Petition in Supreme Court demanding SIT probe into electoral bond scheme | Latest News India - Hindustan Times

Petition in Supreme Court demanding SIT probe into electoral bond scheme

Apr 24, 2024 01:24 PM IST

The petition claimed that the EB data shows the bulk of these were given as “quid pro quo” arrangements by corporates to political parties

The non-profit organisation Common Cause and Centre for Public Interest Litigation (CPIL) have jointly moved a petition in the Supreme Court, demanding a probe by a special investigation team (SIT) under judicial supervision into an alleged scam in electoral financing using electoral bonds (EBs), which was scrapped by the top court on February 15 because the scheme completely anonymised political donations.

The plea contends that at least 20 firms have contributed over <span class='webrupee'>₹</span>100 cr to political parties within 3 yrs of their establishment. (Representative file photo)
The plea contends that at least 20 firms have contributed over 100 cr to political parties within 3 yrs of their establishment. (Representative file photo)

The petition claimed that the EB data released last month on the orders of the Supreme Court shows that the bulk of these were given as “quid pro quo” arrangements by corporates to political parties either for fiscal gains or for avoiding actions by central agencies, including the Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Income Tax department.

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Additionally, EBs were purchased for donation to political parties to trigger some policy and regulatory changes to favour certain business firms, the NGO alleged.

Also Read: Congress attacks FM Sitharaman over her ‘electoral bonds will be back’ remark

“Though these apparent pay offs amount to several thousand crores, they appear to have influenced contracts worth lakhs of crores and regulatory inaction by agencies worth of thousands of crores and also appear to have allowed substandard or dangerous drugs to be sold in the market, endangering the lives of millions of people in the country. That is why the electoral bonds scam has been called by many astute observers as the largest scam in India so far, and perhaps in the world,” stated the petition filed through advocate Prashant Bhushan on April 18.

The petition heeded to a raft of media reports to claim that the scrutiny of donations made through EBs since 2018 shows quid pro quo arrangements between political parties, corporates, public servants and others working under the government which would lead to blatant violation of Articles 14 (equality and equal protection) and 21 (life and liberty) guaranteed under the Constitution of India.

“The data shows private companies have paid crores of funds to political parties either as ‘protection money’ for protection against agencies under the central government or as a ‘bribe’ in return for undue benefits. In some instances, it has been seen that the political parties in power at the Centre or in states have apparently amended policies and/or laws to provide benefits to private corporates at the cost of public interest and the public exchequer,” the petition alleged.

Citing substantial irregularities and potential violations of the Companies Act, the plea contends that at least 20 companies, some newly incorporated, have contributed over 100 crore to political parties within three years of their establishment, which it said is prohibited under Section 182(1) of the Companies Act.

The petition, drawn by advocates Neha Rathi and Kajal Giri, also details how loss-making and shell companies have allegedly donated significant amounts through EBs, potentially as a method to launder money and gain undue favors from political entities, particularly those in power. This, the plea argues, mirrors scenarios seen in the 2G and Coal Scam cases, where court-monitored investigations were mandated due to arbitrary allocations without direct evidence of monetary transactions.

Further, the petition accuses some of India’s primary investigative agencies, such as the CBI, ED and the Income Tax department, of being complicit in these corrupt dealings, arguing that firms under investigation by these bodies have made substantial donations to the ruling party, presumably to influence the outcomes of their probes.

Given the gravity and complexity of the allegations, involving both private and government entities, the non-profits contend that the existing regulatory bodies are inadequate for a fair investigation and, therefore, requested the formation of an SIT, under the supervision of a retired Supreme Court judge, to ensure a thorough and unbiased investigation.

Introduced in 2018, EBs were available for purchase at any SBI branch in multiples of 1,000, 10,000, 1 lakh, 10 lakh and 1 crore and could be bought through a KYC-compliant account. There was no limit on the number of electoral bonds that a person or company could purchase. Donations made under this scheme by corporate and even foreign entities through Indian subsidiaries enjoyed 100% tax exemption while identities of the donors were kept confidential both by the bank as well as the recipient political parties.

But on February 15, a five-judge Constitution bench struck down the scheme, declaring it to be “unconstitutional” because it completely masked contributions made to political parties, and added that restricting black money or illegal election financing – some of the articulated objectives of the scheme – did not justify violating voters’ right to information in a disproportionate manner.

The bench directed SBI – the only designated EB-issuing bank – to stop the issuance of EBs, adding that the bank should submit details of EBs purchased since April 12, 2019, till that date to the poll watchdog by March 6.

The tranches of data released by the ECI over two weeks in March revealed that Tamil Nadu-based Future Gaming and Hotel Services, the top donor that accounted for 1,365 crore worth bonds, donated across party lines. Out of this, 39.7% ( 542 crore) went to the All India Trinamool Congress, 36.8% ( 503 crore) to the Dravida Munnetra Kazhagam (DMK), 11.3% ( 154 crore) to the YSR Congress, 7.3% ( 100 crore) to the Bharatiya Janata Party (BJP), and 3.7% ( 50 crore) to the Congress.

The second highest donor -- Hyderabad-based Megha Engineering and Infrastructure Limited (MEIL) -- donated 60.5% of its 966 crore to the BJP and 20.2% ( 195 crore) to the Telangana-based Bharat Rashtra Samithi.

The third highest donor, Thane-based Qwik Supply Chain donated 91.5% of its 410 crore to the BJP followed by 6% ( 25 crore) to the Shiv Sena. It donated 10 crore (2.4%) to the Nationalist Congress Party. According to Zaubacorp, a website that scrapes data from the Ministry of Corporate Affairs, and LinkedIn profiles, two of the directors of the firm are employees of the Reliance group and are directors of multiple Reliance Group companies.

Mining behemoth Vedanta Limited donated 230.15 crore, or 57.5% of its total bonds worth 400.35 crore, to the BJP, followed by 125 crore (31.2%) to the Congress.

The Kolkata-based RP-Sanjiv Goenka Group’s Haldia Energy donated 74.5% of its 377 crore to the TMC followed by 81 crore (21.5%) to the BJP.

For the BJP, MEIL was the largest donor at 584 crore, followed by Qwik Supply Chain at 375 crore and Vedanta at 230.15 crore. Others contributed 4,032.15 crore. In all, the BJP netted 6,061 crore of the 8,252 crore between April 12, 2019, and January 11, 2024.

Of this 6,061 crore, the donors of only 5,594.2 crore could be matched because the April 12, 2019, deadline fell in the middle of a bond sale phase which was from April 1 to April 20. 3,346 bonds were sold between April 1 and April 11 of which only 1,609 bonds were redeemed in the same period. The remaining bonds were redeemed between April 12 and 20. The same problem persists for TMC and Congress, too.

The TMC received its biggest chunk of funds from Future Gaming at 542 crore, followed by Haldia Energy at 281 crore and Dhariwal Infrastructure at 90 crore. Others contributed 588.12 crore. In all, the TMC netted 1,610 crore of the 1,708 crore between April 12, 2019, and January 11, 2024.

For the Congress, the biggest donor was Vedanta at 125 crore, followed by Western UP Power Transmission Company Limited at 110 crore and MJK Enterprise at 91.6 crore. In all, the Congress netted 1,422 crore of the 1,952 crore between April 12, 2019, and January 11, 2024.

The petition filed before the Supreme Court has cited several of the above-mentioned donations to term these fundings quid pro quo transactions.

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