Companies which are under scrutiny would now hesitate to donate: Former Election Commissioner SY Qureshi on Electoral Bonds

The Supreme Court's judgment striking down the Electoral Bonds Scheme, which allowed anonymous funding to political parties, is likely to significantly impact the political landscape in India..Although parties can still continue to receive funding through other means, experts point out that the veil of anonymity being lifted by the apex court will change things.While some predict that political parties will face a significant drop in funding henceforth, others expected more prospective effects..What are electoral bonds?.Electoral bonds are “bearer” instruments in the nature of a promissory note (a written promise by one entity to another) and an interest-free banking instrument. An Indian citizen was eligible to purchase such bonds available in multiples of ₹1,000, ₹10,000, ₹1,00,000, ₹10,00,000 and ₹1,00,00,000 from specified branches of the State Bank of India. According to the scheme, a purchaser was allowed to buy electoral bonds only after due fulfilment of all Know Your Customer (KYC) norms and by making payment from a bank account. .The scheme ensured anonymity of the donor and had a life of only 15 days. During this period, it could be used for making donations only to those political parties registered under Section 29A of the Representation of the Peoples Act, 1951 and which had secured not less than one per cent of the votes polled in the last general election to the House of the People or a Legislative Assembly..Unlimited funding by companies: A thing of the past.At this juncture, it is pertinent to refer to the part of the judgment where the Supreme Court deals with an amendment to a Finance Act provision which was challenged on the ground that it allowed companies, including loss-making ones, to contribute unlimited amounts to political parties.It was argued that the law facilitated the creation of shell companies solely for the purposes of contributing funds to political parties.“Unlimited contribution by companies to political parties is antithetical to free and fair elections because it allows certain persons/companies to wield their clout and resources to influence policy making,” observed the Supreme Court..The verdict, therefore, held that the amendment was “manifestly arbitrary” for:(a) treating political contributions by companies and individuals alike;(b) permitting the unregulated influence of companies in the governance and political process violating the principle of free and fair elections and;(c) treating contributions made by profit-making and loss-making companies to political parties alike..Former Chief Election Commissioner SY Qureshi underlined that political parties could continue receiving funds by cheques and online transactions, except now they can’t keep it a secret. “It can significantly drop,” he said on the point if parties could see less money being offered to them from now on, adding, “Companies which are under scrutiny would now hesitate to donate.”.Anonymity vs accountability.Senior Advocate and former Maharashtra Advocate General Shrihari Aney said that the Electoral Bonds Scheme took away the element of accountability while affording anonymity to entities offering money to political parties.“Now that is very problematic to my mind, because it straight away afforded them anonymity and it became easier to persuade them to give without the bother of having to balance the giving by giving to others.”.However, he expressed reservations over the apex court's direction calling for declarations of who got how much and from whom.“And this would mean that people who in confidence gave money knowing that their names won't be exposed will face the music now. I’m not saying that they have trouble with their tax things because they were giving money through accounted means. These were actually declared monies. But they would've trouble with those whom they gave less or whom they gave more. Knowing that governments can be very vindictive, and we've seen that happen in different ways in the last few years. The way police machinery or investigative machinery can be put to make your life difficult,” he said..He said the judgment ought to have been prospective and not retrospective.“But henceforth, those bonds will not be permitted and whatever is done has to stop at that — would've probably been a more balanced view,” said Aney. .Alternatives to electoral bonds.According to Aney, introducing a law relating to electoral bonds with proper protections, including a disclosure that "straight away” makes the “veiled aspect” disappear, could be another way to deal with the issue. “Once the contributions are declared and known, the donors can't hide behind the promise that we will never tell anybody who has given the money. Then if they donate, they’ll know that this is the consequence of their donation. Today, a lot of invisible threat or invisible hanging swords appear on the scene because of the fact that the disclosure is not made. That will stop,” added Aney..In its ruling, the apex court observed that access to information that could materially shape the citizens’ choice was necessary for them to have a say in how their lives are affected. “Thus, the right to know is paramount for free and fair elections and democracy,” it added..Former Law Secretary PK Malhotra suggested bringing in another law, perhaps by way of an ordinance, before the next election to remove the illegalities of the scheme as pointed out by the Court.“But that may not be the right step on the part of the government. The appropriate step will be that the government should constitute an independent committee to examine all the observations made by the Supreme Court and come out with a better scheme, which is constitutionally sustainable,” said Malhotra. .The creation of a National Electoral Fund, in his opinion, was an option as it can be only be utilised for the purpose of election.“As of today, the money under the Electoral Bond Scheme is not being used by the parties only for the purpose of election. They are using for all other political purposes, including construction of the infrastructure for their political thing," he said. He believes that an independent committee can be constituted to look into a better system to ensure political parties use funds for election and no other purposes..Former Additional Solicitor General of India Pinky Anand, however, believes the decision would reintroduce into Indian mainstream a cash culture that sustained “violence and gangs in politics” in the stead of clean-banked money. “The decision of the Supreme Court has made certain value choices that were best saved not for a Constitutional Court but the Parliament,” she said.She further underscored that the decision to retrospectively reveal information on already received donations is equivalent to a Court sanctioned breach of contract.."When a company chose to donate previously, they were guaranteed anonymity. With the present verdict, the Court will retrospectively unmask companies, which will open them up to political vendetta, negative media coverage, when they had been explicitly told the donations will be anonymous,” Anand added. According to Anand, while American courts have said corporates have a right of political expression by way of donations, a contradictory view in India over apprehensions of abuse of power, would leave parties, companies, and individuals stripped of privacy and Indian elections susceptible to black money..Electoral Bonds Judgment: Why Supreme Court said no to anonymous political donations