PMO Directed Issuing of Illegal Electoral Bonds Before 2018 Assembly Elections: Report

The Prime Minister’s Office directed the Finance Ministry to break its own rules to approve the special and illegal sale of Electoral Bonds just before crucial Assembly elections in 2018, Huffpost has reported, citing previously unpublished documents obtained by transparency activist Commodore Lokesh Batra (Retd.).

In January 2018, the Bharatiya Janata Party government notified rules concerning Electoral Bonds and categorically specified that the State Bank of India (SBI) would sell the bonds to donors in 10-day windows in January, April, July and October each year. As per the rules, an additional 30 days sale of electoral bonds are also allowed in years when a general election was scheduled.

In contravention to this, the report reveals that these bonds were sold in March, May and November in 2018, days before the Assembly elections were scheduled in Karnataka, Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Telangana. These bonds were also sold in the months specified in the rules.

The report stated: “The rules for electoral bonds were broken at the first given opportunity. SBI was supposed to sell the first tranche in April 2018, but the first round was opened a month earlier in March 2018 instead. Rs 222 crore worth of bonds were bought in this round, with 95% going to the BJP.”

“PMO desired to open a special 10-day window for issuance of electoral bonds. However, as per para 8(2) of the notification on electoral bond scheme, dated January 2, 2018, an additional 30-day window could be specified by the Central government in the year of the general elections to the House of People. At this stage, such a special window with general elections to Lok Sabha far away, may not be in consonance with the wordings of the notification,” Vijay Kumar, deputy director of the Department of Economic Affairs handling the electoral bond scheme, wrote to his higher officials on April 3, 2018. The internal file has been obtained under RTI act.

Also read: Elections 2019: EC Says Electoral Bonds to have Serious Impact on Transparency

According to the report, this intervention by PMO to open extra windows for political donations via electoral bonds is significant because the limited sale periods were intended as a precaution against money laundering as earlier warned by the Reserve Bank of India.

Subsequently on April 11, 2018, S C Garg, the then secretary of Economic Affairs wrote to the then Finance Minister Arun Jaitley suggesting him to break the regulations the union government has approved in January 2018. “In view of the requirement, we may, as an exception, open an additional window for the period of May 1-10, 2018,” Garg was cited from an internal communication document in the report.

Furthermore, in October 2018, Vijay Kumar moved a proposal to his seniors for another special window to sell electoral bonds in November 2018, ahead of the Assembly elections in Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Telangana. “In view of the forthcoming State Assembly elections in five states and as per the directions, additional 10-day special window for issuance of Electoral Bonds is proposed, on the analogy adopted at the previous occasion of issuance of electoral bonds through special window during May 1-10, 2018, by the government in view of state Assembly elections in Karnataka with the approval of the finance minister,” the report cited Vijay Kumar as saying from an internal communication document.

Also read: Political Parties Receive Over Rs 871 Crore For Upcoming Assembly Elections In 5 States Through Electoral Bonds

The report stated that both Garg and Jaitley signed off the proposal without hesitation. “Rs 184 crore worth of electoral bonds were bought by donors from SBI in this phase, and given to political parties,” it said.

Journalist Nitin Sethi, who authored the report, has earlier on November 18-19, published two reports in Huffpost India, revealing the stringent opposition from the Reserve Bank of India, the Election Commission and opposition parties on the unveiling of the controversial electoral bearer bonds.

It has been revealed that the Narendra Modi-led government dismissed the Election Commission of India’s strident opposition to electoral bonds, lied to the Indian Parliament and finally resorted to a hurried cover-up when it's misstatements were caught.

According to the previously unpublished documents obtained under RTI act, the Election Commission wanted the government to roll back the electoral bonds back in May 2017, which was communicated to the Union Ministry of Law and Justice which subsequently passed the suggestion to the Finance Ministry in July 2017. However, in the winter session of Parliament in 2018, when Rajya Sabha Member Mohammad Nadimul Haque asked the government whether the Election Commission of India raised concerns about electoral bonds, the then minister of state for finance, P. Radhakrishnan, replied that the government had not received “any concerns from Election Commission on the issue of Electoral Bearer Bonds”.

The investigative report found that “three senior bureaucrats came up with six different convoluted explanations to protect P. Radhakrishnan when he was caught lying about electoral bonds on the floor of the Parliament, Indian democracy’s most hallowed ground.”

Also read: Will Electoral Bonds Actually Ensure Transparency in Political Funding?

Another Huffpost report had also revealed earlier how the BJP government has overlooked the RBI’s reservations. The RBI in January 2017 has wrote to the Financial Ministry stating that the electoral bonds and the amendment to the RBI Act would set a “bad precedent” by encouraging money laundering and undermining faith in Indian banknotes, and would erode a core principle of central banking legislation.

According to Association of Democratic Reforms, electoral bonds worth at least Rs 6,000 crore have been sold since March 2018.