By accepting political donations, a question is being raised on whether the political parties BJP, Congress, NCP, Save Goa Front, MGP and Shiv Sena have violated the Foreign Contribution (Regulation) Act, 1976. GoaChronicle.com investigates… In its Annual Report of 2010- 11, Vedanta – Sesa Goa mentions about its Board Policy on the issue of political donations;
“It is the Board’s policy that neither Vedanta nor any of its subsidiary companies may, under any circumstances, make donations or contributions to political organizations within the United Kingdom or European Union. In exceptional circumstances where such political donations or contributions are to be paid in the United Kingdom and European Union and if deemed necessary for legitimate business reasons, they will not be made without the approval of the Board and the shareholders in the general meeting.
During the year, the Group made political donations in India of USD 3.66 million either through a trust or directly in respect of the Indian general election. The Board believes this will encourage and strengthen the democratic process in India.”
At USD 3.36 million which at an exchange rate of Rs 45 for a US Dollar works to over 15 crores in political donations to different political parties. Here is what the national and state-level parties in Goa received from Sesa Goa.
Of the list of the political parties that have received political donations from Sesa Goa; BJP has received most of the donation amounting to Rs 1.13 crore in the past four years. Goa Pradesh Congress Committee has received a total of Rs 58 lacs, while NCP got Rs 5 lacs; MGP got Rs 7 lacs, Save Goa Front 5 lacs and Shiva Sena Rs 2 lacs.
Is it a violation of FCRA Act 1976?
Section 4 of the Foreign Contribution (Regulation) Act of 1976 clearly states the following;
Candidate for election etc. not to accept foreign contribution-
(1) No foreign contribution shall be accepted by any —
(a) candidate for election,
(b) Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper,
(c) Judge, Government servant or employee of any corporation,
(d) Member of any legislature,
(e) Political party or office-bearer thereof.
In fact on May 1, 2011, this act was further made strict, when it changed from ‘any payment of a political nature’ to ‘no foreign contribution’
The above section of the law makes no exception to receipts of foreign contributions to political parties.
Section 2 defines (c) “foreign contribution” means the donation, delivery or transfer made by any foreign source,-
(e) “Foreign source’ includes-
(i) The Government of any foreign country or territory and any agency of such Government,
(ii) any international agency, not being the United Nations or any of its specialised agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the official Gazette, specify in this behalf,
(iii) A foreign company within the meaning of the section 591 of the Companies Act, 1956 (1 of 1956), and also includes-
(a) A company which is a subsidiary of a foreign company, and
(b) A multi- national corporation within the meaning of this Act,
(iv)A corporation, not being a foreign company, incorporated in a foreign country or territory,
(v) A multi-national corporation within the meaning of this Act,
(vi) a company within the meaning of the Companies Act, 1956 (1 of 1956), if more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:
(a) Government of a foreign country or territory,
(b) Citizens of a foreign country or territory,
(c) Corporations incorporated in a foreign country or territory,
(d) Trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory,
Sesa Goa Defence
Sesa Goa informed media when the news of political donations broke out that like many other corporate houses in India, Sesa indeed made donations to political parties but strictly in accordance with due process prescribed under law, including the Companies Act and the Income Tax Act,” it said, saying that the donations were made by account payee cheques. “It is common practice among political parties to approach business houses for donations at different points of time,” it further said, adding the donations were made only after political parties made requests to the mining firm, the biggest in operation in Goa.
While Congress and other political parties in Goa has not made a statement on this regards to the media, BJP leader Manohar Parrikar has mentioned that it is normal for political parties to raise donations from business houses and it is not in violation of any law.
Section 23 – Punishment for the contravention of any provision of the Act
(1) Whoever accepts, or assists any person, political party or organization in accepting, any foreign contribution or any currency from a foreign source, in contravention of any provision of this Act or any rule made there under, shall be punished with imprisonment for a term which may extend to five years, or with fine, or with both.
(2) Whoever accepts any foreign hospitality in contravention of any provision of this Act or any rule made there under shall be punished with imprisonment for a term which may extend to three years, or with fine, or with both.
Here is what Section 12 of the FCRA Act of 1976 has to say;
Power to prohibit payment of currency received in contravention of the Act-
Where the Central Government is satisfied, after making such inquiry as it may deem fit that any person has in his custody or control any article or currency, whether Indian or foreign, which has been accepted by such person in contravention of any of the provisions of this Act, it may be, by order in writing, prohibit such person from paying, delivering transferring or otherwise dealing with, in any manner whatsoever, such article or currency save in accordance with the written orders of the Central Government and a copy of such order shall be served upon the person so prohibited in the prescribed manner, and thereupon the provisions of sub-sections (2),(3),(4)and(5) of section 7 of the Unlawful Activities (Prevention) Act, 1967(37 of 1967) shall, so far as may be, apply to, or in relation to, such article or currency and references in the said sub -sections to moneys, securities or credits shall be construed as references to such article or currency.
The Indian law on foreign contribution to political parties is clearly defined; the question that does arise is whether the political parties are guilty of any violations; as explained by a member of a political party who has received the political donation from Sesa Goa, political parties often receive donations from corporate houses. We do not see any violations in it. As far as Sesa Goa is concerned it is not a violation since Sesa Goa is an Indian company listed on the Indian Stock Exchange and Indian companies can make political donations either directly or through a trust. In that case what happens to FCRA 1976.