7 Things Piyush Goyal Said On Electoral Bonds (And What He Left Out)

On Thursday night, commerce minister Piyush Goyal held a press conference at the BJP headquarters, responding to allegations about electoral bonds raised by the opposition after a HuffPost India investigative series published this week.  

Goyal claimed the Congress’s allegations about the scheme were “baseless”, though Nitin Sethi’s reports in the series were substantiated by documents obtained through the RTI by transparency activist Lokesh Batra.

Here’s a look at what Goyal didn’t address at the press conference:

KYC-based, non-transferable bond?

What he said: “By electoral bonds, we have made sure that whatever money is used in election proceedings must come from the bank, through the KYC procedures, and can be issued by selected SBI branches so that the SBI can keep its track. Earlier, there was no record of where the money came from and where it went. The new system will now allow taxpayers money with KYC tags to buy bonds. These bonds will remove the fear of banks in the minds of donors, who can now rightfully donate.”

Goyal also said the bonds were non-transferable.

What he didn’t say: In its opposition to the scheme, RBI had warned the government that the bonds would function as a type of “bearer bond”—an opaque financial instrument that carries no trace of its ownership—which are transferable by delivery. 

“Hence who finally and actually contributes the bond to the political party will not be known,” RBI had said.

A secure, non-traceable bond?

What he said: “We’ve added in-built security features to ensure forgery doesn’t take place. There’s a random serial number, invisible to the naked eye, in the bond to ensure there’s no harassment of any individual/party.”

What he didn’t say: The government had claimed last year that this serial number, visible under UV light, would not be noted by the SBI in any record associated with the buyer or political party depositing a particular electoral bond. Therefore, it could not be used to track the donation or the buyer.

But documents obtained by Commodore Lokesh Batra (Retd) through RTI showed that SBI does keep track of who bought how many bonds, and the political party to whom the bond is eventually donated.

This was approved by the Finance Ministry. The rules governing electoral bonds require SBI to share this data with law enforcement agencies if required. It, however, did not require either the political parties or the donors to be intimated by the government or the SBI that their promised secrecy has been breached by the government. 

15-day expiry 

What he said: Goyal said the bonds had a strict 15-day tenure and therefore were clean and safe.

What he didn’t say: The government bent its own rules to allow for encashment of expired bonds soon after the May 2018 Karnataka state elections resulted in a hung assembly. 

The Finance Ministry took this decision after the “holders” of these bonds — ie, political parties — asked SBI to accept the expired bonds, arguing that the 15-day limit referred to working days and not calendar dates.

These bonds had been purchased in the same special window that Prime Minister Narendra Modi ’s Office had directed the Finance Ministry to break its own rules to open.

Identity of donor

What he said: “People who want to contribute but were scared of political retribution will be able to contribute.” People can also donate to opposition without fear of repercussions, he said.

But Goyal also said the data of the donor and the political party is easily accessible to the authorities, including income tax officials. 

What he didn’t say: The scheme does not necessarily provide a donor with anonymity from the government of the day. The rules governing electoral bonds require the SBI to divulge these details if enforcement agencies ask for them. The rules do not lay out more details about the kind of criminal cases these agencies can demand information for. This leaves a window of ambiguity open on how and when enforcement agencies can demand the data from SBI. 

On EC, RBI consultations 

What he said: “The Govt of India has been in constant discussion with the Reserve Bank of India & the Election Commission. Thus, after bringing the Finance Bill in Parliament on Feb 1, 2017, this scheme was notified on 2nd Jan, 2018. The Bill was passed 31st March, 2017 and we allowed the organisations enough time to consider on all aspects.”

In answer to a question on EC’s involvement in the scheme, Goyal said, “BJP has asked the EC to look into this, take suggestions from Opposition parties and study this scheme completely. The EC of that time had some misunderstanding, but at the time they had not experienced this system. It was the beginning and there had been perhaps only one or two tranches of bonds issued. Now, 12 tranches have been issued so far. They should check properly now and I’m sure they will be happy with it and find that a good, pathbreaking way of bringing honest money has been brought forward in the country and has been used successfully.” 

What he didn’t say: The government dismissed RBI’s objections to electoral bonds (and first wrote to it 2 days before announcing the scheme) and also ignored most of the central bank’s subsequent suggestions to make the scheme less vulnerable to fraud and less prone to destabilising the Indian currency. 

Read: How the government overruled the RBI

In May 2017, the Election Commission had written to the Law ministry, warning that electoral bonds would help political parties hide illegal donations from foreign sources. Even as late as October 2018, law and justice ministry records show, the Election Commission continued to insist upon the rollback of the bonds and other anti-transparency provisions the government had introduced. In the 2018 winter session of the Parliament,  then MoS Pon Radhakrishnan told the Rajya Sabha that the government had not received “any concerns from Election Commission on the issue of Electoral Bearer Bonds”, an outright misstatement the government was forced to correct later.

Read: How government dismissed EC’s objections

On opening bond sale for state elections

What he said: Assembly elections happen all the time and at various times through the year. Bonds should work for those occasions as well. Assembly elections don’t always coincide with the four windows in the year. The decision was important to bring in clean money during assembly elections as well.

What he didn’t say: The government’s own rules for electoral bonds say that apart from four 10-day windows in a year, electoral bonds can be sold for 30 extra days only in years that have a general election scheduled (like 2019). Not only did the PMO ask for a special window to be opened in 2018 just ahead of the Karnataka assembly election—which was initially dismissed by the FinMin’s most senior bureaucrat before he found out where the instruction came from—this was first justified as an “exception” and then made into a practice.

Read: Modi PMO Ordered Illegal Electoral Bond Sale Before Vital State Polls   

Read Part 1 , Part 2 , Part 3 , Part 4  and Part 5 of the series.