Which companies are funding political parties and how legal is it

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.
  • Like this story? Get our top stories by email.



    Nem Chandra Singhal

    8 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.


    8 years ago

    Corporates need to be encouraged to make political donations in more transparent manner. That is the only solution.

    Dolphy Dsouza

    8 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

    8 years ago

    Together we sit
    Together we eat
    Together we loot
    Together we share ....and show some CSR.

    Majority CEOs of Sensex companies get pay hike in FY12

    Pay packages of company chiefs like Chanda Kochhar, AM Naik, Rahul Bajaj, Pawan Munjal, Nitin Paranjape, Anand Mahindra, Navin Agarwal and N Chandrasekaran rose, while Wipro's Azim Premji, Infosys' SD Shibulal and Bharti Airtel's Sunil Mittal took a cut in their total pay packages during 2011-12  

    New Delhi: Majority of the country's top-30 blue chip companies have given their chiefs a hefty pay hike, even as industry titans like Mukesh and Anil Ambani, Kumar Mangalam Birla and Sunil Mittal either capped their salaries or took a cut in their remuneration packages, reports PTI.
    An analysis of remuneration paid by the 30 Sensex firms to their chiefs during the last fiscal shows that the pay packages rose for more than half of them -- including for Chanda Kochhar, AM Naik, Rahul Bajaj, Pawan Munjal, Nitin Paranjape, Anand Mahindra, Navin Agarwal and N Chandrasekaran.
    On the other hand, industry leaders like Wipro's Azim Premji, Infosys' SD Shibulal and Bharti Airtel's Sunil Mittal took a cut in their total pay packages during 2011-12.
    Besides, Reliance Industries' Chairman and Managing Director Mukesh Ambani and Hindalco Industries' Chairman Kumar Mangalam Birla kept their respective remunerations unchanged.
    Mukesh's younger brother Anil Ambani also saw his total remuneration from the four main companies of Reliance Group fall by nearly two-third during the year, although none of his group firms are currently part of the Sensex.
    Among the 30 companies forming part of the stock market barometer Sensex, the pay package was highest at Rs73.42 crore for Jindal Steel & Power's chief Naveen Jindal, putting him in the front for being the country's top-paid executive for second consecutive year in 2011-12.
    The pay packages for the last financial year have not been disclosed by many companies as yet, including at two Sensex entities -- PSU energy giant ONGC and private sector drugmaker Sun Pharmaceuticals.
    After Jindal, Hero MotoCorp MD & CEO Pawan Munjal was the second highest paid (Rs34.47 crore) among the Sensex group in 2011-12, followed by Hero MotoCorp Chairman Brijmohan Lall Munjal (Rs34.44 crore), Maruti Suzuki's Shinzo Nakanishi (Rs28.14 crore), Tata Motors' former CEO Carl-Peter Forster (Rs23.97 crore) and Bharti Airtel's Sunil Mittal (Rs21.3 crore).
    Forster's package included a termination payment of about Rs14.02 crore. He stepped down as Managing Director and CEO with effect from 9 September 2011.
    Other highly-paid top executives in last fiscal included Hindalco' Managing Director D Bhattacharya (Rs19.5 crore), RIL's Mukesh Ambani (Rs15 crore), Hindalco Chairman Kumar Manglam Birla (Rs13.06 crore), Sterlite Industries' Navin Agarwal (Rs12.5 crore), Rahul Bajaj (Rs11.1 crore), ITC's YC Deveswhar (Rs9.85 crore) and HUL's Nitin Paranjape (Rs9.74 crore).
    The ten highest paid top executives at Sensex companies saw their combined pay package rise by about Rs36 crore to Rs276 crore, as just one (Sunil Mittal) took a pay cut and two (Mukesh Ambani and KM Birla) kept their packages unchanged among them during 2011-12.
    In percentage terms, Deveshwar saw his pay package rise by a marginal 0.2%, but hike was much steeper for ICICI Bank chief Chanda Kochhar, TCS CEO N Chandrasekaran, L&T Chairman AM Naik, Tata Steel MD HM Nerurkar, Tata Motors' former CEO Carl Forster and Bajaj Auto Chairman Rahul Bajaj.
    Besides, Hindalco's Bhattacharya, Sterlite's Agarwal, Hero MotoCorp's Pawan and Brijmohan Lall Munjal, Cipla's YK Hameid, M&M's Anand Mahindra, HUL's Paranjape, Maruti Suzuki's Nakanishi, HDFC's Keki Mistry and HDFC Bank's Aditya Puri also saw double-digit percent rise in respective remunerations.
    The hike was relatively lower at 9.2% for Naveen Jindal, the top-paid executive among all of them.
    Among those witnessing a decline in their packages, Infosys chief SD Shibulal's remuneration fell by 32%, while that of Wipro's Premji and Bharti's Mittal dropped by 32% and 22.5%, respectively.
    Among public sector units (PSUs), GAIL's BC Tripathi and NTPC's Arup Roy Choudhury also saw increase in their remunerations, but their pay packages are small compared to private sector peers.
    The remunerations were not comparable for a few like SBI, Coal India and Tata Power, as these entities saw changes at their top leadership positions.
    For Dr Reddy's Labs, the individual pay package of its business head could not be ascertained, as the company has only disclosed total remuneration of all Executive Directors in its annual report. The total remuneration for its EDs rose by 3.4% to Rs27.1 crore.
  • Like this story? Get our top stories by email.


    Company pledges to complete construction of bridge in 25 days through ad

    The construction company had not completed the construction of Sonwani bridge in local MLA Rashid's constituency even after missing the deadline by over three years

    Srinagar: An independent member of legislative assembly (MLA) in Kashmir has forced a local construction company to come out with an advertisement in a local English daily pledging to complete within 25 days the construction of a bridge which has missed several deadlines so far, reports PTI.


    Sheikh Abdul Rashid, MLA from Langate constituency in north Kashmir's Kupwara district, was set to launch drum-beating protests against "inefficient officials, ministers and contractors" outside the respective residences of the company owner.


    The MLA had chosen the residence of proprietor of New Asian Construction Company to launch his protests. The construction company had not completed the construction of Sonwani bridge in Rashid's constituency even after missing the deadline by over three years.


    "I hereby submit my undertaking that the construction of Sonwani bridge at Langate shall be completed by 25 September 2012 in any case," the company said in the advertisement published on Friday.


    "I deeply regret to the inhabitants concerned for all the inconvenience due to delay in execution of work," it added.


    Rashid told PTI that he was forced to resort to such tactics as all his efforts earlier in this regard were not given any consideration by the people concerned.

  • User 

    We are listening!

    Solve the equation and enter in the Captcha field.

    To continue

    Sign Up or Sign In


    To continue

    Sign Up or Sign In



    online financial advisory
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone