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Corporate funds to parties: Govt created avenues for money laundering, says Oppn

The companies will now no longer need to disclose the name of the political party to which they make the donations.

india Updated: Apr 02, 2017 07:09 IST
Aurangzeb Naqshbandi
Aurangzeb Naqshbandi
New Delhi, Hindustan Times
Corporate funds,Political donation,Political funding
The Communist Party of India said the ruling Bharatiya Janata Party will be the biggest beneficiary of the amendment to the Companies Act of 2013, and demanded a rollback.(HT Photo)

The Centre’s move to relax conditions for donations made by corporate entities to political parties has evoked strong criticism from the opposition, which accused the BJP-led NDA government of creating “new avenues” for large-scale money laundering.

Through one of the 40 amendments moved in the finance bill, the government has proposed to remove the cap that barred companies from donating more than 7.5% of their average net profit to a political party. Till now, companies could contribute up to 7.5% of their average net profit in the past three financial years.

Besides, the companies will now no longer need to disclose the name of the political party to which they make the donations.

The Communist Party of India (Marxist) said in a statement that through this amendment to the Companies Act of 2013, corporates can now pay political parties an unlimited amount through the election bonds scheme without disclosing the beneficiary’s name.

“This government has not only widened the process of corporate funding to political parties but also created new avenues for large-scale money laundering,” it said.

CPI(M) general secretary Sitaram Yechury said this move has exposed Prime Minister Narendra Modi’s claim to bring transparency in political funding. Now that the corporate do not have to declare their contribution and no limits on their contribution, the changes will trigger massive corruption, he told HT.

Yecury said, more importantly, this paves the way for money laundering. For example, a politician transfers his illegal money to a corporate and the corporate transfers it back to the same politician’s party. “In one word, this is an atrocious” move by the BJP government.

The Communist Party of India (CPI) said the ruling Bharatiya Janata Party (BJP) will be the biggest beneficiary of the amendment and demanded a rollback of the amendment.

“Even foreign companies can donate huge funds to parties and this will act as a severe threat to our national security,” it added.

The Congress said the electoral bonds will open the door to anonymous donations, crony capitalists and influence the policy outcome without any suspicion. “We will not know who contributed, we will not be able to follow them and find out who influenced what public policy and that is a dangerous development in terms of transparency for our democracy,” party spokesperson Rajeev Gowda said.

In the Lok Sabha, the Biju Janata Dal (BJD) staged a walkout on the issue. “It opens the floodgates for potential corruption and removes the means to check it,” BJD leader Bhratruhari Mahtab said.

The Trinamool Congress demanded the removal of the anonymity clause. “We need to remove the anonymity clause and make it mandatory for firms to disclose to which party they have paid money. Otherwise, we could be flooded with cases of misuse of office to get political donations,” Trinamool leader Dinesh Trivedi said.

The opposition parties also came down heavily on the government for “tagging along” non-tax bills in the finance bill to make them money bills.

“The Modi government and the RSS always speak of transparency in dealings and posed as the champions of fighting against black money. But the cat is now out of the bag. Now that the Rajya Sabha does not have powers to reject the money bill, it becomes a law automatically,” the CPI said in a statement.

The Lok Sabha passed the finance bill on Wednesday and the Rajya Sabha cannot reject a money bill. The bill is, therefore, deemed to have been passed by Parliament and will become a law following the presidential assent.

Through another amendment to the companies act, donations by companies to electoral trusts through account payee cheque, bank draft or electronic transfer have also been allowed. The government claimed that it is part of its move to check black money and bring transparency in political fundings.

First Published: Mar 24, 2017 12:15 IST