions are not attracted in the background of present facts, to Indian companies incorporated as such and duly listed on domestic stock exchanges."