Last week, the Bharatiya Janata Party’s “man in Tamil Nadu,” Governor R. N. Ravi declared that foreign forces intent on destabilising India’s economy were behind the historic 100-day protests in Thoothukudi that ended with the tragic police firing that resulted in 14 deaths.
Ravi did not highlight the extent to which BJP has benefited from Vedanta’s largesse, or disclose how the national party has worked to keep the electorate from learning about which corporate houses are pulling its strings. Behind the smokescreen of the ‘foreign’ bogey, the national party is hiding the extent of its own indebtedness to foreign corporate funders like Vedanta.
The Union government’s vocal defence of Vedanta and its silence on Adani need to be seen as part of the same plot.
Hands in the cookie jar
In March 2013, Sterlite’s copper smelter was shut down after a poisonous gas leak from the factory poisoned thousands in Thoothukudi city. The following year was an election year, and UK-based Vedanta Resources’ subsidiary Sterlite Industries donated Rs. 15 crores to BJP.
Explaining the donation in its 2014 Annual Report, the British multinational says: “The Board believes that supporting the political process in India will encourage and strengthen the democratic process.”
The Delhi high court had a different view. In 2015, the high court in Association for Democratic Reforms v. Union of India found BJP, and the Congress too, guilty of receiving foreign funds from Sterlite Industries and Sesa Goa in violation of the Foreign Currency Regulation Act (FCRA). Sterlite and Sesa’s owner Vedanta is a foreign company. Between 2004 and 2012, Congress and BJP had each received more than Rs. 8 crores in electoral funding from Vedanta subsidiaries. The court directed the Election Commission to proceed against the two political parties.
Responding to the adverse order, the ruling BJP and the opposition Congress approached the Supreme Court seeking to quash it. And then, in a synchronised move, on November 29, 2016, both withdrew their pleas from the Supreme Court.
Their problem had already been solved. Earlier in 2016, the government had introduced an amendment to the FCRA that shielded the guilty parties from the consequences of the high court order. The amendment redefined “foreign source” to exclude companies whose “nominal value of share capital is within the limits specified for foreign investment.” Majority foreign ownership did not matter; if the Foreign Direct Investment (FDI) component was within the sector-specific limits designated by the government, such companies would be deemed to be Indian under the law.
The move struck a blow to the basis of the FCRA, which was to avert the threat of foreign control of India’s politics and economy by placing particular restrictions on political parties and party functionaries.
The amendment gave BJP more than just a way to bypass the guilty verdict – it opened a rich source of electoral funds from foreign companies, including fully foreign-owned corporations, as long as their stakes in their subsidiaries was within sector-specific limits specified by the government.
FDI caps on various sectors have been successively raised. FDI cap for defence industries, for instance, is at 100%; i.e. a foreign arms manufacturer could set up a fully-owned company in India and could be considered Indian under FCRA for the purposes of funding a political party.
The law, however, still required political parties to disclose the names of all political donors who contribute more than Rs 20,000. That needed to be fixed. In 2018 – in the lead up to the 2019 Lok Sabha election – the Modi government passed a new law that would allow donors, including wholly-owned Indian subsidiaries of foreign companies to contribute to political parties anonymously through electoral bonds.
Relying on publicly available sources, including Vedanta’s annual reports, the Thoothukudi-based Anti-Sterlite People’s Movement (ASPM) estimates that Vedanta has paid at least $42.5 million (Rs. 300 crores) in election bonds to undisclosed political parties since the Thoothukudi smelter was shut down for environmental violations in 2018. This is in addition to Rs. 4.5 crores paid by Sterlite and traceable to BJP.
Vedanta’s ‘Pay-off’ to Political Parties Since 2018, according to the ASPM
|Year ending March 31||Payment to political parties via electoral bonds||Payment to political parties via Janhit Electoral Trust (Name of the party)||Source document|
|2019||Rs 64.5 crores (US $ 10 million)||Rs 2.5 crores (BJP)||1. Annual Report FY 2018-19. Vedanta Ltd. [Page 312-313. Table 30: Other Expenses. Footnote (c)]|
|2020||Rs 114 crore (US $ 16 million)||Rs 3 crore or US $ 400,000 (BJP and JMM)||
1. Annual Report FY 2019-20. Vedanta Ltd. [Page 355. Table 30. Other Expenses. Footnote (c)]
2. Annual Report FY 2019-20. Vedanta Resources Plc (UK). [Page 102. Political Donations]
3. The Print. 08.03.2022
|2022||Rs 123 crore (US $ 16.52 million)||Nil||1. Annual Report FY 2021-22. Vedanta Ltd. [Page 392-393. Table 33. Other
Expenses. Footnote (b)]2. Annual Report FY 2021-22. Vedanta Resources Plc (UK). [Page 131. Political Donations]
In an open call put out in the form of a press statement, ASPM asked the governor of Tamil Nadu to disclose the total payments, including through electoral bonds, made to BJP by Vedanta since the Sterlite’s closure. Between 2018, when electoral bonds were legalised, and March 2022, political parties received Rs. 9,208 crores in electoral bonds mainly from corporations. Of this, more than 57% went to the BJP, according to research cited by the group.
“If the national trend and the spirited defence of Vedanta by BJP loyalists, including the governor, is anything to go by, we bet that BJP has cornered the lion’s share, if not all of Vedanta’s payoff,” said Fatima Babu, convenor of ASPM.
In military parlance, what the governor of Tamil Nadu did by invoking the foreign angle is called a smokescreen – a ruse to conceal real intentions. In this case, that is to deflect attention from the issues that led to Sterlite’s closure.
The Sterlite factory is currently facing two closures. It was first shut down by the Tamil Nadu Pollution Control Board for causing a massive gas leak in 2013 and hurting thousands of people. This order was challenged by Vedanta in the Madras high court. In August 2020, Vedanta’s appeal was struck down by the court which found “that the stand taken by the TNPCB to be just and proper and the professional opinion rendered by the expert also aids and strengthens the decision taken by TNPCB leading to closure of the petitioner industry.”
In 2018, Sterlite was once again shut down by the TNPCB and the government of Tamil Nadu. Once again, Vedanta appealed to the Madras high court. Once again, and as part of the judgement delivered in August 2020, the court upheld the Tamil Nadu government’s decision. The court confirmed allegations by the government and citizen respondents of Vedanta’s land-related fraud, unlicensed operation, pollution, greenbelt violation, illegal toxic waste disposal, tampering with pollution monitoring equipment and unaccounted dumping of tons of arsenic and mercury into the environment. The matter is now on pending before the Supreme Court.
“The governor’s statements disregards the honourable Madras high court’s serious findings of pollution, fraud and unlicensed operation by Sterlite. By belittling the people’s struggle and ignoring the high court’s findings without offering any evidence to the contrary, the governor’s arguments appear to be designed to prejudice the ongoing judicial process,” Babu said.
Nityanand Jayaraman is a writer and social activist, and has been part of the struggle to hold Vedanta accountable.