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Photo illustration by John Lyman

It turns out that dark money in politics isn’t a uniquely American problem.

Past, ongoing, or future elections in the Maldives, Bangladesh, Sri Lanka, Pakistan, and India have revealed a political and electoral landscape fraught with manipulation, allegations, and uneven playing fields. Concurrently, India, the world’s largest democracy, is navigating its staggered election process. An impressive cadre of more than 970 million voters are partaking in this democratic exercise to determine the future direction of their nation.

Free and fair elections are the cornerstone of any democratic system, ensuring a peaceful transition of power. However, no electoral process is devoid of flaws. The phased elections in India, despite its democratic stature, have not been immune to irregularities. Observations from independent media and electoral watchdogs during these elections have repeatedly highlighted significant electoral manipulations, including the extensive use of unregulated financial power.

The prominence of money and influence was starkly highlighted when India’s highest court ruled the government’s electoral bond scheme unconstitutional, nullifying it entirely. This landmark decision sparked a broad discourse on the implications of unregulated money in elections, affecting electoral integrity, voter rights, transparent policymaking processes, and accountable governance.

In February, a five-member bench of the Indian Supreme Court, headed by Chief Justice Dhananjaya Yeshwant Chandrachud, dismantled a seven-year-old election funding system that permitted individuals and companies to make unlimited and anonymous donations to political parties. Chief Justice Chandrachund remarked that these political contributions secure contributors a seat at the decision-making table, which also translates into undue influence over policy.

Consequently, the issuance of fresh bonds was prohibited, and India’s central bank was ordered to disclose all information related to electoral bonds. This decision is seen as a significant setback for the Bharatiya Janata Party (BJP)—the party of Prime Minister Narendra Modi and the largest beneficiary of this scheme.

The electoral bond system, introduced in 2017, allowed persons or companies to purchase bonds from India’s central bank and donate them anonymously to a political party. This system was contested by opposition members and civil society groups, who argued that it obscured the public’s right to know who was financing political parties. Data from the Association for Democratic Reforms (ADR) shows that individuals and companies had purchased electoral bonds worth $1.99 billion by November 2023, with the BJP receiving around $720 million over seven years.

The issuance of electoral bonds also surfaced dubious practices where top corporate donors from various sectors made hefty donations to the BJP. Individuals like Sarath Reddy, an executive at Aurobindo Pharma, implicated in a liquor scam in New Delhi, and Santiago Martin, known as the ‘lottery king’ and facing allegations of money laundering, used these bonds to seemingly cleanse their reputations through substantial political donations. Furthermore, large-scale infrastructure projects like the world’s biggest lift irrigation project awarded by the government of Telangana State to Megha Engineering and Infrastructure Limited (MEIL) followed significant purchases of electoral bonds by MEIL, suggesting potential quid pro quo arrangements.

Aside from the BJP, a spectrum of other political parties and regional entities governing different states have been major recipients of these funds. In many cases, donors of electoral bonds secured lucrative government deals and contracts shortly thereafter. According to Anjali Bhardwaj, a transparency activist, companies that secured large government contracts either before or after making donations frequently saw related charges of corruption and extortion quietly shelved.

Political finance is a critical aspect of electoral politics. While political parties are subject to certain regulations regarding donation ceilings and limits, actual expenditures often remain undisclosed, and a major portion of donations goes unreported in South Asian countries. Election oversight agencies have limited power and capacity to control the flow of unrestricted money in politics. The lack of effective limits on corporate and anonymous funding and on election expenditures allows political parties to exploit these funding system loopholes extensively.

The impact of undue monetary influence on political processes has grown increasingly important across South Asian countries, facing similar challenges. The escalating costs of election campaigns, financed by exceedingly wealthy corporations, result in political parties and candidates becoming overly dependent on donors. This dependency shifts democratic representation from ordinary citizens to special interests. The vast sums of unreported money have strengthened the influence of criminal networks over legitimate politics, and policy-making processes have become hostage to donor interests.

Addressing compliance and enforcement of laws is a broader regional issue that requires a cooperative approach among nations. Government agencies overseeing elections must ensure that economically weaker candidates without reasonable resources do not lose out to wealthier counterparts and get excluded from the electoral process. Further, countries across South Asia need to enhance transparency in the funding of candidates and political parties. If unchecked, unrestricted money in politics will continue to commercialize political parties and undermine the spirit of gender equality, inclusive politics, and democracy in South Asian countries.

Ikram Ali, an alumnus of Quaid-i-Azam University Islamabad with a Master’s degree in History, is a seasoned expert in election management and political reforms. With a rich tapestry of experience spanning over 15 years, Ikram has honed his expertise through collaborations with preeminent global organizations such as the United Nations Development Programme (UNDP), the International Foundation for Electoral Systems (IFES), and Democracy Reporting International (DRI), advocating for comprehensive political and electoral reforms in Pakistan. As a testament to his commitment to enhancing democratic frameworks, Ikram is a certified BRIDGE (Building Resources in Democracy, Governance, and Elections) Workshop Facilitator, specializing in capacity building across democratic institutions. His dedication to fostering governance excellence was further recognized in 2018 when he completed the prestigious South and Central Asia Legislative Fellows Program, sponsored by the U.S. Department of State, affirming his role as a distinguished scholar and practitioner in the realm of democracy and governance.