India: Supreme Court abolishes system of anonymous financing of political parties
The Indian Supreme Court has just put an end to a system of opaque financing of political parties, criticized for years by the opposition, part of civil society and electoral institutions. This constitutes a setback for the government of Narendra Modi.
BJP workers at the party headquarters in Lucknow, India, Thursday March 10, 2022 (Illustrative image). AP - Rajesh Kumar Singh
By: Sébastien Farcis Follow
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From our correspondent in New Delhi,
Indian parliamentary elections are among the most expensive in the world, and much of this money passes through illegal channels or in cash. In 2017, the government launched a major reform to “
clean up
” this method of financing political parties and reduce the role of cash. This Thursday, the Supreme Court declared this system unconstitutional, condemning its opacity and its potential role in money laundering.
This
method of financing
involved “
electoral leaps
”. Any company or individual who wanted to make a donation to a political party of more than 20,000 rupees (225 euros) could purchase these bonds from the public bank State Bank of India, which registered their name and handed over this monetary instrument. But the transparency ends there, because the name of the buyer is then kept secret by the bank, and he can give this bond to the party he wants, always anonymously.
Voters therefore have no information about which company finances which political party. On the other hand, the public bank holds this information, and the ruling party that controls it can obtain it and put pressure on opposition donors.
Enabling money laundering
The Central Bank and the Elections Commission opposed this reform, arguing that this system was opaque and could even allow money laundering. But the government did not take their opinion into account. As soon as it was adopted, this system was challenged in the Supreme Court by the Association for Democratic Reform (ADR). One of its arguments was that it allowed big business to influence the government in a hidden way - a concern supported, the association argued, by the fact that 94% of the bonds were purchased in denominations of 10 million rupees ( 112,000 euros), and therefore by rich donors.
According to ADR research, between 2017 and 2022, more than €1 billion in bonds funded political parties, making them the largest source of political funding, and 57% of them went to the BJP in power (nearly 600 million euros), more than for the thirty other main Indian political parties. The attorney general defended the anonymity of this system on behalf of the government, saying that "
voters do not have a constitutional right to know who finances their political parties
."
This Thursday, the Supreme Court firmly rejected this vision, and considered that the electoral leaps violated article 19 of the Constitution, which precisely defends this right of citizens to information. The five judges, meeting as a constitutional bench including the President of the Court, also condemned another aspect of this reform: it allowed for the first time subsidiaries of foreign companies based in India to finance Indian political parties - a significant security risk in view of latent border conflicts with neighboring China and Pakistan, and a reform contradictory with the nationalist policy of the BJP, which recently prosecuted the media NewsClick for terrorism, because it allegedly received funds from Chinese investors.
This reform also removed political financing limits for Indian companies and authorized unprofitable companies - and therefore potentially shell companies - to contribute, while exempting them from declaring these political donations in their accounts. The judges ordered the reversal of all these reforms, and demanded the repayment of the recently issued bonds. “
This is historic,
” says eminent lawyer Sanjay Hegde.
The Supreme Court has ruled that big business money cannot influence our democracy, especially if it is done anonymously.
»
“
The Indians will finally know which company financed which party
”
For bonds already cashed by the parties, and therefore non-refundable, the SBI bank will have to share all the information on the buyers and beneficiaries, and it will be disseminated by the Election Commission by March 13 - just before the start of the legislative elections, which should begin in mid-April.
For the founder and director of ADR, who launched this legal battle in 2018, it is a relief. “
The Indians will finally know which company financed which party
,” rejoices Jagdeep Chhokar. This information is all the more important as the government of Narendra Modi has been accused in recent years of favoring the two large groups Adani and Ambani. “
But electoral leaps were only a way of financing political parties
,” he says, “
and there are still many dubious or illegal sources of financing.
»
The cancellation of this electoral financing system represents a significant setback for the government of Narendra Modi, and it underlines the importance of the role of the Supreme Court as a check and balance in India. A role that she seemed to have abandoned in recent years, but which is essential in a context where any opposition to the BJP is fiercely repressed. However, this should not radically change the financing of the legislative campaign, given that the BJP is already much richer than all its competitors.
Read alsoIndia: anonymous financing of political parties at the heart of the Supreme Court hearings
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