Electoral Bonds: Farcical From the Word Go, Reveal RTI Responses

New Delhi: The Finance Ministry violated its own electoral bond scheme rules by allowing anonymous donors to donate expired electoral bonds worth Rs 10 crore to unidentified parties, soon after the May 2018 Karnataka state elections resulted in a hung Assembly, as per a series of reports based on RTI responses.

Furthermore, while the government claimed that the identity of donors and political parties would remain anonymous under the scheme, investigative reports by Huffpost India also revealed that public sector State Bank of India (SBI), the only bank entrusted with issuing electoral bonds, used an alphanumeric code to keep track of both the donors and political parties that receive them.

Journalist Nitin Sethi, who authored the reports, citing previously unpublished documents obtained by transparency activist Commodore Lokesh Batra (Retd.) through the RTI Act, revealed that despite stringent opposition from the Reserve Bank of India (RBI), the Election Commission and Opposition parties, the Narendra Modi-led Bharatiya Janata Party government unveiled the controversial electoral bearer bonds.

More RTI Responses Confirm PMO Role

Another set of RTI responses from the department of Economic Affairs, received by activist Anjali Bhardwaj, and seen by Newsclick, also confirm that the Union government pushed the electoral bond scheme despite apprehensions from RBI, Election Commission and Opposition parties.

On top of this, the Union government also undermined its own rules and regulations on the directions of the Prime Minister Office (PMO) to approve the ‘special’ and ‘illegal’ sale of electoral bonds just before the crucial Assembly elections in 2018.

Also, while political parties are mandated to encash the electoral bonds within 15 days of the issued date, and not doing so would result in the expiry of those bonds and the equivalent amount would go to the Prime Minister Relief Fund, the Finance Ministry permitted SBI to allow unidentified political parties to encash amounts worth Rs 10 crore, although the bonds had expired.

This was in May 2018, immediately after the Karnataka state elections resulted were announced and the political parties -- BJP, Congress and Janata Dal (Secular) -- were accusing each other of bribing elected MLAs to garner more support.

According to the final report in the series in Huffpost India, on May 23, 2018, the SBI wrote to the Finance Ministry, stating that “some EB holders” with bonds worth Rs 20 crore went to SBI’s main branch in New Delhi. “EB, or Electoral Bond, holders refers to representatives of political parties, those holding the physical bond that must be deposited in a political party’s account.” It stated that: “Half the bonds had been bought on 3 May 2018 and the other half on 5 May 2018, and both, SBI noted, had expired as their 15 calendar-day period of redemption had lapsed.”

To this, Vijay Kumar, deputy director in the department of economic affairs (DEA) was cited as saying: “As some amount of lack of complete clarity may have been witnessed in the bonds issue in last windows, SBI may grant credit to such bond holders of bond purchased before 10th May, 2018 if the bonds were deposited in 15 working days. No such accommodation will be available in future.”

This response was approved by the then secretary of DEA, S.C. Garg, the highest-ranking official in the department. The response was sent back to the SBI chairman on May 24, 2018.

On the question of anonymity of electoral bonds, on January 16, 2018, SBI told the Finance Ministry that “these bonds would necessarily need serial numbers to identify the buyers and recipients of these financial instruments,” reveals the investigative series.

“Electoral bonds will not bear the name of the buyer or payee, but will necessarily need a serial number,” bank officials explained to the Finance Ministry. “Without the serial numbers, the bank explained, there would be no audit trail available for internal control and reconciliation of the bonds by the bank. If courts and law enforcement agencies asked SBI for details on the purchaser of the bonds, the bank would have no answer. Without unique identifiers, the bonds could be forged, and accounting for them would be impossible,” stated the report.