Which companies are funding political parties and how legal is it
Moneylife Digital Team 03 September 2012

After reports about Vedanta’s $8 million donation to Indian political parties EAS Sarma discovers that two companies which funded the BJP, two public sector entities which funded the Congress and one company which funded SP have all made illegal donations. Here's how

Vedanta Resources Plc, Anil Agarwal’s controversial multinational company is not the only one to have made illegal donations to Indian political parties, says EAS Sarma, former secretary with the Union Government. In another letter to the Chief Election Commissioner, Mr Sarma has pointed out that as per information compiled by Association for Democratic Reforms (ADR), during 2007 to 2009 the Bharatiya Janata Party (BJP) received donations from two companies. Similarly, the Indian National Congress or INC (yes, this is the real name of Sonia Gandhi-led party, which is often referred as just ‘Congress’ or “Indira Congress” or Congress-I) and Samajwadi Party (SP) also received donations.
Nippon Investment and Finance Pvt Ltd, one of the promoters of Videocon Industries, donated Rs1 crore while a Honda group unit gave Rs15 lakh to the BJP as donation. Venugopal N Dhoot, chairman and managing director of the Videocon Group is one of the directors of Nippon Investment and Finance. During the same period, Mulayam Singh Yadav-led SP also received Rs10 lakh from the Honda group while Congress received Rs2 lakh from State Trading Corporation of India (STC) and MMTC, both owned by the Union government.
“Under Sections 3 & 4 of Foreign Contributions (Regulation) Act (FCRA), 1976, political parties are not permitted to accept contributions from foreign companies or companies controlled in India by foreign companies. In addition, under Section 293A (1)(a) of Companies Act, political parties cannot receive contributions from government companies,” Mr Sarma pointed out.
He said, “These contributions are clearly illegal. There are other companies which seem to be foreign companies the details of which need to be ascertained by Election Commission (EC) on its own. If there are other foreign companies, political parties would have violated FCRA provisions. They need to be proceeded against.”
Here is the report prepared by ADR...

Mr Sarma had earlier written to the Election Commission about Vedanta, with extracts from its annual report. “The company (Vedanta) is not permitted to make such a dubious contribution in the UK and other European countries. However, the company has condescended to contribute to our own political parties for ‘supporting the political processes...’ and encourage and strengthen the democratic process!” said the former secretary.
Calling Vedanta’s action as “violation of the laws of the land”, Mr Sarma, requested the Election Commission (EC) to consider imposing an outright ban on all such contributions, as is the case with the democracies of Europe.
According to the former secretary, donations to political parties should not amount to blatant corruption and bribery and an affront to the rule of law. Here are the three concerns raised by Mr Sarma in his previous letter to the EC...
1. The Vedanta group is a London-based foreign multinational company and its contributions attract the prohibition envisaged under Sections 3 & 4 of Foreign Contributions (Regulation) Act, 1976 (as amended from time to time). Under Section 3(1)(e), in particular, “no foreign contribution shall be accepted by any political party or office bearer thereof”. This stipulation applies to Vedanta and all other companies controlled by it. As such, both Vedanta and those political parties that have received the donations are liable to prosecution under this Act. ECI should quickly consult the ministry of home affairs on the legal aspects involved.
2. Sections 29B & 29C of the Representation of the People’s Act, 1951, requires that the concerned political parties should make a declaration to ECI on the donations received thus from private companies. ECI should ascertain whether the concerned parties have complied with this.
3. Section 293 A(4) of the Companies Act requires the companies making the donations to political parties to disclose the same with the details explicitly in their respective profit & loss account statements. The ministry of corporate affairs should cause a verification of this and take necessary action in case there is any infringement. 
Requesting EC to investigate expeditiously these statutory violations and proceed against both the political parties and companies involved, Mr Sarma said the Commission should carry out the investigation transparently so that there may be public accountability.
Nem Chandra Singhal
9 years ago
Are the corporates donating willingly or forced to donate ? Who knows ? Why to target the donars ? The receipants are also be blamed who have all sort of powers to snatch, loot, or whatever you may call it. Who is guilty, or more guilty or who is perpetrating such trends. Who made the laws & who is defying it? The culprit is to be find out, not the intention of cherity.
9 years ago
Corporates need to be encouraged to make political donations in more transparent manner. That is the only solution.
Dolphy Dsouza
9 years ago
I do endorse the demand of Mr.Sarma that the Election Commission take punitive action against both the Political parties who are recipients of the donations and the companies involved in such illegal contributions. But does the Election Commission have the teeth to punish the guilty?

Vedanta is also part of this illegal contribution.

I was reading the Sept 16 issue of Business Today and the lead article is The Best Advice I ever Got.

Mr. Anil Agarwal,Chairman of Vedanta said the following: Quote "Two pieces of advice from my father have remained the guiding force of my journey.

His first was to keep trying till one succeeded, but never at the cost of principles.

The second one was to be empathetic to the cause of the underprivileged". Unquote.

There is been an outcry by rights groups all over the world including India against Vedanta and its methods utilized to displace the underprivileged.

On matters of principle, what has Vedanta have to say about such illegal donations to the Political parties.

Mario Puzo's magnum opus, Godfather begins with a illuminating quote: Behind every fortune there is a crime.

Mr. Agarwal can you put your hand on your heart and say you are following the very inspiring message of your Father???

Dolphy Dsouza
Kamal Shah
9 years ago
Together we sit
Together we eat
Together we loot
Together we share ....and show some CSR.
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