Corporate donations through Electoral Bonds and other instruments possibly involve quid pro quos/ intimidation/ extortion- Appeal for directing the CVC to institute an investigation | E A S Sarma

Former Secretary to the Government of India

To

Smt. Droupadi Murmu

Hon’ble President of India

Respected Rashtrapati Ji,

Kindly refer to my letter of March 12th, 2024 about the haste in which the NDA government was trying to select candidates to be appointed as Election Commissioners, ignoring the ongoing proceedings before the Hon’ble Supreme Court and other related issues, including the fact that the BJP had planted its own representatives on the Boards of Bharat Electronics Ltd (BEL), Electronics Corporation of India Ltd (ECIL), the two CPSEs involved in the manufacture and supply of EVMs and which were privy to the secret source code embedded in them, as well as the Board of Directors of the SBI entrusted with the issue of the highly opaque and Constitutionally invalid Electoral Bonds (EBs).

Since my last letter, the NDA government has gone ahead with the selection of two Election Commissioners so as to make it a fait accompli, ignoring the norms of transparency and objectivity, referred to in my letter. In addition, despite the political executive’s influence, overt and covert, over the SBI, as a result of the firm stand taken by the apex court, the SBI has been forced to make a disclosure of the details of the EBs issued by different private corporate entities and the EBs encashed by the political parties [1].

There are a few disturbing facts that emerge from the particulars available from the site of the Election Commission of India (ECI) which suggest serious improprieties including the possibility of intimidation/ quid pro quos/ extortion around which donations made through EBs appear to have revolved. I have cited three examples of this below.

Vedanta Group:

The donations made by the group through EBs from 2019 to 2024 amounted to Rs 400 Crores constituting 3.3% of the total EB donations, though the group has been a donor for the two national political parties since a long time through other means.

It is possiuble that the BJP received a significant portion of the EB donations made by the Vedanta Group.

The following instances suggest the quid pro quos possibly involved in the donations.

(i) Retrospective amendment of FCRA laws:

The group. the parent company of which was listed overseas, figured in the judgement dated 28-3-2014 in WP(C) 131/2014 before the Delhi High Court filed by some of us, as having violated the Foreign Contributions (Regulation) Acts of 1976 & 2010, a judgement that was upheld by the apex court on 29-11-2016 in SLP No. 18190/2014. In the normal course, in follow up of those orders, the Ministry of Home Affairs functioning directly under the NDA ought to have prosecuted the two national parties. However, in an extraordinary measure of an undue concession granted to itself, the political executive, through the backdoor of the Finance Acts of 2016 & 2017, retrospectively amended the two Acts to extricate itself from prosecution [2].

This is clealy one important quid pro quo that is possibly linked to the political donations given by the group to the ruling political executive, showing how the party in power is prepared to go out of the way to amend an imprtant legislation in place for safeguarding national security, going to the extent of amending it retrospectively, to permit it to receive donations from that group.

(ii) Mineral block allocations- Sijimali bauxite block:

In the recent mineral block auctions, the Vedanta group was given at least eight highly valuable mineral blocks, some of which contain critical minerals of strategic nature, amounting to a huge largesse by any stretch of imagination, especially keeping in view that the group was already heavily indebted to several financial institutions and would probably depend on PSU banks for loans to develop the mineral blocks.

Among the blocks given to the group is the Sijimali bauxite mineral block located across Thuamul–Rampur tehsil of Kalahandi district and Kashipur tehsil of Rayagada district in Odisha, which stand notified under the Fifth Schedule to the Constitution, attracting the provisions of the Panchayat (Extension to the Scheduled Areas) Act, 1996 [PESA] and the Scheduled Tribes And Other Traditional Forest Dwellers (Recognition Of Forest Rights) Act, 2006 [FRA]. Under both these legislations, no private mining can be allowed in this area without a prior discussion and consent by the local tribal Gram Sabhas, supported by a resolution of the Odisha Tribal Advisory Council. The concerned authorities did not fully comply with such a statutory requirement, which rendered the allotment of the mine to the private party illegal. The Union Ministry of Mines, directly under the administrative control of the present NDA government, despite being cautioned by me and others, went ahead and conducted the auction, overriding the interests of the local tribal communities [3]

In a landmark judgement dated 18-4-2013 in Orissa Mining Corporation Ltd vs Ministry Of Environment & Forest & Others, the apex court reiterated the above statutory requirement, holding the allotment of a bauxite mine in the same area to the same Vedanta Group to be illegal. The Union Ministry of Mines ignored even the implications of that judgement to favour the Vedanta Group.

Further, the restrictive provisions of the Orissa Scheduled Areas Transfer of Immovable Property (By Scheduled Tribes) Regulation, 1956 also prohibited alienation of land and minerals in the Scheduled Areas of the State to private parties. This position was reiterated by the apex court in their judgement dated 11-7-1997 in Samatha vs State Of Andhra Pradesh And Ors, which dealt with a similar statute in force in Andhra Pradesh and held that mining by a private agency in the Scheduled Areas in that State to be invalid.

Under Article 338A(9), both the Union and the States are required to consult the NCST in matters that affect the lives of the Scheduled Tribes. In such an important matter as allowing mining in the Scheduled Areas and that too, by private agencies, in violation of PESA and FRA, the Union Ministry of Mines ought to have sought NCST’s considered views before proceeding to put mining blocks to auction in the tribal tracts of the country. No such prior consultation had been held by the Union Ministry of Mines and the States. This renders the whole process prima facie illegal.

As such, it amounted to an undue favour granted to the Vedanta Group,

(iii) No action following the Shah Commission findings

The Shah Commission, appointed by the Union Mines Ministry to look into irregularities in iron ore mining in Goa and other States, including infringement of environmental laws and under-invoicing of ore exports, recommended action against a subsidiary of the group but the present government deliberately or otherwise chose not to act on the same.

(iv) Inaction by the Environment Ministry against the Sterlite company, a subsidiary of the Vedanta Group for causing toxic pollution around the Tuticorin copper smelter plant

The toxic pollution caused by Sterlite’s copper smelter at Tuticorin damaged the health of the people residing in the vicinity. The apex court recently ordered the closure of the plant in view of it. The Union Environment Ministry entrusted with the responsibility of regulating the plant under the Environment (Protection) Act failed to monitor the pollution caused by the plant nor did it to impose a deterrent penalty on the project promoter for the environmental damage and adverse health impact on the people.

On the other hand, there have been reports to the effect that the concerned Central agencies have initiated investigation against some members of the civil society for agitating against the company, on the ground that they had obtained foreign funding. It is ironic that the company that violated the FCRA provisions should go scot free and the helpless people whose health got impaired due to pollution should be subject to harassment.

It is thus clear that undue favours have been granted to the Vedanta Group over the years on multiple fronts and the donations that the ruling political party has possibly received constituted a quid pro quo, which should attract the provisions of the Prevention of Corruption Act, to be got investigated by the Central Vigilance Commission (CVC)

Megha Engineering:

The ECI website disclosure on EBs shows that Megha Engineering has donated Rs 956 Crores, constituting 7.9% of the total EB donations. It is possible that the BJP received a significant portion of it.

Megha Engineering has been awarded a large component of the prestigious Char Dham project in the Himalayas. It’s name figured in the Silkyara tunnel collapse that resulted in more than forty workers being trapped and their lives saved with the help of rat-hole miners, after considerable effort and human trauma. Till date, while the rat-hole miners who risked their lives seem to have been treated shabbily, no penal action has been initiated against the contractors responsible for the disaster.

In addition, the company’s name also figured in the case of serious construction shortcomings associated with the Kaleswaram Lift Irrigation project in Telangana for which the Union Environment Ministry was reported to have issued a post-facto approval in violation of the statute. [4]

Considering that the ruling political party at the Centre has been involved in one way or the other in regulating the execution of the two projects and that the political party in power in Telangana in the specific case of Kaleswaram was also involved, it appears that, in case they received donations from the company, the same need to be considered quid pro quos, which would amount to granting undue favours and corruption.

Future Gaming & Hotel Services (FGHS):

FGHS has been the largest contributer to EBs (Rs 1368 crores constituting 11.3%), a significant portion of which would have been possibly received by the BJP.

Surprisingly, the Enforcement Directorate’s press release dated 22-9-2023 [5] says

"ED investigation revealed that M/s Future Gaming & Hotel Services Private Limited (FGHSPL) entered into agreement with various state governments to sell the state organised lotteries in whole of India, however, they have allegedly cheated the lottery issuing State Governments by not depositing the entire sale proceeds generated from the sale of lotteries. The modus operandi also includes illegally retaining unsold lottery, claiming prizes on unsold lotteries, manipulating data to show unsold prize-winning tickets as sold & claimed prizes on same which are also in contravention of Lottery Regulation Act, 1998.

During ED investigation, proceeds of crime to the tune of Rs. 411 Crore were attached/ freezed in the bank accounts of the accused persons vide attachment order dated 31.03.2022. Subsequently, the attachment/freezing order was confirmed by the Adjudicating Authority, PMLA, New Delhi on 22.09.2022.

Further investigation is under progress"

On the other hand, the details disclosed at the ECI website indicate that political parties continued to receive donations from this company every year from 2021 to 2024! If it is established that the BJP has received a portion of it, it is clearly unacceptable, as the Enforcement Directorate functions directly under the supervision of the BJP-led political executive and it should therefore be deemed that it has had a direct involvement. Has there been intimidation on the part of those that matter that resulted in the company parting with such large EBs? If it is so, it amounts to corruption of a highly regressive kind, attracting the penal provisions of the Prevention of Corruption Act, the IPC and the election laws.

The examples cited above indicate only the tip of the iceberg of the widespread electoral corruption that has tainted India’s elections. While electoral corruption attracts the penal provisions of the election laws and the IPC, in the instant case, if the political executive led by the ruling political party has received any portion of the donations, whether through the EBs or other instruments, it also attracts the penal provisions of the Prevention of Corruption Act that falls directly within the purview of the Central Vigilance Commission (CVC) and the Central investigating agencies such as the CBI and the Enforcement Directorate.

In the normal course, I would have appealed to the CVC to get the whole gamut of the EB details investigated but I am constrained to seek intervention from your high office as, in recent times, statutory institutions have been weakened and even compromised, a situation that does not augur well for the future of our democracy.

I therefore appeal to you, respected Rashtrapati ji, to direct the CVC to institute a thorough independent investigation into instances of quid pro quos/ intimidation/ extortion that lie behind the EB donations in particular and all political donations in general.

A time has come when your high office should step in to advise the political parties, especially the BJP that is in power at the Centre, to put a stop to private corporate donations, as they tend to compromise regulation, place the ordinary citizens and individual candidates seeking to contest elections without adequate means at a disadvantage vis-a-vis the big business houses. Corporate donations have resulted in the political executive brazenly changing the laws and policies to suit the interests of private companies at the cost of public interest, sometimes even compromising the national interest.

Your timely intervention at this crucial hour is essential to preserve the democratic values of our Constitution, handed over to us by Dr Ambedkar and other elders who drafted the Constitution.

Respectfully,

E A S Sarma
Visakhapatnam
15th March 2024