BY RAGHAVENDRA VERMA, in New DelhiINDIAN authorities have seized more than US$120 million worth of unaccounted cash during the six-week long general election that concluded in May. Law enforcers have warned that this could be for vote buying, making a future government susceptible to corruption, promoting graft in business. Raghavendra Verma reports from New Delhi.

AS the afternoon heat ebbs in the middle of this Indian summer, a police team block a major highway outside the city of Nashik, in the western state of Maharashtra, rolling in wheeled yellow-coloured barricades. Soon a traffic jam builds up and policemen move from one car to another in search for cash, often hidden in door cavities or spare wheels.With general election polling due the following morning in the city, this is a last-ditch effort to disrupt the movement of cash that many political parties and candidates use for bribing voters. The task is not easy, as couriers employ highly innovative ways to transport money.
Trains are also checked -there have been reports of railway engine drivers becoming carriers. They slow down trains at certain predetermined spots to throw out cash-filled bags to election campaigners, who are breaking election spending limits and vote buying laws.

Corrupt conduct
The distribution of money or any other item to influence voters is an offence under the Indian Penal Code and is outlawed as corrupt conduct under the Public Representation Act. In another western state, Gujarat, a team of 400 police officers has been formed to track down unaccounted cash during the elections. You have to admire police officers undertaking this work. But they do receive support from government officials. Income tax authorities in the southern city of Bangalore have set up a special toll-free number to collect intelligence on vote buying. Veeravalli Sundaram Sampath, a former Chief Election Commissioner (CEC) of India, told Commercial Crime International (CCI) that any large sums of cash found during the election period is seized by police “unless the person holding it is able to explain its source.” Otherwise, such money is assumed to be election spending breaching the statutory spending limit of Indian Rupees INR7 million (US$100,500) per candidate in parliamentary elections. This limit is widely believed to be dwarfed by actual spending.

Spending increased
The legal situation is muddied by the fact that central party campaigns have no financial limits. Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management has predicted US$8 billion will be spent on the current electoral cycle, which includes votes in 543 parliamentary constituencies. Speaking last month in New Delhi, Mr Sharma said that total election spending in India in this cycle is likely to be 25 percent higher than the money spent in the 2016 US presidential and congressional election campaigns (estimated at US$6.25 billion).Moreover, according to Shahabuddin Yaqoob Quraishi, another former Chief Election Commissioner (CEC), his agency regularly receives complaints from political parties that rival ministers and even some corrupt senior police officers “carry money in their cars to bribe voters,” a claim made in his 2014 book ‘An Undocumented Wonder –Making of The Great Indian Election’. The government says it is not blind to the problem –highlighting that it has introduced electoral bonds, issued by the government-owned State Bank of India for the purpose of donating money to political parties. “Through electoral bonds now we moved a little forward but there can be obviously more things to do…,” regarding boosting electoral finance transparency, said Nirmala Sitharaman, a spokesperson of the ruling Bharatiya Janata Party (BJP) and India’s defence minister. She told CCI that electoral corruption had declined, and the new system has boosted accountability.

Retrograde step
However, the new system has its critics, with even the election commission having concerns. It said in submission to the supreme court on the issue: “This is a retrograde step as far as transparency of donations is concerned,” as it “opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties.” The court is currently hearing a petition by the Association for Democratic Reforms (ADR) to quash the bonds. In March and April this year, US$510 million’s worth of electoral bonds were purchased, with an overwhelming majority of them bought for the ruling BJP. One useful outcome of the case is that US$44 million in cash seized during the 2014 general elections was refunded to the owners after they had made a new updated income assessment. Judges were not amused: “You [just] kept the money in safe custody for a month,” said one.
Anil Verma, head of the ADR told CCI that “the bulk of the money which is being used [in elections] is cash, which is not accounted for, not shown anywhere, nobody knows how much it is and where it comes from.” Furthermore, the Indian criminal procedure code does not list bribery in elections as a serious ‘cognisable’ offence which can be investigated without a warrant, and, therefore private property cannot be searched without permission from a court. That means raids cannot be held with “surprise and secrecy”, forcing the authorities to intercept cash during its transit, said former CEC Sampath.During his tenure as CEC between 2012 and 2015, Mr Sampath said that he worked hard to amend the law, but as many politicians were elected using unfair means, they were not interested in curbing this practice. “Why should they make [into] law [something] which will tie their own hands,” he said. In such a complex environment, businesses face difficult choices, according to Alexandra Wrage, president of TRACE, a US based anti-bribery business organisation. They “will find themselves targeted for payments that, if made, would expose them to both legal and reputational jeopardy,” she said.Corporations can protect themselves by emphasising a corporate commitment to refuse such demands and backing that up with well-structured and well-supported anti-bribery compliance programmes, Ms Wrage told CCI. Certainly, major corporations operating in India are already very cautious about issues relating to money given to political parties, Harinderjit Singh, a senior partner at Price Waterhouse India, the Indian branch of international accounting firm PricewaterhouseCoopers (PwC) told CCI. “In our experience this money is very transparently disclosed to the [corporate governing] boards and all the procedures required under the Companies Act are being followed,” he said. However, according to Mr Verma, many businesses are not the victims of Indian electoral bribery and excess spending as they make donations for future favours: “They are not going to be harmed, [but in fact] benefit from it,” he said, “They will expect policies which will benefit them and receive [government] contracts.”

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