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India Inc plays safe; prefers lawful funding of political parties by Naren Karunakaran

The Aditya Birla Group increased its contribution to political parties about fourfold to Rs 30.5 crore in 2009-10 while the Bharti Group cut it from Rs 17 crore to zero. 

The two main national parties, Congress and BJP, received Rs 84 crore and Rs 82 crore, respectively, as contribution from all sources while a regional party like Sharad Pawar's NCP obtained only Rs 3 crore. 
Corporate donors
The 2009-10 numbers of companies making legal donations to political parties, compiled by the Association for Democratic Reforms (ADR), a Delhi-based civil society group, both reveal and conceal. What they reveal is a listing of the 36 corporate entities that donated Rs 1 crore and more to political parties. 

They show a majority of companies don't want to be seen leaning towards one party and the gradual emergence of a more structured way of giving through 'electoral trusts'. What they conceal is how misrepresentative this listing is. 

According to the Centre for Media Studies, political parties spent Rs 10,000-16,000 crore during the 2009 national elections, implying that legal, transparent contributions by companies account for less than 2% of election spending. 

The truth is more obvious: elections in India are fought on torrents of unaccounted money that flow from businesses of all hues to political parties. "Politicians, even those with a national stature, openly demand black money," laments Vishnubhai Haribhakti, chairman of audit firm Haribhakti & Co, and trustee of the General Electoral Trust of the Aditya Birla Group. 

Even figures for aboveboard funding were not easy to come by. In spite of loud proclamations on transparency made by political parties and businesses, ADR had to ferret out the 2009-10 numbers from tax filings of political parties. A series of Right to Information applications moved by ADR were initially rebuffed by the parties. 

"We had to lodge a complaint with the chief information commissioner to get to these figures," says Anil Bairwal, national co-ordinator, ADR. According to ADR data, the $35-billion Aditya Birla Group, with Rs 30.5 crore in contributions, has emerged the largest corporate donor to parties in 2009-10. 

Corporates donate to both Congress & BJP 

The Aditya Birla Group donated Rs 16.6 crore to Bharatiya Janata Party (BJP) and Rs 13.95 crore to Congress through its General Electoral Trust. It was ranked third in the combined sum for 2007-08 and 2008-09, with companies under the ward of Kumar Mangalam Birla donating a total of Rs 7.76 crore. 

Following the Aditya Birla Group in 2009-10 were Asianet TV Holdings (Rs12.5 crore), Torrent Power (Rs10.55 crore) and the electoral trust belonging to the Tatas (Rs9.78 crore). The leader of 2007-08 and 2008-09, Bharti Electoral Trust of the Bharti Group, is not present in the listing of 36 companies that donated over Rs1 crore. 

In 2009-10, eight of the top 10 donors, and 17 of the 36 companies, gave to both BJP and Congress. "No group wants to be seen to be aligned with any political party for fear, if it has backed the wrong one, of getting the short end of the stick," says Haribhakti, trustee of the General Electoral Trust. 

"The winning party then can be less than fair to the company." Corporate India preferring the transparent, above-the-table manner of funding parties has, expectedly, gravitated towards BJP and Congress, the dominant political parties. 

For example, only two Mumbai-based groups, Mahindra & Mahindra and Hindustan Construction Company (HCC), wrote out cheques to Nationalist Congress Party, which has considerable sway in Maharashtra. A significant majority of the top contributors are in infrastructure, power or mining sectors. 

For example, HCC, whose Lavasa city near Pune continues to battle scrutiny of the ministry of environment and forests for several alleged violations, contributed Rs2 crore each to BJP and Congress, andRs1 crore to NCP. 

New vehicles of giving 

Another visible trend is of business houses creating special vehicles called electoral trusts, particularly at the group level, to channel money to political parties. The Tatas were the first to float an electoral trust, in 1996. The Birlas followed a couple of years later. 

Companies of both groups route political donations only through their respective trusts. "We didn't want to dirty our hands and get into this game," says Dinesh Vyas, senior Supreme Court advocate and trustee of the Tatas' Electoral Trust. 

"We, therefore, devised a non-partisan, formulabased way of funding all political parties." The electoral trust follows a strict construct or model, an adaptation of the German way of funding political parties. "Business can thrive only in a good democratic set-up," says Vyas, emphasising the raison d'etre of the trust, and the need for companies to participate in electoral processes. 

The Tatas' trust funds all political parties above a certain representation in Parliament. It starts humming only during the election season. Half the funds in its corpus are distributed before elections, each party receiving an amount proportional to its number of seats in Parliament. 

The remaining 50% is distributed after the elections in the same manner. Parties with less than 5% of seats in the House are ineligible. This self-triggering mechanism caused embarrassment to the Tatas in the previous general elections. 

Trinamool Congress, with just one member in the 14th Lok Sabha, didn't qualify, but it made the cut in the 15th Lok Sabha with 19 members. Accordingly, the trust sent out a cheque for Rs 27 lakh to the party. Trinamool leader Mamata Banerjee, still bristling from a confrontation with the Tatas over the proposed Nano factory in Singur, promptly returned it. 

"The money disbursed to Trinamool neither had any connection with the Singur incident as was made out to be, nor had the Tatas anything to do with it," explains Vyas. The only other party that has refused a donation from the trust was the CPM. Vyas says the trust is not exclusive to the Tata Group and is open to other companies, though the response, he adds, has been tepid. 

Still conservative in his approach, Vyas has been trying to keep pace with the times, especially the radical power shift and the rising influence of regional parties in the country's polity. 

"We have recently amended our trust deed to enable funding of election processes for state assemblies too," he says. Parties such as the Samajwadi Party of UP and Shiv Sena in Maharashtra have been knocking on his doors. Unlike the formulabased approach adopted by Tata's Electoral Trust, the General Electoral Trust prefers a more liberal approach. 

It funds parties and candidates, including independents, but only in constituencies or regions where a group company is located. "We have even funded communists in Kerala because the management at the local manufacturing plant desired so," says Haribhakti. 

Fight for transparency 

A series of RTI applications moved by ADR were rebuffed. Congress and CPM maintained they weren't 'public authorities' as defined by the Act and, therefore, were under no compulsion to reveal transactions. 

NCP said it couldn't provide the numbers as it did not have people to compile them. BJP and Bahujan Samaj Party (BSP) simply didn't respond. The sole exception was CPI, which appears to have shunned corporates. Its top donors were party outfits and party office-bearers AB Bardhan and D Raja. 

The top corporate donors to CPM were Nuziveedu Seeds and Hetero Drugs, both Andhra Pradeshbased companies. During hearings held with the chief information commissioner through last year, ADR argued its case: political parties, which enjoyed income-tax concessions and other government doles, are indeed public authorities as envisaged under the Act and they ought to be accountable to the people, the taxpayers. 

"We had to explain, with figures, that political parties are already state-funded in numerous ways," says Rosmin Francis, programme associate at ADR. "They are the ones who form governments, (and) therefore, undertake a public function." 

While political parties have been opaque about funds raised and the manner in which they are raised, companies and trusts too are reluctant to speak about contributions. 

The trusts of both the Aditya Birla Group and Tatas shied away from revealing the names of the beneficiaries and the amounts disbursed. However, both Vyas and Haribhakti agree that Corporate India ought to take a serious look at reforming financing of political parties and that the present situation cannot go on.