Corporate poll fund set up to end slush money
Amberish K Diwanji in Bombay and George Iype in New Delhi
An electoral fund has been set up to clean up the funding of political parties.
Aiming to pay politicians over the counter rather than under, a three-member trust, headed by senior Supreme Court advocate Dinesh Vyas, has been appointed to look after the collection and distribution of these monies.
It was earlier reported that Tata Sons chairman Ratan Tata was behind the idea to set up the Electoral Fund. However, Vyas was at pains to disassociate Ratan Tata from the Fund. "Certain newspapers have called it the Tata Electoral Fund, which is completely wrong," Vyas told Rediff On The NeT. "Ratan Tata only suggested the idea to me late last year, and we began working on it. He is in no way involved with the Fund."
Refusing to divulge figures, Vyas said various Tata companies have written for details and expressed a keen desire to contribute. "The final decision on whether to contribute or not is up to the respective boards of each company," he insisted.
He added that many non-Tata corporate houses, too, have been making inquiries and he expected some of them, at least, to contribute to the Fund.
Vyas declared that the Electoral Fund had no agenda nor did it solicit contributions. "We are not canvassing or seeking assistance," he said. "All contributions are on a voluntary basis and our only aim is to clean up the electoral process."
The Supreme Court advocate said the Electoral Fund is not attached to any party or ideology. "We will distribute the money that we collect on a very objective basis, which will be fair to all the major political parties concerned." But he insisted that parties linked to anti-national activities or perceived as a threat to the country would not come under the ambit of the Fund.
Will the Left parties, often linked to trade union activities and not liked by many corporates, be part of the distribution. "Certainly," he said, "We will be scrupulously fair in our distribution for all the major national parties which are present in Parliament."
Vyas explained how the money would be distributed. "To be absolutely fair, we will distribute 50 per cent of our collection to the parties on the basis of their strength in the outgoing Parliament, while the remaining 50 per cent will be distributed as per the number of seats won by parties in the next Parliament."
While setting up the Electoral Fund, it possessed no corpus nor did it plan on having a rolling fund, he said. "Whatever is collected will be distributed. The amount will be audited and open," he said, "All of us trustees are working free of cost for the Fund."
Despite the Tatas's backing, the Electoral Fund is not yet a runaway success. Vyas blamed it on the recession that has gripped the country, saying this had forced companies to tighten their budgets. "There is a financial crunch in the country, so naturally much cannot be expected," he said. So were collections below expectations? "We had no expectations," he replied quickly.
He pointed out that, though the initiative was first mooted last August, they had not expected an election so soon. "We really were not geared for an election in February 1998 and did not have time to prepare or inform various corporates of this scheme. Naturally, the awareness is low," he said.
A major grouse is that donations to political parties are not eligible for income tax exemption, and this in itself goes against companies paying by cheque. Shareholders may object to making large contributions, especially since contributing companies are unlikely to gain any benefit from a general pool donation.
Meanwhile, the major political parties -- the Congress, the Bharatiya Janata Party and the Janata Dal -- have welcomed the initiative. The Left parties, however, said the move will not help reduce the influence of slush money in the electoral process.
Congress treasurer Ahmed Patel felt it is "a right step in the right direction. It will help bring in the much-needed transparency into the electoral system in India."
Patel said other corporate houses should follow the initiative. "We cannot deny the fact that nearly all the political parties have been accepting money from corporate houses during elections. But there should be some accountability to that process," he said.
However, he warned that setting up of electoral trusts by corporate houses alone cannot cleanse the electoral system. "We need drastic reforms in the election laws so that nobody wins an election through money and muscle power," the Congress leader said.
Senior BJP leader and former finance minister Jaswant Singh said his party welcomed the move. "But other corporate houses should follow the initiative and set up similar trusts so that it becomes a combined corporate move," he said.
However, Singh said the present Company Law needs to be amended to make the corporate trusts for election funds "meaningful and legally permissible."
He stated that the BJP has made considerable efforts to make election funding for the party transparent in the past. "Political parties should also openly declare before the Election Commission the amount of money they receive from each corporate house, so that electoral funding process will be above board," Singh said.
The BJP leader said his party has already started a 'life membership' for raising money for the party funds.
Janata Dal leader and Minister of State for Finance Veerendra Kumar -- himself a businessman -- said the setting up of electoral trusts by corporate houses "could be one way to bring in transparency into the electoral system. But that alone cannot cleanse the system. We need electoral reforms and the United Front government is committed to bring changes in the electoral process."
However, Communist Party of India general secretary A B Bardhan said the Left parties want corporate houses to stay away from funding political parties during elections. "I do not believe that setting up trusts is an answer to bring the much-needed transparency in the electoral process," he stated.
"The need of the hour is the electoral reforms that the government should immediately enact," he said.
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