After a protracted legal battle, the information on electoral bonds is finally out in the public domain. On March 12, the Supreme Court came down heavily on an attempt by the State Bank of India (SBI) to evade its directions to disclose, within three weeks, details of electoral bonds transacted.
Dismissing the bank’s application seeking four additional months to provide the data, the Chief Justice of India-led bench set a deadline of one day for the SBI to furnish details of the donors and recipients of electoral bonds to the Election Commission of India (ECI). The ECI was directed to upload this to their website by March 15.
There are three important questions regarding the impact of the Supreme Court’s seminal judgement, which warrant consideration.
Data is out. What next?
In its judgement, the Supreme Court directed the disclosure of two sets of information since April 12, 2019: details of electoral bonds purchased, including “the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased”; and details of bonds redeemed by political parties, including the date of encashment and the denomination of the electoral bonds.
While hearing the SBI’s plea for an extension of the time frame to provide the information, the court clarified that it had never asked for information on purchasers and recipients to be decoded and matched.
A concern voiced by many is that shorn of details about who donated how much money through electoral bonds to which party, the disclosures are of little value.
While it is true that a fully matched database of the purchasers and redeemers of electoral bonds would have been ideal, there is no denying that the information revealed on the eve of elections will greatly further the people’s right to know. Now that the data is in the public domain, those in pursuit of greater transparency and accountability in the political system will be empowered to examine the list of purchasers of electoral bonds to discern if they benefited from quid pro quo arrangements.
Did their loans get written off? Did they get a disproportionate share of government contracts? Did investigative agencies go slow on cases against them after they made donations? Were policy changes made to favour them?
Further, apart from tracing out shell companies or fly-by-night operators, perusing the financial statements of donor companies will reveal if loss-making entities donated through electoral bonds.
The court had observed, “it is more plausible that loss-making companies will contribute to political parties with a quid pro quo”.
Finally, the data will shine light on which foreign companies used the electoral bonds route to donate money anonymously through their Indian subsidiaries to political parties.
The dogged fight put up by the government at every step to deny and delay disclosure reaffirms the old adage – information is power. It is now for people to engage with this crucial data and cast an informed vote in the forthcoming elections.
Back to unaccounted cash?
The judgement has been criticised for not considering the effect that striking down the electoral bonds scheme will have on political funding. No less than the BJP’s national vice-president, Baijayant Jay Panda, tweeted that electoral bonds “were infinitely better than what they had replaced: suitcases of illicit cash”, claiming that “the perfect has become the enemy of the good”.
This was also a key argument of the government while defending electoral bonds in court – that bonds could only be purchased through banking channels, thereby curbing the use of black money for funding parties.
The anonymity guaranteed to donors was meant to incentivise them to move away from cash donations, which they preferred because of fear of “consequences from political opponents”.
Also read: After FAQs on Electoral Bonds, SBI’s Beneficial Ownership Proformas Disappear from Website
The court dealt with this issue at length in its judgement under the heading, “Whether the infringement of the right to information of the voter is justified”.
It noted that though the purported objective of guaranteeing the anonymity of donors was curbing black money by incentivising contributions through banking channels, the electoral bonds scheme failed to provide any regulatory check to prevent the trading of bonds.
This concern had also been flagged by the RBI in its correspondence with the finance ministry while objecting to the introduction of electoral bonds.
Letters accessed by the authors under the RTI Act showed that the RBI warned the scheme could give rise to black money being laundered, as the bonds may be traded for a consideration without any trail of the transactions and the original buyer may not be the ultimate contributor.
Further, the electoral bonds scheme and the concomitant amendments made to laws did not prohibit political parties from accepting donations in cash; instead, they just put a cap of Rs 2,000 on cash donations.
Thus, problems associated with anonymous donations in cash persisted, including the practice of breaking up large cash donations into smaller packets to hoodwink the system.
The Supreme Court arrived at the conclusion that the electoral bonds scheme failed the proportionality test. It ruled that though the scheme may reduce donations through cash, there are other alternative means through which the circulation of black money in electoral financing could be curbed that would not compromise voters’ right to know to the extent that electoral bonds did.
Unwarranted breach of the promise of anonymity?
Another concern that has been flagged is that revealing the names of the purchasers of electoral bonds, that too with retrospective effect, is violative of the guarantee of anonymity made to the donors.
This is misplaced on at least two counts.
First, the electoral bonds scheme, in clause 7(4) – the very clause which obligated the SBI to treat all information furnished by a buyer as confidential – defined the conditions under which details would be disclosed: “when demanded by a competent court or upon registration of criminal case by any law enforcement agency”.
So, purchasers would have been aware at the time of buying a bond that there was no promise of blanket confidentiality. Since 94% of bonds sold in value terms were of the highest available denomination of Rs 1 crore, it is difficult to fathom that these entities, presumably mostly corporates, would not have understood the applicable terms and conditions.
Second, it is well within the powers of the apex court, while examining the constitutional validity of a policy formulated by a government, especially on the premise that it unreasonably abrogates the fundamental right to information, to order the disclosure of information.
In this case, the amendments made to various laws through the Finance Act of 2017 to enable the electoral bonds scheme, including the aspect of purchasers’ anonymity, were challenged in 2017 even before the scheme was operationalised.
The possibility of the court striking down the anonymity clause always existed.
Anjali Bhardwaj and Amrita Johri are transparency activists associated with the National Campaign for Peoples’ Right to Information and Satark Nagrik Sangathan.