With days to go for the Delhi state election of 2015, a group called the Aap Volunteer Action Manch (AVAM) held a press conference to expose 4 checks of Rs. 50 lakh each (a very substantial sum) that the Aam Aadmi Party (AAP) had got from companies that earned very little income themselves.  AVAM argued that the companies were used as a front for money laundering i.e. illegal cash was given by AAP to the company which in-turn issued a check, converting the black money to white to use in the election.

Opposition parties, especially the BJP were quick to raise questions about AAP and to dismiss their credibility.  They have raised several important questions including:

1.  How can a company with little revenue give such massive donations – there must be some hanky panky here.

2.  AAP says that it has a committee that screens large donations.  How was such a large donation by a false company accepted?

3.  Such large donations do not come from unknown sources.  Some due diligence would have proved that the companies do not exist in reality.  The fact that these donations were accepted indicates that not all is correct with the Aam Aadmi Party.

These are very serious questions and it is clear that something is wrong in this picture.  It is a case that needs to be investigated and it should have consequences.  That is the only correct thing to do.

While AAP deserves to be questioned in this case, there is absolutely no doubt that they stand on a much stronger moral ground on this issue than any other political party in India.  This issue came to light only because of the fact that AVAM had access to the funding record, which was VOLUNTARILY put on the website by AAP.  There are many ways of obfuscating fraudulent sources of funding that political parties are well aware of.  These including not bringing the money to books and spending them directly on the campaign, and to say the least not disclosing the funding to the world thorough a website – especially on the eve of elections.  AAP chose to make the funds transparent that no one else does.

While the transactions in consideration are questionable, the very fact that they were voluntarily put online by AAP makes me give them a benefit of doubt, which I would not have done if the fact was discovered despite their resistance.

While these four checks need to be investigated, this episode only raises the importance of transparency of political funding.  I have not an iota of doubt that a very large volume of political funding in India is questionable and forcing parties to disclose funding will be a huge step in cleaning our political system. Not surprisingly, every major party in the country likes their balances without checks – neither checks issued by banks that are traceable, nor checks created by law that require them to disclose funding to the public.

BJP and Congress have both argued that they are transparent since they get their accounts audited. The episode under contention is a clear example of a transaction that would not have come out through the audit process.  An auditor would only have looked at the procedural integrity of the transaction i.e. was the fund received from a legitimate entity, was it received in a legitimate form (e.g. through a bank check) and was it accounted for in a proper manner.  No auditor would have looked at the balance sheet of the donor company to see if they had the capacity to donate.

The election commission that has put substantial measures to track election expenses does not look at the audit reports with a keen eye either.  Every party can thus get away with much illegal funding or at least illegtimate funding and produce an audit report to satisfy the letter of the law while trampling its spirit.

AAP should be saluted for the exceptional and unprecedented standard that it has set in transparency of political funding, even though the murky checks need to be investigated.  In the process, we must raise our voices for every political party to make their sources of fund transparent.  Unlike AAP, we cannot expect other political parties today to do so voluntarily.  Pressure from the citizens or a directive from the Supreme Court seem to be the only viable means of achieving that goal.

Addendum: A response on this issue by AAP that is incredibly mature and statesman-like.