Preliminary examination of electoral bonds data has revealed a strong possibility of quid pro quo. What are the legal dimensions of the issue?.—.MONTHS after the Supreme Court struck down the 2018 electoral bond scheme, that allowed anonymous donations to political parties, a public interest litigation (PIL) has been filed in the Supreme Court seeking a court-monitored investigation by a special investigation team (SIT) into instances of apparent 'quid pro quo' between public servants, political parties, commercial organisations, companies, officials of investigation agencies and others..Common Cause, a registered society with over 2,500 members spread all over the country and known for its dedication to championing public causes, has filed the PIL..In its landmark ruling earlier this year, the Supreme Court held that the electoral bond scheme violated the rights of the people to be informed about who is donating how much to political parties; and that it could lead to quid pro quo arrangements between corporates and governments headed by these political parties..The court also held that the scheme distorts the level playing field by giving a massive advantage to parties in power..Consequently, the Supreme Court ordered the State Bank of India (SBI) to release all data about the purchase of bonds and encashment of bonds by political parties..“In its landmark ruling earlier this year, the Supreme Court held that the electoral bond scheme violated the rights of the people to be informed about who is donating how much to political parties..In its petition, filed through advocate Prashant Bhushan, Common Cause claims that the electoral bond data that has been revealed shows that the bulk of the bonds appear to have been given as quid pro quo arrangements by corporates to political parties for:.Getting contracts, licences, leases, clearances and approvals worth thousands and sometimes lakhs of crores of rupees and other benefits from the governments or authorities controlled by the governments which were in turn controlled by the political parties that received those bonds.Electoral bonds given in close proximity to action by agencies such as the Enforcement Directorate (ED), income tax department and Central Bureau of Investigation (CBI) raising suspicion of it being 'protection' money to avoid or stall action by or in exchange for regulatory inaction by various regulators such as the drug controller, etc.Electoral bonds given as a consideration for favourable policy changes.. Also read: No bond with Article 19: Supreme Court declares electoral bonds unconstitutional, directs SBI to stop issuing them."Though these apparent pay-offs amount to several thousand crore (rupees), they appear to have influenced contracts worth lakhs of crore (rupees) and regulatory inaction by agencies worth thousands of crore (rupees) and also appear to have allowed substandard or dangerous drugs to be sold in the market, endangering the lives of millions of people in the country.."That is why the electoral bonds scam has been called by many astute observers as the largest scam in India so far, and perhaps in the world," the petition states..The petition enlists five categories of data, namely:.Cases where corporate entities facing ongoing investigations by ED, income tax department, Central Bureau of Investigation (CBI) and other regulatory authorities donated large sums to the ruling party at the Union level or in the states, thereby raising questions about whether these were meant to affect the outcomes of the probes.Cases where substantial public or government projects involving thousands or lakhs of crores have been awarded by the ruling party in power at the Union level or in the states to corporate entities.Cases where the government in power at the Union level or in the states brought about a substantive policy change.Cases where even loss-making companies and shell companies have donated huge sums of money to political parties.Cases where companies have donated huge amounts as electoral bonds within three years of incorporation in violation of Section 182(1) of the Companies Act, 2013..In its petition, Common Cause has given a tabulated chart, based on newspaper reports, showing as many as 22 entities that appear to have benefitted from quid pro quo arrangements based on donations made to political parties through electoral bonds.."The data makes it apparent that private companies paid crores of rupees to political parties apparently either as 'protection money' for protection against agencies under the government or as a 'bribe' in return for undue benefits.."In some instances, it has been seen that political parties in power at the Union level or in states have brazenly amended policies and laws to apparently provide benefits to private promoters of large projects at the cost of public interest..Also read: Electoral bonds: A landmark judgment in the direction of free and fair elections."Further, in flagrant violation of the safeguard provided in Section 182(1) of the Companies Act, that a company needed to be in existence for three years before making contributions to a political party, several newly minted companies have donated through electoral bonds," the petition states..“The Supreme Court judgment on electoral bonds flagged that the scheme could lead to quid pro quo arrangements between corporates and governments headed by these political parties..For instance, the petitioner states that Megha Engineering and Infrastructures, Ltd (MEIL), which is the second-highest donor of electoral bonds, purchased bonds amounting to ₹980 crore between April 12, 2019 and October 12, 2023, and donated worth ₹584 crore to the Bharatiya Janata Party (BJP), ₹195 crore to the Bharat Rashtra Samithi, and ₹85 crores to the Dravida Munnetra Kazhagam (DMK).."MEIL bagged key projects like a crude oil project worth ₹5,400 crore in Mongolia (the Mongol Refinery Project is a government-to-government initiative) in September, 2023 and two separate packages to build the Thane–Borivali twin tunnel project in Mumbai for a total bid of ₹14,400 crore in May and a ₹500 crore order from the Ministry of Defence for its company IComm in June.."Furthermore, the company was awarded with contracts over ₹1 lakh crore to construct part of the Kaleshwaram lift irrigation project, built from 2016–19 by the BRS government in Telangana.."In February 2024, the Comptroller and Auditor General of India (CAG) pointed out serious illegalities in the price estimation of the project so as to cause undue benefit of thousands of crore rupees to MEIL and other private contractors.."As per the data available, prima facie it appears that there are quid pro quo arrangements between the company and political parties to which it donated," the petition claims..The claim has been made based on the reports published by The Indian Express on March 31, 2024 and The Wire on March 13, 2024..Also read: Donor anonymity versus voters' right to know: Supreme Court reserves judgment in electoral bonds case.The petitioner states that APCO Infratech Private Limited (APCO) has been awarded a plethora of projects spanning roadways, transport, irrigation and water sanitation in recent years..On November 11, 2018, APCO was awarded two major projects, i.e, the Bundelkhand Expressway Project, worth ₹7,786.81 crore for construction work and ₹2202.38 crore for land acquisition and the Gorakhpur Expressway project worth ₹3,024.10 crore for construction work and ₹1,563.90 crore for purchasing land..The petitioner alleges that within two months of getting the expressway projects, APCO donated ₹10 crore to the BJP on January 15, 2020..“The Supreme Court judgment on electoral bonds held that the scheme distorts the level playing field by giving a massive advantage to parties in power.."The company was again awarded with the Bangalore–Chennai Expressway project on September 15, 2021 worth ₹2007 crore by the National Highway Authority of India (NHAI).."After three months, on January 10, 2022, it donated ₹10 crore to the BJP. It is prima facie apparent from the facts above mentioned that the company bagged contracts worth thousands of crore rupees right after donating the bonds to the BJP," the petitioner states..The petition relies upon a news report published by The Pioneer on November 12, 2019 to buttress its claim..Future Gaming and Hotel Services PR, which is the largest donor to political parties, donated ₹1,368 crore. Of this, a sum of ₹540 crore was encashed by the All India Trinamool Congress (AITMC), ₹509 crore by the DMK and ₹160 crore by the Yuvajana Sramika Rythu Congress Party (YSRCP) , ₹100 crore by the BJP and ₹50 crore by the Congress..The petition states that in 2017, the CAG flagged irregularities by marketing agents of Future Gaming and Hotel, in Sikkim, Nagaland and Mizoram, and noted that they were involved in lottery scams in Andhra Pradesh, Bihar and Jharkhand and Tamil Nadu.."Andhra (Pradesh)'s governing party, YSRCP then took ₹154 crore from Future (Gaming), while Tamil Nadu's governing party took ₹503 crore. The CAG report specifically flagged issues in the Sikkim state lottery. From October, 2022 to January 2024, Future Gaming gave ₹8 crore to the Sikkim Krantikari Morcha and ₹5 crore to the Sikkim Democratic Front.."Two cases regarding criminal conspiracy and cheating against Future Gaming were closed by the Kolkata police right before and after the company donated electoral bonds to AITMC..Also read: Has SC dented transparency in a din of strong words against SBI in the electoral bonds contempt case?."The closure reports were filed in December 2021 and January 2022. From July 2021 to July 2022, ₹160 crore was given by the company to AITMC. Future (Gaming) has donated ₹100 crore to the BJP. It has been facing a CBI probe since 2010, but the progress on the case reportedly stalled since 2014," the petitioner alleges..The petitioner refers to a news report published by The Print on April 2, 2024 to substantiate the allegations..The petitioner alleges that Grasim Industries (part of the Aditya Birla Group) appears to be an example of arrangements of quid pro quo through a policy change..The company donated ₹534 crore in total to the BJP. The income tax department, on March 15, 2019, raised a demand of ₹5872.13 crore to the company for a merger..The tax demand of ₹5,872 crore was quashed right after the company donated bonds worth ₹20 crore to the BJP on April 12, 2019. On January 2, 202, the income tax authorities raised a demand of ₹8,334 crore as capital gains tax on Grasim Industries..“The Supreme Court ordered the State Bank of India to release all data about the purchase of bonds and encashment of bonds by political parties..In the next two years, between 2021–23, Aditya Birla Group purchased bonds worth ₹180 crore which were encashed by the BJP..The petitioner states that no further information was available in the public domain about any follow-up action of the income tax authorities. Also, there were policy changes so that Grasim was able to lead the market comfortably.."In August 2021, the Union government removed anti-dumping duty on viscose staple fibre, a man-made, biodegradable fibre in textile manufacturing that has been Grasim's forte for decades.."The decision let foreign manufacturers enter with cheaper products which hurt Grasim's business interests. As per the information available in the public domain, Grasim officials successfully lobbied with textiles minister Piyush Goyal to implement strict quality control measures in the sector..Also read: The myth of an informed choice: Algorithms and information echo chambers on the rise in Indian politics."Accordingly, an Order was passed for stricter quality control in December 2022, choking imports from China and Indonesia that had allowed small- and medium-sized firms to run," the petitioner claims..In support of its claim, the petitioner has referred to a report published by web-portal Reporter's Collective on March 16, 2024..Another company, IFB Agro Limited, bought bonds worth ₹92.3 crore from 2021 to 2024. In June 2020, there was a goods and services tax (GST) search on the company..In 2022, the company's board of directors approved "contributions to political parties by way of subscription to the electoral bonds in one or more tranches aggregating not more than ₹40 crore for the financial year 2022–23"..The company's board also mentioned that the decision had been taken since the company was facing "excise-related issues"..The petitioner also states a recording of the company's annual general meeting for the financial year 2023. Joint executive chairman Bikramjit Nag said the bonds were bought "as per instructions from the government"..In February 2024, the company declared that it had contributed ₹40 crore to political parties in the first nine months of the financial year 2023–24. This is an amount that is three times its after-tax profits of ₹13.87 crore for the same period..The petitioner states that Infina Capital Private Ltd. (Infina), a Kotak entity, donated electoral bonds amounting to ₹131 crores to the BJP from 2019 to 2022..In August 2018, the RBI rejected Kotak Mahindra Bank's (KMB) proposal of issuing preference shares in order to reduce Uday Kotak's holding in the bank which was further challenged in the court in December 2018..In 2019, Infina donated ₹30 crore to the BJP, which has not been not disclosed by the SBI to ECI. In 2020, despite having a solid case, the RBI made significant efforts to reach an out-of-court settlement in favour of Uday Kotak..Also read: CEC's support for donor anonymity in electoral bonds sign of compromise of basic institutions of democracy.In 2020, Infina donated ₹76 crore of electoral bonds to the BJP but only ₹35 crore was disclosed by the SBI..This chain of events, the petitioner states, prima facie shows the arrangement of quid pro quo. The petitioner has referred to a report dated April 5, 2024 published by The Wire to buttress the claim..The petitioner also refers to yet another company namely Aurobindo Pharma. It states that this company and its wholly owned subsidiaries contributed a total of ₹55 crore worth of electoral bonds to the BJP..In November 2022, the ED arrested its director, Sarath Reddy, on charges of money laundering as part of investigations into the Delhi liquor policy case..“Common Cause has given a tabulated chart showing as many as 22 entities that appear to have benefitted from quid pro quo arrangements based on donations made to political parties through electoral bonds..Aurobindo Pharma bought electoral bonds worth ₹5 crore on November 15, 2022. All of them were encashed by the BJP soon after, on November 21, 2022. In May 2023, when Reddy's bail plea came up for hearing, the ED did not oppose it.."This is perhaps the first case where ED, in a money laundering case, had not opposed the grant of bail of the money laundering accused on the medical grounds that he suffers lower back pain..After he was released from prison, Reddy turned approver in the case on June 02, 2023. On November 8, 2023 Aurobindo Pharma donated ₹25 crore more to the BJP through bonds while another ₹25 crore were contributed through two companies— Eugia Pharma Specialities Ltd (₹15 crore) and APL Healthcare (₹ 10 crore)— which are wholly owned subsidiaries of Aurobindo Pharma," the petitioner claims..The petitioner has referred to a news report published on March 22, 2024 by The Scroll under the heading: "Accused in ₹100-crore Delhi liquor scam, businessman's firms paid the BJP ₹55 crore through bonds"..Vedanta, which is the fourth largest buyer of electoral bonds, bought electoral bonds worth ₹402.5 crore. In March 2020, the CBI booked Vedanta, among other companies, for criminal conspiracy and cheating over the supply of coal..Also read: Electoral bonds case: Supreme Court begins hearing case that goes to 'the root of democracy'.It bought ₹76.5 crore worth of bonds on January 10, 2022, which were given to the BJP. In August 2022, TSPL, a Vedanta company, was raided by the ED in connection with a money laundering case..(It had also raided Karti Chidambaram in this case, summoned him for questioning in December 2023, and filed a fresh charge sheet against him in February 2024.) On November 14, 2022, Vedanta gave ₹100 crore to the BJP through bonds..The petitioner refers to Bharti Airtel Limited, which donated worth ₹51.4 crore to the BJP from 2019–22. On August 24, 2021, Bharti-linked company OneWeb received a Global Mobile Personal Communications by Satellite (GMPCS) licence from the department of telecommunications..In 2022–23, the company donated a further ₹135 crore to the BJP. On November 21, 2023, OneWeb received space authorisation from the Indian National Space Promotion and Authorisation Centre (INSPACe) for the use of satellite capacity. Thus, OneWeb became the only company to get both the licence and space authorisation..The petitioner states that on December 18, 2023, a new Telecommunications Bill was introduced in Lok Sabha paving the way for discretionary administrative allocation of spectrum instead of auction. With over 140 opposition members of Parliament suspended, the said Bill was swiftly passed..This law, the petitioner states, allowing discretionary administrative allocation of spectrum virtually overrides the judgment passed by the Supreme Court in the Centre for Public Interest Litigation versus Union of India, the 2G spectrum allocation case which cancelled all administrative allocations and directed auction of spectrum..In January 2024, the Bharti group donated another ₹50 crore to the BJP..“Future Gaming and Hotel Services PR is the largest donor to political parties, donating ₹1,368 crore.."It is to be noted that OneWeb India is the Indian subsidiary of international satellite company Eutelsat OneWeb, headquartered in London. The largest shareholder of Eutelsat OneWeb is Airtel's parent company Bharti Enterprises," the petition states..To support its allegations, the petitioner cites a report published by The Scroll on March 27, 2024..Donation by pharmaceutical companies.Many pharma companies such as Hetero, Micro Labs, Torrent etc., which were under regulatory scanner for manufacturing substandard drugs, also purchased electoral bonds. According to the petitioner, these cases show the following:.Also read: On electoral bonds: Why is there something rather than nothing?.That many of these companies were flagged by authorities for manufacturing and selling substandard drugs.That even after being flagged these companies were permitted to manufacture and sell these drugs.In this time, these pharma companies gave huge sums of money through electoral bonds to those very ruling political parties which had earlier flagged them or were investigating them..Torrent Group, which includes Torrent Pharmaceuticals, bought ₹184 crore worth of electoral bonds from May 2019 to January 2024. These bonds went to eight different political parties. The petitioner alleges:.In 2018, the company's antiplatelet medicine Deplatt-150 had failed the salicylic acid test and was declared substandard by the Maharashtra Food and Drug Administration. Torrent Group gave ₹3 crore to the Shiv Sena, ₹3.5 crore to the Nationalist Congress Party (NCP), ₹22 crore to the Indian National Congress (INC), and ₹137 crore to the BJP, all of which have governed Maharashtra since 2019.In September 2019, Torrent Pharma's drug Losar H, used to lower blood pressure, was found to be substandard by the Gujarat Food and Drug Administration. In October 2019, the United States Food and Drug Administration issued a warning to the firm for repeated quality-related failures at the Indrad, Gujarat manufacturing unit, following inspections in April 2019..However, the Gujarat government apparently did not take any action in either case. In May 2019, Torrent group gave ₹14 crore in bonds to the BJP, while on October 1, 2019, Torrent Group bought ₹10 crore worth of electoral bonds, which were encashed by the BJP..“The petitioner alleges that Grasim Industries (part of the Aditya Birla Group) appears to be an example of arrangements of quid pro quo through a policy change..In 2022, another US Food and Drug Administration inspection also found violations in Torrent's Indrad facility. The firm donated ₹22 crore to the BJP in 2022. Apparently, no action was taken against the Indrad facility by the Gujarat government.In December 2021, its medicine Nikoran LV, used to treat heart diseases, failed to meet standards when tested by the Maharashtra Food and Drug Administration.In February 2023, its Lopamide medicine, used to treat diarrhoea, failed the dissolution test and was found substandard.Torrent Group gave ₹7 crore to the Sikkim Krantikari Morcha and ₹50 lakh to the Sikkim Democratic Front from October 2023–January 2024. It has three pharma manufacturing units in Sikkim..Also read: Electoral bonds: SBI seeking more time negates the purpose of the Supreme Court judgment.Zydus Healthcare purchased electoral bonds worth ₹29 crore between 2022 and 2023. Regarding Zydus, the petitioner alleges:.In 2021, the Bihar drug regulator declared a batch of remdesivir medicines manufactured by the Gujarat-based company as "not of standard quality" after traces of bacterial endotoxin were found in them. Several patients were reported to have suffered adverse drug reactions from the medicines. However, the Gujarat drug regulator did not collect samples of these batches for further testing, nor did it initiate any action against the manufacturing unit of Zydus.On October 10, 2022, Zydus donated ₹18 crore to the BJP, in power in Gujarat..Glenmark donated ₹9.75 crore of electoral bonds in November 2022 to the BJP. The petitioner alleges:.The company received five notices for its substandard drugs between 2022 and 2023 and four of these were issued by the Maharashtra Food and Drugs Administration (FDA), which flagged its blood pressure regulating medicine Telma as substandard, mostly failing dissolution test.Glenmark has given ₹9.75 crore to the BJP government in Maharashtra since 2022. .“"In August 2021, the Union government removed anti-dumping duty on viscose staple fibre, a man-made, biodegradable fibre in textile manufacturing that has been Grasim's forte for decades," read the petition..Cipla has purchased bonds worth ₹39.2 crore since 2019 and received four show-cause notices for its drugs between 2018 and 2022. The petitioner alleges:.In August 2018, its RC cough syrup failed to meet standards during an inspection. In 2019, it gave ₹15 crore in bonds to the BJP. In July 2021, it received notices twice for its remdesivir medicine, Cipremi, which was found to have less than the required quantity of remdesivir in it.Cipla bought bonds worth ₹24.2 crore in November 2022, of which ₹22 crore went to the BJP and ₹2.2 crore to the INC..IPCA Laboratories Limited bought bonds worth ₹13.5 crore between November 2022 and October 2023. The petitioner alleges:.In October 2018, its anti-parasitic medicine, Lariago, had lower than required chloroquine phosphate levels and was found substandard and eventually flagged by the Mumbai Food and Drugs Administration. It gave ₹10 crore to the BJP in November 2022..Also read: Black economy persists with or without electoral bonds.IPCA gave ₹3.5 crore to the Sikkim Krantikari Morcha in 2023. It has manufacturing facilities for drugs in Sikkim..Regarding Hetero Group, the petitioner says it has been slapped with notices for substandard drugs at least six times between 2020 and 2022, including three notices for its remdesivir medicine, by the Maharashtra FDA. The petition alleges:.The US Food and Drug Administration also sent a notice to Hetero Labs, a supplier of active pharmaceutical ingredients, about possible manufacturing deficiencies at its unit. However, no action has been taken.Hetero Group gave ₹60 crores in electoral bonds, including ₹10 crore to the BJP in 2023 and ₹50 crore to the BRS in 2022–23..Regarding Intas Pharmaceutical, the petitioner alleges that in 2020, the company's Enapril-5 tablet failed the dissolution test by the Maharashtra FDA..In October 2022, Intas gave ₹20 crore to the BJP and in December 2022, the US FDA flagged serious quality control issues amounting to what it called a "cascade of failure" at an Intas facility in Ahmedabad, following an inspection from November 22 to December 2..Natco Pharma purchased bonds worth ₹69.25 crore. The petitioner alleges:.From August 5 to 9, 2019, the US FDA inspected a Natco facility in Mekaguda, near Hyderabad, and concluded with six 'observations'. Natco responded that it would specify justification and corrective actions in two weeks.On July 1, 2022, Natco gave ₹10 crore to the BRS following an inspection of a Natco facility in Rangareddy district, Telangana, from October 9 to 18 in 2023, the FDA reportedly found unclean and ill-maintained equipment that could contaminate the drugs.On October 4, 2022, Natco gave another ₹10 crore to the BRS..Regarding Micro Labs Ltd, the petitioner submits that the income tax department searched more than 40 offices of the Bengaluru-based pharmaceuticals on July 6, 2022..Micro Labs is the maker of the ubiquitous paracetamol tablet Dolo 650. Officials also searched the residences of its owners. In the same month, the Indian government said the searches revealed "substantial incriminating evidence" of unethical practices and freebies to medical professionals to the tune of ₹1,000 crore..Also read: Electoral bonds: No solution to illegal political funding.The same month, the National Pharmaceutical Pricing Authority (NPPA) asked the Indian Pharmaceutical Alliance (IPA) to investigate the matter. The NPPA is an independent regulator attached to the department of pharmaceuticals in the Union ministry of chemicals and fertilisers, and is responsible for pricing drugs to keep them affordable..“The petitioner states that Infina Capital Private Ltd. (Infina), a Kotak entity, donated electoral bonds amounting to ₹131 crores to the BJP from 2019 to 2022..In September, the IPA cleared the company in a report to the NPPA, declaring the "₹1,000 crore expenditure on a single brand Dolo 650 on freebies in one year" to be "not correct"..In October 2022, Micro Labs purchased electoral bonds worth ₹6 crore, which were encashed by the BJP..The petitioner buttresses its claims, relying upon reports published by The Hindu, Scroll.in and Reporter's Collective. These reports can be read here, here and here..The petitioner argues that there is a huge difference in the donations made by the companies before and after the enactment of the 2018 electoral bonds scheme..Many top donors after 2018, when they could take the shield of anonymity, never donated large amounts before the enactment of the scheme..The petitioner also submits that none of the top 30 donors of the AITMC and Biju Janata Dal (BJD) appear to have directly given funds to them in the five years before the scheme, adding that there does not appear to be any record of Megha Group, the largest donor for the BJP, having donated to the party before 2018..Large donations by loss-making and shell companies.The petitioner claims that the electoral bonds data has shown that various loss-making companies and shell companies were donating huge sums to political parties through electoral bonds, which were apparently being used as a medium to launder illicit money by corporate houses.."It is evident from the fact that many companies having little profits gave large donations to many political parties, especially ruling parties, suggesting laundered money finding its way into the coffers of the political parties..Also read: So, which political parties are receiving electoral bonds? SBI won't tell us. Whither political transparency?."That the source of these funds from these shell companies is unknown and a matter of investigation as apparently names and know your customer (KYC) of these companies have been used by other entities to launder their illicit money," the petitioner submits..The petitioner refers to a report published by The Hindu with an independent research team, which shows that the sources of funds of as many as 45 companies or donors of electoral bonds are under suspicion..“Torrent Group, which includes Torrent Pharmaceuticals, bought ₹184 crore worth of electoral bonds from May 2019 to January 2024. These bonds went to eight different political parties..As per the report: "Thirty-three companies donated an aggregate sum of ₹576.2 crore in electoral bonds, out of which ₹434.2 crore (nearly 75 percent) was encashed by the BJP.."These companies had negative or near zero profit after tax in aggregate over seven years, from 2016–17 to 2022–23. The aggregate net losses of these 33 companies were over ₹1 lakh crore.."Sixteen out of these 33 companies (category A) paid zero or negative direct taxes in aggregate. That these loss-making companies made such substantial donations indicates they could be acting as fronts for other firms or have misreported their profits and losses— raising the possibility of money laundering..“Many top donors after 2018, when they could take the shield of anonymity, never donated large amounts before the enactment of the scheme.."Six companies donated a total of ₹646 crore, out of which ₹601 crore (93 percent) was encashed by the BJP. They had positive net profits in aggregate from 2016–17 to 2022–23, but the amounts donated through EBs exceeded their aggregate net profit significantly.."These companies (category B) could also have acted as fronts for other companies or have misreported their profits and losses. Three companies donated an aggregate sum of ₹193.8 crore, out of which ₹28.3 crore (around 15%) was encashed by the BJP.."Of the rest, the Congress received ₹91.6 crore (47 percent); the Trinamool Congress, ₹45.9 crore (24 percent); the BRS and the BJD, ₹10 crore (close to 5 percent) each; and the AAP, ₹7 crore (3.6 percent). These three companies had positive net profits but reported negative direct taxes in aggregate from 2016–17 to 2022–23. Such companies (category C) could have engaged in tax evasion.."Three companies (category D) donated a total of ₹16.4 crore in electoral bonds, out of which ₹4.9 crore (around 30 percent) was encashed by the BJP and the rest by the Congress (58 percent), Akali Dal and JD (U), 6.1 percent each..Also read: Electoral Bonds: How compromised is our democracy."These three companies had no reported data on net profits or direct taxes paid for the entire seven-year period which raises the question of whether the donors were shell companies that were involved in money laundering.".On the basis of these reports, the petitioner argues that loss-making companies and shell companies paying hundreds of crores of rupees through electoral bonds with unknown sources of funds attract the provisions of the Prevention of Money Laundering Act, 2002 and need to be investigated..“Searches revealed "substantial incriminating evidence" of unethical practices and freebies to medical professionals to the tune of ₹1,000 crore by Micro Labs, maker of the ubiquitous paracetamol tablet Dolo 650.."Electoral bond data suggests that 19 of the companies which donated nearly ₹100.9 crore to political parties were termed 'high risk' companies by the ministry of finance's financial intelligence unit (FIU) for violating rules under PMLA, 2002.."Interestingly, 18 of these 19 companies which purchased electoral bonds did not appear in the FIU's subsequent annual lists of 'high risk' NBFCs," the petitioner submits.
Preliminary examination of electoral bonds data has revealed a strong possibility of quid pro quo. What are the legal dimensions of the issue?.—.MONTHS after the Supreme Court struck down the 2018 electoral bond scheme, that allowed anonymous donations to political parties, a public interest litigation (PIL) has been filed in the Supreme Court seeking a court-monitored investigation by a special investigation team (SIT) into instances of apparent 'quid pro quo' between public servants, political parties, commercial organisations, companies, officials of investigation agencies and others..Common Cause, a registered society with over 2,500 members spread all over the country and known for its dedication to championing public causes, has filed the PIL..In its landmark ruling earlier this year, the Supreme Court held that the electoral bond scheme violated the rights of the people to be informed about who is donating how much to political parties; and that it could lead to quid pro quo arrangements between corporates and governments headed by these political parties..The court also held that the scheme distorts the level playing field by giving a massive advantage to parties in power..Consequently, the Supreme Court ordered the State Bank of India (SBI) to release all data about the purchase of bonds and encashment of bonds by political parties..“In its landmark ruling earlier this year, the Supreme Court held that the electoral bond scheme violated the rights of the people to be informed about who is donating how much to political parties..In its petition, filed through advocate Prashant Bhushan, Common Cause claims that the electoral bond data that has been revealed shows that the bulk of the bonds appear to have been given as quid pro quo arrangements by corporates to political parties for:.Getting contracts, licences, leases, clearances and approvals worth thousands and sometimes lakhs of crores of rupees and other benefits from the governments or authorities controlled by the governments which were in turn controlled by the political parties that received those bonds.Electoral bonds given in close proximity to action by agencies such as the Enforcement Directorate (ED), income tax department and Central Bureau of Investigation (CBI) raising suspicion of it being 'protection' money to avoid or stall action by or in exchange for regulatory inaction by various regulators such as the drug controller, etc.Electoral bonds given as a consideration for favourable policy changes.. Also read: No bond with Article 19: Supreme Court declares electoral bonds unconstitutional, directs SBI to stop issuing them."Though these apparent pay-offs amount to several thousand crore (rupees), they appear to have influenced contracts worth lakhs of crore (rupees) and regulatory inaction by agencies worth thousands of crore (rupees) and also appear to have allowed substandard or dangerous drugs to be sold in the market, endangering the lives of millions of people in the country.."That is why the electoral bonds scam has been called by many astute observers as the largest scam in India so far, and perhaps in the world," the petition states..The petition enlists five categories of data, namely:.Cases where corporate entities facing ongoing investigations by ED, income tax department, Central Bureau of Investigation (CBI) and other regulatory authorities donated large sums to the ruling party at the Union level or in the states, thereby raising questions about whether these were meant to affect the outcomes of the probes.Cases where substantial public or government projects involving thousands or lakhs of crores have been awarded by the ruling party in power at the Union level or in the states to corporate entities.Cases where the government in power at the Union level or in the states brought about a substantive policy change.Cases where even loss-making companies and shell companies have donated huge sums of money to political parties.Cases where companies have donated huge amounts as electoral bonds within three years of incorporation in violation of Section 182(1) of the Companies Act, 2013..In its petition, Common Cause has given a tabulated chart, based on newspaper reports, showing as many as 22 entities that appear to have benefitted from quid pro quo arrangements based on donations made to political parties through electoral bonds.."The data makes it apparent that private companies paid crores of rupees to political parties apparently either as 'protection money' for protection against agencies under the government or as a 'bribe' in return for undue benefits.."In some instances, it has been seen that political parties in power at the Union level or in states have brazenly amended policies and laws to apparently provide benefits to private promoters of large projects at the cost of public interest..Also read: Electoral bonds: A landmark judgment in the direction of free and fair elections."Further, in flagrant violation of the safeguard provided in Section 182(1) of the Companies Act, that a company needed to be in existence for three years before making contributions to a political party, several newly minted companies have donated through electoral bonds," the petition states..“The Supreme Court judgment on electoral bonds flagged that the scheme could lead to quid pro quo arrangements between corporates and governments headed by these political parties..For instance, the petitioner states that Megha Engineering and Infrastructures, Ltd (MEIL), which is the second-highest donor of electoral bonds, purchased bonds amounting to ₹980 crore between April 12, 2019 and October 12, 2023, and donated worth ₹584 crore to the Bharatiya Janata Party (BJP), ₹195 crore to the Bharat Rashtra Samithi, and ₹85 crores to the Dravida Munnetra Kazhagam (DMK).."MEIL bagged key projects like a crude oil project worth ₹5,400 crore in Mongolia (the Mongol Refinery Project is a government-to-government initiative) in September, 2023 and two separate packages to build the Thane–Borivali twin tunnel project in Mumbai for a total bid of ₹14,400 crore in May and a ₹500 crore order from the Ministry of Defence for its company IComm in June.."Furthermore, the company was awarded with contracts over ₹1 lakh crore to construct part of the Kaleshwaram lift irrigation project, built from 2016–19 by the BRS government in Telangana.."In February 2024, the Comptroller and Auditor General of India (CAG) pointed out serious illegalities in the price estimation of the project so as to cause undue benefit of thousands of crore rupees to MEIL and other private contractors.."As per the data available, prima facie it appears that there are quid pro quo arrangements between the company and political parties to which it donated," the petition claims..The claim has been made based on the reports published by The Indian Express on March 31, 2024 and The Wire on March 13, 2024..Also read: Donor anonymity versus voters' right to know: Supreme Court reserves judgment in electoral bonds case.The petitioner states that APCO Infratech Private Limited (APCO) has been awarded a plethora of projects spanning roadways, transport, irrigation and water sanitation in recent years..On November 11, 2018, APCO was awarded two major projects, i.e, the Bundelkhand Expressway Project, worth ₹7,786.81 crore for construction work and ₹2202.38 crore for land acquisition and the Gorakhpur Expressway project worth ₹3,024.10 crore for construction work and ₹1,563.90 crore for purchasing land..The petitioner alleges that within two months of getting the expressway projects, APCO donated ₹10 crore to the BJP on January 15, 2020..“The Supreme Court judgment on electoral bonds held that the scheme distorts the level playing field by giving a massive advantage to parties in power.."The company was again awarded with the Bangalore–Chennai Expressway project on September 15, 2021 worth ₹2007 crore by the National Highway Authority of India (NHAI).."After three months, on January 10, 2022, it donated ₹10 crore to the BJP. It is prima facie apparent from the facts above mentioned that the company bagged contracts worth thousands of crore rupees right after donating the bonds to the BJP," the petitioner states..The petition relies upon a news report published by The Pioneer on November 12, 2019 to buttress its claim..Future Gaming and Hotel Services PR, which is the largest donor to political parties, donated ₹1,368 crore. Of this, a sum of ₹540 crore was encashed by the All India Trinamool Congress (AITMC), ₹509 crore by the DMK and ₹160 crore by the Yuvajana Sramika Rythu Congress Party (YSRCP) , ₹100 crore by the BJP and ₹50 crore by the Congress..The petition states that in 2017, the CAG flagged irregularities by marketing agents of Future Gaming and Hotel, in Sikkim, Nagaland and Mizoram, and noted that they were involved in lottery scams in Andhra Pradesh, Bihar and Jharkhand and Tamil Nadu.."Andhra (Pradesh)'s governing party, YSRCP then took ₹154 crore from Future (Gaming), while Tamil Nadu's governing party took ₹503 crore. The CAG report specifically flagged issues in the Sikkim state lottery. From October, 2022 to January 2024, Future Gaming gave ₹8 crore to the Sikkim Krantikari Morcha and ₹5 crore to the Sikkim Democratic Front.."Two cases regarding criminal conspiracy and cheating against Future Gaming were closed by the Kolkata police right before and after the company donated electoral bonds to AITMC..Also read: Has SC dented transparency in a din of strong words against SBI in the electoral bonds contempt case?."The closure reports were filed in December 2021 and January 2022. From July 2021 to July 2022, ₹160 crore was given by the company to AITMC. Future (Gaming) has donated ₹100 crore to the BJP. It has been facing a CBI probe since 2010, but the progress on the case reportedly stalled since 2014," the petitioner alleges..The petitioner refers to a news report published by The Print on April 2, 2024 to substantiate the allegations..The petitioner alleges that Grasim Industries (part of the Aditya Birla Group) appears to be an example of arrangements of quid pro quo through a policy change..The company donated ₹534 crore in total to the BJP. The income tax department, on March 15, 2019, raised a demand of ₹5872.13 crore to the company for a merger..The tax demand of ₹5,872 crore was quashed right after the company donated bonds worth ₹20 crore to the BJP on April 12, 2019. On January 2, 202, the income tax authorities raised a demand of ₹8,334 crore as capital gains tax on Grasim Industries..“The Supreme Court ordered the State Bank of India to release all data about the purchase of bonds and encashment of bonds by political parties..In the next two years, between 2021–23, Aditya Birla Group purchased bonds worth ₹180 crore which were encashed by the BJP..The petitioner states that no further information was available in the public domain about any follow-up action of the income tax authorities. Also, there were policy changes so that Grasim was able to lead the market comfortably.."In August 2021, the Union government removed anti-dumping duty on viscose staple fibre, a man-made, biodegradable fibre in textile manufacturing that has been Grasim's forte for decades.."The decision let foreign manufacturers enter with cheaper products which hurt Grasim's business interests. As per the information available in the public domain, Grasim officials successfully lobbied with textiles minister Piyush Goyal to implement strict quality control measures in the sector..Also read: The myth of an informed choice: Algorithms and information echo chambers on the rise in Indian politics."Accordingly, an Order was passed for stricter quality control in December 2022, choking imports from China and Indonesia that had allowed small- and medium-sized firms to run," the petitioner claims..In support of its claim, the petitioner has referred to a report published by web-portal Reporter's Collective on March 16, 2024..Another company, IFB Agro Limited, bought bonds worth ₹92.3 crore from 2021 to 2024. In June 2020, there was a goods and services tax (GST) search on the company..In 2022, the company's board of directors approved "contributions to political parties by way of subscription to the electoral bonds in one or more tranches aggregating not more than ₹40 crore for the financial year 2022–23"..The company's board also mentioned that the decision had been taken since the company was facing "excise-related issues"..The petitioner also states a recording of the company's annual general meeting for the financial year 2023. Joint executive chairman Bikramjit Nag said the bonds were bought "as per instructions from the government"..In February 2024, the company declared that it had contributed ₹40 crore to political parties in the first nine months of the financial year 2023–24. This is an amount that is three times its after-tax profits of ₹13.87 crore for the same period..The petitioner states that Infina Capital Private Ltd. (Infina), a Kotak entity, donated electoral bonds amounting to ₹131 crores to the BJP from 2019 to 2022..In August 2018, the RBI rejected Kotak Mahindra Bank's (KMB) proposal of issuing preference shares in order to reduce Uday Kotak's holding in the bank which was further challenged in the court in December 2018..In 2019, Infina donated ₹30 crore to the BJP, which has not been not disclosed by the SBI to ECI. In 2020, despite having a solid case, the RBI made significant efforts to reach an out-of-court settlement in favour of Uday Kotak..Also read: CEC's support for donor anonymity in electoral bonds sign of compromise of basic institutions of democracy.In 2020, Infina donated ₹76 crore of electoral bonds to the BJP but only ₹35 crore was disclosed by the SBI..This chain of events, the petitioner states, prima facie shows the arrangement of quid pro quo. The petitioner has referred to a report dated April 5, 2024 published by The Wire to buttress the claim..The petitioner also refers to yet another company namely Aurobindo Pharma. It states that this company and its wholly owned subsidiaries contributed a total of ₹55 crore worth of electoral bonds to the BJP..In November 2022, the ED arrested its director, Sarath Reddy, on charges of money laundering as part of investigations into the Delhi liquor policy case..“Common Cause has given a tabulated chart showing as many as 22 entities that appear to have benefitted from quid pro quo arrangements based on donations made to political parties through electoral bonds..Aurobindo Pharma bought electoral bonds worth ₹5 crore on November 15, 2022. All of them were encashed by the BJP soon after, on November 21, 2022. In May 2023, when Reddy's bail plea came up for hearing, the ED did not oppose it.."This is perhaps the first case where ED, in a money laundering case, had not opposed the grant of bail of the money laundering accused on the medical grounds that he suffers lower back pain..After he was released from prison, Reddy turned approver in the case on June 02, 2023. On November 8, 2023 Aurobindo Pharma donated ₹25 crore more to the BJP through bonds while another ₹25 crore were contributed through two companies— Eugia Pharma Specialities Ltd (₹15 crore) and APL Healthcare (₹ 10 crore)— which are wholly owned subsidiaries of Aurobindo Pharma," the petitioner claims..The petitioner has referred to a news report published on March 22, 2024 by The Scroll under the heading: "Accused in ₹100-crore Delhi liquor scam, businessman's firms paid the BJP ₹55 crore through bonds"..Vedanta, which is the fourth largest buyer of electoral bonds, bought electoral bonds worth ₹402.5 crore. In March 2020, the CBI booked Vedanta, among other companies, for criminal conspiracy and cheating over the supply of coal..Also read: Electoral bonds case: Supreme Court begins hearing case that goes to 'the root of democracy'.It bought ₹76.5 crore worth of bonds on January 10, 2022, which were given to the BJP. In August 2022, TSPL, a Vedanta company, was raided by the ED in connection with a money laundering case..(It had also raided Karti Chidambaram in this case, summoned him for questioning in December 2023, and filed a fresh charge sheet against him in February 2024.) On November 14, 2022, Vedanta gave ₹100 crore to the BJP through bonds..The petitioner refers to Bharti Airtel Limited, which donated worth ₹51.4 crore to the BJP from 2019–22. On August 24, 2021, Bharti-linked company OneWeb received a Global Mobile Personal Communications by Satellite (GMPCS) licence from the department of telecommunications..In 2022–23, the company donated a further ₹135 crore to the BJP. On November 21, 2023, OneWeb received space authorisation from the Indian National Space Promotion and Authorisation Centre (INSPACe) for the use of satellite capacity. Thus, OneWeb became the only company to get both the licence and space authorisation..The petitioner states that on December 18, 2023, a new Telecommunications Bill was introduced in Lok Sabha paving the way for discretionary administrative allocation of spectrum instead of auction. With over 140 opposition members of Parliament suspended, the said Bill was swiftly passed..This law, the petitioner states, allowing discretionary administrative allocation of spectrum virtually overrides the judgment passed by the Supreme Court in the Centre for Public Interest Litigation versus Union of India, the 2G spectrum allocation case which cancelled all administrative allocations and directed auction of spectrum..In January 2024, the Bharti group donated another ₹50 crore to the BJP..“Future Gaming and Hotel Services PR is the largest donor to political parties, donating ₹1,368 crore.."It is to be noted that OneWeb India is the Indian subsidiary of international satellite company Eutelsat OneWeb, headquartered in London. The largest shareholder of Eutelsat OneWeb is Airtel's parent company Bharti Enterprises," the petition states..To support its allegations, the petitioner cites a report published by The Scroll on March 27, 2024..Donation by pharmaceutical companies.Many pharma companies such as Hetero, Micro Labs, Torrent etc., which were under regulatory scanner for manufacturing substandard drugs, also purchased electoral bonds. According to the petitioner, these cases show the following:.Also read: On electoral bonds: Why is there something rather than nothing?.That many of these companies were flagged by authorities for manufacturing and selling substandard drugs.That even after being flagged these companies were permitted to manufacture and sell these drugs.In this time, these pharma companies gave huge sums of money through electoral bonds to those very ruling political parties which had earlier flagged them or were investigating them..Torrent Group, which includes Torrent Pharmaceuticals, bought ₹184 crore worth of electoral bonds from May 2019 to January 2024. These bonds went to eight different political parties. The petitioner alleges:.In 2018, the company's antiplatelet medicine Deplatt-150 had failed the salicylic acid test and was declared substandard by the Maharashtra Food and Drug Administration. Torrent Group gave ₹3 crore to the Shiv Sena, ₹3.5 crore to the Nationalist Congress Party (NCP), ₹22 crore to the Indian National Congress (INC), and ₹137 crore to the BJP, all of which have governed Maharashtra since 2019.In September 2019, Torrent Pharma's drug Losar H, used to lower blood pressure, was found to be substandard by the Gujarat Food and Drug Administration. In October 2019, the United States Food and Drug Administration issued a warning to the firm for repeated quality-related failures at the Indrad, Gujarat manufacturing unit, following inspections in April 2019..However, the Gujarat government apparently did not take any action in either case. In May 2019, Torrent group gave ₹14 crore in bonds to the BJP, while on October 1, 2019, Torrent Group bought ₹10 crore worth of electoral bonds, which were encashed by the BJP..“The petitioner alleges that Grasim Industries (part of the Aditya Birla Group) appears to be an example of arrangements of quid pro quo through a policy change..In 2022, another US Food and Drug Administration inspection also found violations in Torrent's Indrad facility. The firm donated ₹22 crore to the BJP in 2022. Apparently, no action was taken against the Indrad facility by the Gujarat government.In December 2021, its medicine Nikoran LV, used to treat heart diseases, failed to meet standards when tested by the Maharashtra Food and Drug Administration.In February 2023, its Lopamide medicine, used to treat diarrhoea, failed the dissolution test and was found substandard.Torrent Group gave ₹7 crore to the Sikkim Krantikari Morcha and ₹50 lakh to the Sikkim Democratic Front from October 2023–January 2024. It has three pharma manufacturing units in Sikkim..Also read: Electoral bonds: SBI seeking more time negates the purpose of the Supreme Court judgment.Zydus Healthcare purchased electoral bonds worth ₹29 crore between 2022 and 2023. Regarding Zydus, the petitioner alleges:.In 2021, the Bihar drug regulator declared a batch of remdesivir medicines manufactured by the Gujarat-based company as "not of standard quality" after traces of bacterial endotoxin were found in them. Several patients were reported to have suffered adverse drug reactions from the medicines. However, the Gujarat drug regulator did not collect samples of these batches for further testing, nor did it initiate any action against the manufacturing unit of Zydus.On October 10, 2022, Zydus donated ₹18 crore to the BJP, in power in Gujarat..Glenmark donated ₹9.75 crore of electoral bonds in November 2022 to the BJP. The petitioner alleges:.The company received five notices for its substandard drugs between 2022 and 2023 and four of these were issued by the Maharashtra Food and Drugs Administration (FDA), which flagged its blood pressure regulating medicine Telma as substandard, mostly failing dissolution test.Glenmark has given ₹9.75 crore to the BJP government in Maharashtra since 2022. .“"In August 2021, the Union government removed anti-dumping duty on viscose staple fibre, a man-made, biodegradable fibre in textile manufacturing that has been Grasim's forte for decades," read the petition..Cipla has purchased bonds worth ₹39.2 crore since 2019 and received four show-cause notices for its drugs between 2018 and 2022. The petitioner alleges:.In August 2018, its RC cough syrup failed to meet standards during an inspection. In 2019, it gave ₹15 crore in bonds to the BJP. In July 2021, it received notices twice for its remdesivir medicine, Cipremi, which was found to have less than the required quantity of remdesivir in it.Cipla bought bonds worth ₹24.2 crore in November 2022, of which ₹22 crore went to the BJP and ₹2.2 crore to the INC..IPCA Laboratories Limited bought bonds worth ₹13.5 crore between November 2022 and October 2023. The petitioner alleges:.In October 2018, its anti-parasitic medicine, Lariago, had lower than required chloroquine phosphate levels and was found substandard and eventually flagged by the Mumbai Food and Drugs Administration. It gave ₹10 crore to the BJP in November 2022..Also read: Black economy persists with or without electoral bonds.IPCA gave ₹3.5 crore to the Sikkim Krantikari Morcha in 2023. It has manufacturing facilities for drugs in Sikkim..Regarding Hetero Group, the petitioner says it has been slapped with notices for substandard drugs at least six times between 2020 and 2022, including three notices for its remdesivir medicine, by the Maharashtra FDA. The petition alleges:.The US Food and Drug Administration also sent a notice to Hetero Labs, a supplier of active pharmaceutical ingredients, about possible manufacturing deficiencies at its unit. However, no action has been taken.Hetero Group gave ₹60 crores in electoral bonds, including ₹10 crore to the BJP in 2023 and ₹50 crore to the BRS in 2022–23..Regarding Intas Pharmaceutical, the petitioner alleges that in 2020, the company's Enapril-5 tablet failed the dissolution test by the Maharashtra FDA..In October 2022, Intas gave ₹20 crore to the BJP and in December 2022, the US FDA flagged serious quality control issues amounting to what it called a "cascade of failure" at an Intas facility in Ahmedabad, following an inspection from November 22 to December 2..Natco Pharma purchased bonds worth ₹69.25 crore. The petitioner alleges:.From August 5 to 9, 2019, the US FDA inspected a Natco facility in Mekaguda, near Hyderabad, and concluded with six 'observations'. Natco responded that it would specify justification and corrective actions in two weeks.On July 1, 2022, Natco gave ₹10 crore to the BRS following an inspection of a Natco facility in Rangareddy district, Telangana, from October 9 to 18 in 2023, the FDA reportedly found unclean and ill-maintained equipment that could contaminate the drugs.On October 4, 2022, Natco gave another ₹10 crore to the BRS..Regarding Micro Labs Ltd, the petitioner submits that the income tax department searched more than 40 offices of the Bengaluru-based pharmaceuticals on July 6, 2022..Micro Labs is the maker of the ubiquitous paracetamol tablet Dolo 650. Officials also searched the residences of its owners. In the same month, the Indian government said the searches revealed "substantial incriminating evidence" of unethical practices and freebies to medical professionals to the tune of ₹1,000 crore..Also read: Electoral bonds: No solution to illegal political funding.The same month, the National Pharmaceutical Pricing Authority (NPPA) asked the Indian Pharmaceutical Alliance (IPA) to investigate the matter. The NPPA is an independent regulator attached to the department of pharmaceuticals in the Union ministry of chemicals and fertilisers, and is responsible for pricing drugs to keep them affordable..“The petitioner states that Infina Capital Private Ltd. (Infina), a Kotak entity, donated electoral bonds amounting to ₹131 crores to the BJP from 2019 to 2022..In September, the IPA cleared the company in a report to the NPPA, declaring the "₹1,000 crore expenditure on a single brand Dolo 650 on freebies in one year" to be "not correct"..In October 2022, Micro Labs purchased electoral bonds worth ₹6 crore, which were encashed by the BJP..The petitioner buttresses its claims, relying upon reports published by The Hindu, Scroll.in and Reporter's Collective. These reports can be read here, here and here..The petitioner argues that there is a huge difference in the donations made by the companies before and after the enactment of the 2018 electoral bonds scheme..Many top donors after 2018, when they could take the shield of anonymity, never donated large amounts before the enactment of the scheme..The petitioner also submits that none of the top 30 donors of the AITMC and Biju Janata Dal (BJD) appear to have directly given funds to them in the five years before the scheme, adding that there does not appear to be any record of Megha Group, the largest donor for the BJP, having donated to the party before 2018..Large donations by loss-making and shell companies.The petitioner claims that the electoral bonds data has shown that various loss-making companies and shell companies were donating huge sums to political parties through electoral bonds, which were apparently being used as a medium to launder illicit money by corporate houses.."It is evident from the fact that many companies having little profits gave large donations to many political parties, especially ruling parties, suggesting laundered money finding its way into the coffers of the political parties..Also read: So, which political parties are receiving electoral bonds? SBI won't tell us. Whither political transparency?."That the source of these funds from these shell companies is unknown and a matter of investigation as apparently names and know your customer (KYC) of these companies have been used by other entities to launder their illicit money," the petitioner submits..The petitioner refers to a report published by The Hindu with an independent research team, which shows that the sources of funds of as many as 45 companies or donors of electoral bonds are under suspicion..“Torrent Group, which includes Torrent Pharmaceuticals, bought ₹184 crore worth of electoral bonds from May 2019 to January 2024. These bonds went to eight different political parties..As per the report: "Thirty-three companies donated an aggregate sum of ₹576.2 crore in electoral bonds, out of which ₹434.2 crore (nearly 75 percent) was encashed by the BJP.."These companies had negative or near zero profit after tax in aggregate over seven years, from 2016–17 to 2022–23. The aggregate net losses of these 33 companies were over ₹1 lakh crore.."Sixteen out of these 33 companies (category A) paid zero or negative direct taxes in aggregate. That these loss-making companies made such substantial donations indicates they could be acting as fronts for other firms or have misreported their profits and losses— raising the possibility of money laundering..“Many top donors after 2018, when they could take the shield of anonymity, never donated large amounts before the enactment of the scheme.."Six companies donated a total of ₹646 crore, out of which ₹601 crore (93 percent) was encashed by the BJP. They had positive net profits in aggregate from 2016–17 to 2022–23, but the amounts donated through EBs exceeded their aggregate net profit significantly.."These companies (category B) could also have acted as fronts for other companies or have misreported their profits and losses. Three companies donated an aggregate sum of ₹193.8 crore, out of which ₹28.3 crore (around 15%) was encashed by the BJP.."Of the rest, the Congress received ₹91.6 crore (47 percent); the Trinamool Congress, ₹45.9 crore (24 percent); the BRS and the BJD, ₹10 crore (close to 5 percent) each; and the AAP, ₹7 crore (3.6 percent). These three companies had positive net profits but reported negative direct taxes in aggregate from 2016–17 to 2022–23. Such companies (category C) could have engaged in tax evasion.."Three companies (category D) donated a total of ₹16.4 crore in electoral bonds, out of which ₹4.9 crore (around 30 percent) was encashed by the BJP and the rest by the Congress (58 percent), Akali Dal and JD (U), 6.1 percent each..Also read: Electoral Bonds: How compromised is our democracy."These three companies had no reported data on net profits or direct taxes paid for the entire seven-year period which raises the question of whether the donors were shell companies that were involved in money laundering.".On the basis of these reports, the petitioner argues that loss-making companies and shell companies paying hundreds of crores of rupees through electoral bonds with unknown sources of funds attract the provisions of the Prevention of Money Laundering Act, 2002 and need to be investigated..“Searches revealed "substantial incriminating evidence" of unethical practices and freebies to medical professionals to the tune of ₹1,000 crore by Micro Labs, maker of the ubiquitous paracetamol tablet Dolo 650.."Electoral bond data suggests that 19 of the companies which donated nearly ₹100.9 crore to political parties were termed 'high risk' companies by the ministry of finance's financial intelligence unit (FIU) for violating rules under PMLA, 2002.."Interestingly, 18 of these 19 companies which purchased electoral bonds did not appear in the FIU's subsequent annual lists of 'high risk' NBFCs," the petitioner submits.
