Bloomberg Businessweek - USA (2019-05-27)

INDIA’SELECTIONS ARE AMONG

the world’s most expensive. New

Delhi’sCentreforMediaStudiesproj-

ectsthatabout$7 billionhasbeenspent

onthisyear’snationalraces,putting

thetallyaheadofthe$6.5billionthat

OpenSecrets.orgreportedwasspenton

the 2016 U.S.presidentialandcongres-

sionalcampaignscombined.

They’realsoamongthemostcor-

rupt.Illegaldonationsknownas“black

money”areusedtoferrysupporters

toralliesorbuydrugsandalcoholto

bribevoters,amongotherthings.It’s

a vestigeofthesystemthatprevailed

aftera 1969rulingbarredcompanies

fromfundingpoliticalparties;even

thoughthebanwasliftedin1985,cor-

poratedonorshadgottenusedtomak-

inganonymouscashdonations.

PrimeMinisterNarendraModi’sgov-

ernmentrosetopowerin 2014 pledg-

ingtostampoutcorruption,and

lastyearit introduceda toolto

helpcleanthingsupcalledelec-

toralbonds.They’remorelike

carnivalticketsthantheprom-

issory notes traded in global

markets.Basically,anindivid-

ualorcompanycanbuyoneat

the government-owned State

BankofIndiaindenominations

from 1,000rupees to 10 mil-

lionrupees ($14to $142,000).

Thedonor—whose nameisn’t

attached—deliversthepieceof

papertoa politicalparty,and

thenthepartyexchangesit for

cash.Theywerepopularinthe

runuptothisspring’snational

elections,with39.7 billionrupees

($567 million)inbondssoldthis

yearthroughApril 30,accordingtothe

PressTrustofIndia.

The administration says that

because the money is channeled

throughthebankingsystem,thepro-

cessismoretransparentthandirect

cashdonations—whicharestillallowed

butaren’ttax-exemptforthedonor,as

electoralbondsare.It arguesthatano-

nymityis essentialfordonorswhoare

waryofreprisals.Criticssaytheelec-

toralbondslegalizeblackmoneylaun-

deringandincreasethepotentialfor

graftgivenotherrestrictionsondona-

tionsthatModihaslifted.

Combined,hisactions“haveopened

doorstounlimitedpoliticaldonations,

even fromforeign companies, and

therebylegitimizeelectoralcorruption

ata hugescale,”theAssociationfor

DemocraticReforms(ADR),anelection

observer,wrotetotheSupremeCourt.

It filedsuitagainstthegovernmentto

stopthesaleofthebonds—oratleast

orderthatparties publicly disclose

donors’identities—sayingtheyincrease

“theopacityoffundingofpoliticalpar-

ties,andthedangerofquidproquo”

betweencompaniesandthegovern-

ment.InAprilthecourtdirectedIndia’s

partiestodetaildonationsraisedbythe

bondsonlytotheelectionregulator,

notthepublic,byMay 30.

About90%ofelectoralbondssold

lastyearwereofthehighestdenomi-

nationavailable,accordingtowebsite

Factly,evidencethatthey’rebeingused

astoolsbywealthypeopleandcompa-

nies,notaveragecitizens.Androughly

95%ofbondssoldinthefinancialyear

thatendedinMarch 2018wenttothe

rulingBharatiyaJanataParty,accord-

ingtoBloombergcalculationsfromits

latestfinancial disclosures.TheBJP

declareda totalfundraisingrev-

enueof10.3 billionrupeesfor

theperiod,comparedwith2 bil-

lionrupeesraisedbytheIndian

National Congress, the main

oppositionparty.

India’sElectionCommission

toldtheSupremeCourtinMarch

thatanonymousdonationshave

negativerepercussionsonthe

transparencyofpoliticalfund-

ing.“Wearenotagainstelectoral

bondspersebut areopposed

to anonymity,” said Rakesh

Dwivedi,a lawyer whorepre-

sentedthecommission inthe

ADRcase.“Electoralbondslegal-

izeanonymity.Anonymitymust

go.”—JeanetteRodriguesand

UpmanyuTrivedi

57

PHOTOGRAPH

BY

ANKARA

DUTTA

FOR

BLOOMBERG

BUSINESSWEEK

A plantoincreasetransparencyin Indian

electionsmaybehavingthereverseeffect

$567m

BLACK

MONEY

ValueofIndianelectionbonds

soldthisyearthroughApril 30

Bloomberg Businessweek

WHERE THE MONEY IS

May 27, 2019

Electoral bond denominations range from

1,000 rupees to 10 million rupees