Interview/ O.P. Rawat, former chief election commissioner
The Election Commission had on many occasions raised red flags to the government on the electoral bonds scheme, such as removal of the cap on donation by corporates, the possibility of shell companies being used to launder money and foreign funding making its way into the Indian political system, says O.P. Rawat, who was election commissioner from August 15, 2015 to January 22, 2018, and chief election commissioner from January 23, 2018 to December 1, 2018. The concerns were raised when the Finance Bill of 2017 was passed, which contained the amendments that paved way for the bonds, and also after the scheme was introduced in January 2018. Excerpts from an exclusive interview:
Q/ What are the major takeaways from the details of electoral bonds that have been made public?
A/ Whatever has come in the media so far shows that the electoral bonds scheme was good in the sense that it facilitated smooth flow of funding from the corporates to the political parties, which was hitherto not available through any other instrument or procedure. In just a period of five years, Rs16,000 crore was passed on to political parties. That was the only positive aspect of the scheme. All other aspects were negative―there was no check on shell companies contributing or foreign sources contributing or money laundering taking place using the bonds.
There was no foolproof check on all these things. And that made the whole thing dicey because any government scheme which cannot check the enforcement of all legal provisions cannot be accepted. There is the case of one company earning Rs2 crore profit every year and contributing Rs183 crore. From where has that money come? It is important to note that most of the donor companies are unlisted companies.
Q/ Do you feel that you stand vindicated, because the commission had raised several red flags regarding the scheme when it was conceived in 2017-2018.
A/ We raised all these issues in 2017 when the Finance Bill brought in these amendments. Immediately we wrote to the government spelling out our concerns and urging that they should be taken care of. We were against the identity of donors being kept anonymous. We said that companies that were not making any profit being allowed to donate was not a good idea. We said it could give rise to shell companies, money laundering could be encouraged. We also pointed out that foreign funding could come in.
Q/ What was the response of the government?
A/ Their response was that the scheme was yet to be formulated and we should wait for that to happen. The economic affairs secretary was sent to brief the commission on the scheme. We were told that if our concerns were not addressed, we could go back to them on the issue. About seven to eight months later, when the scheme was formulated and introduced in 2018, we found that our concerns were not addressed. We wrote to the government again on what we felt were the problem areas in the scheme. It was suggested to us that we could wait for some time, assess the implementation of the scheme, look at the returns filed by the political parties, and if our concerns were still not addressed, the government would see what remedial measures could be taken. So the Election Commission decided to wait for two or three tranches of electoral bonds to be issued and look at the returns. After that, I demitted office. I don’t know what happened after that, but the Election Commission’s view has been that there are grave problems in the electoral bonds scheme. The commission’s affidavit filed before the Supreme Court articulated its views on electoral bonds, and the concerns were enlisted in it.
Q/ You said one positive aspect of the scheme was the smooth manner in which funds could be donated to the political parties. It happened through a banking channel. Do you feel the entire funding of political parties should be made digital?
A/ Of course, that should happen. The only thing is that digital funding should happen one-to-one between the donor and the political party. In the electoral bonds scheme, there was the possibility of a front company purchasing the bond and the bond changing hands before it was finally given to the political party. The bond is like cash, it is like currency. So it could change hands after it was purchased, and in the process, black money could enter the system. So it was facilitating money laundering. And there was also the possibility of foreign funds coming via electoral bonds. Yes, direct payments from the donors to the parties using digital means should be encouraged. That is the best way.
Q/ On the basis of the details that have come out, can wrongdoing be established and accountability be fixed?
A/ For whatever revelations that have been made, to prove any wrongdoing, you need evidence. You have to go deeper. Like after buying the bond, where all did it go, and how much quid pro quo happened between the first buyer, the second buyer, the third buyer if any and then finally the recipient. There is nothing on record. So there will be a need for further investigation to find out what wrongs were committed in the process of those 10-15 days after the bonds were purchased and encashed and what is the evidence for that. Only then can one think of some punitive action.
Q/ How do you view the discussion on the need to protect the privacy of the donor?
A/ I feel that they have the best protection in the sovereign electorate. If everything is done transparently, and if any political party dares to reprimand you or create a backlash for you for donating to a rival, the electorate will punish them. We are a maturing democracy where our electorate is coming of age. Such a mature electorate can always protect your interests if somebody does any injustice to you. So have faith in them. There is no need to be worried unless you have something to hide.
Q/ What is the way ahead? Many suggestions such as state funding of parties or setting up of a National Election Fund have been made.
A/ There are many options, and finding the ideal way to fund political parties is a work in progress. For any democracy, this is the most crucial issue, and all the democracies of the globe are struggling to find the ideal way to fund parties. Only a semblance of an ideal system is visible in the UK because their constituencies are too small, just about 30,000 voters in one constituency. Electioneering means that you drive your own car to your constituency, let people assemble at one place, stop your car, give your speech, move to another part and come back home the same day. You don’t spend much money in campaigning.
Our situation is different. There are around 20 lakh voters in one Lok Sabha constituency, living across 200 square kilometres. The geography is varied―there are hills, valleys, desert, riverine lands―and going to all these places and getting in touch with 20 lakh voters is a herculean task. A lot of money is needed to reach out to those many people. Therefore, we have to continue improving our procedures for political funding. We should not worry that one thing was devised and it worked well, but finally it went bust. We need to think of more effective ways to fund political parties.