30 Firms Pay Billions to Ruling Party Amid CBI, IT, ED Probes

Opposition Party Calls for a Supreme Court-Monitored Inquiry

Newsreel Asia Insight #141
Feb. 24, 2024

An analysis of Election Commission records, financial statements and surveys conducted by central agencies reveals a discernible pattern in political donations received by the Bharatiya Janata Party (BJP) over a five-year period, according to the media outlets The News Minute and Newslaundry. The analysis raises questions about the regulatory environment and the enforcement of laws governing political donations and corporate governance, prompting opposition parties to call for an inquiry.

Between the financial years 2018-19 and 2022-23, over 30 companies, having contributed nearly 3.35 billion rupees to the BJP, also encountered scrutiny from central agencies, the media outlets say in their joint report. Among these, 23 firms contributed 1.87 billion rupees to the party, despite not having made any donations from 2014 until the time they were investigated. Notably, within four months following the scrutiny by central agencies, at least four of these companies made donations amounting to 90.5 million rupees.

Furthermore, six companies, already contributors to the BJP, increased their donations after the agencies’ searches. Another six firms, regular donors until they missed a year, then reportedly faced action from central agencies. Beyond these, three companies, not included in the initial 30 but also donors to the BJP, were alleged to have received preferential treatment from the central government.

During this period, only three out of these 32 companies made contributions to the Congress, according to thew report.

“In some cases, donations were made during or after raids were conducted on the company and in some others, the companies that donated the money received licences or clearances,” says the report. “However, in some cases, the agency action continued despite the donations.”

According to The Telegraph, K.C. Venugopal, a general secretary of the Congress party, has written to Finance Minister Nirmala Sitharaman,  saying, “The news report (about donations) is authenticated by several Election Commission documents regarding donation and other robust evidence. The entire nation knows how investigative agencies are being remote-controlled by your government. This has been testified by the fact that there has been a four-fold increase in ED cases against politicians since 2014, and 95% of the cases are against the Opposition leaders. The report chronicles instances wherein the IT, ED, CBI and other agencies either arrested, searched or seized assets of certain companies, and later they seemed to be coerced to donate to the BJP.”

The timing of donations—particularly from companies that had not previously donated to the BJP before facing action by central agencies, and those that increased their donations following such actions—suggests a possible quasi-transactional relationship. Could this imply that companies seek to gain favour or mitigate adverse outcomes from investigations by making political contributions? Alternatively, are central agencies leveraging their power to compel companies into making political donations? This perception, whether accurate or not, undermines public trust in the impartiality and integrity of central agencies.

A significant majority of these companies donating exclusively or primarily to the ruling party, with minimal contributions to parties in the opposition, indicates a potential skewing of the political playing field. Financial contributions are crucial for political campaigning and outreach; thus, a concentration of donations to one party can impact the competitive balance, potentially limiting the effectiveness of the political opposition.

The effectiveness and impartiality of oversight mechanisms are crucial for maintaining a level playing field in both the economic and political arenas. Concerns about selective enforcement or the use of regulatory agencies for political ends can erode confidence in these institutions.

For the companies involved, these findings might reflect on their corporate governance practices and their approach to managing regulatory and legal challenges. The decision to donate to political parties, especially in the context of ongoing or potential regulatory scrutiny, can be seen as a strategic move with implications for corporate transparency and ethics.

The potential for political donations to influence regulatory actions threatens the principle of equality before the law. The lack of transparency and accountability in political donations and regulatory actions can lead to a governance environment where decisions are made based on undisclosed interests rather than the public good. If political donations influence policy decisions, it can lead to policies that favour narrow interests over the broader public interest, affecting social welfare and economic equity.