The government’s claim that electoral bonds represent, and emanate from, clean money simply doesn’t wash. If all banking transactions are ipso facto representative of clean, tax-paid money, then why did the government freeze some two lakh bank accounts of shell companies in September 2017?
Again, if all bank deposits are deemed to be clean then why is the government still looking into the genuineness of the deposits of 500 and 1000 rupee demonetised notes made during the heady days of demonetisation in November-December 2016? Remember the Modi government bristled with indignation when the opposition and other detractors poked fun at it when the RBI admitted that almost 99 per cent of the banned notes wormed their way back into the banking system.
Money laundering
Indeed money laundering is all about contriving to confer legitimacy on one’s illegal income through the process of routing them into bank accounts. Round-tripping is a frequently used stratagem. Black money generated in India is spirited away through the subterranean
Chief among them are through Promissory Notes (PN) into the stock markets, through start-up companies by way of angel investments and through joint ventures. It is not as if money laundering is done only through foreign bank accounts. Bribes are often shown as consultancy fees or advertising commission.
Money laundering starts with placing of the illegal money into an innocuous bank account and through layering and multi-layering in the manner of wheel within wheels it ultimately finds its way into what appears to be a noble cause which can be purchase of electoral bonds.
It is, therefore, entirely possible that some of the political donations made through electoral bonds may represent money of dubious quality. Anonymity conferred on the donors adds fuel to the suspicion that electoral bonds could well be the official money-laundering scheme. SBI knows the details of the bank accounts from which the electoral bonds are purchased but it is not for it to look into the source of funds of the donor.
Lack of scrutiny and anonymity conferred on donors make the RBI and the Election Commission uncomfortable with the scheme. Yet the government preens with pride at this innovation ushered in with a view to discouraging cash donations.
Some people spring to the defence of the opaque electoral bonds saying that anonymity doesn’t mean immunity . Implicit in this argument is while the accounts of the political parties cannot be probed as to the source of electoral bond funding, the bank accounts from which the electoral bonds were purchased can be. That precisely is the point the opposition is making — demanding inquiry into some of the large donations through electoral bonds.
Political donations
Though there is no official information in the public domain, reports suggest that SBI has sold bonds worth ₹1,716 crore in January and March this year against the ₹1,056 crore of bonds sold in six months in 2018. But a national election is estimated to cost ₹30,000 crore or even more. So it must be conceded that electoral bonds haven’t occupied the centre-stage insofar as political donations are concerned. Yet the disquiet over it is understandable and cannot be brushed aside.
Donations by electoral trusts hog bulk of the corporate donations, 92 per cent of which went to the ruling BJP in 2017-18. It is interesting to note that despite the removal of the 7.5 per cent of the profits ceiling in Section 182 of the Companies Act, upfront political donations by corporates is not happening. Perhaps the anonymity conferred by electoral bonds — 99 per cent of them bought by corporates — beckons them.
The writer is a chartered accountant