Economy

Curb political nominees on PSU board: former CJI A P Shah

PALAK SHAH Mumbai | Updated on August 03, 2018

Justice Shah wants to restore the limit on political donations by companies

A P Shah, former chief justice of the Delhi High Court and chairman of the Law Commission, has written to Prime Minister Narendra Modi to discontinue the appointment of political nominee on the board of PSUs and bring back the limit on political donations by companies.

Justice Shah has said that at least 10 BJP spokespersons were nominated on the board of PSUs like HPCL, BHEL, Nalco and Cotton Corporation of India and has named Sambit Patra and Shazia Ilmi of BJP for their appointment on the board of ONGC and Engineers India.

He said that the appointment of these people on the board of PSUs does not bode well for governance as they do not possess the required skills and capabilities to effectively discharge the role of directors.

“If these PSUs were to be involved in acts of malfeasance, the responsibility for the same would evidently devolve on both the PMO and the Ministry of Corporate Affairs,” the letter said.

Finance Act, 2017

On the point of political donations, Justice Shah said that the Finance Act, 2017 had surreptitiously done away with the limits on political donations prescribed earlier under Section 182 of the Companies Act.

“It has removed the earlier limit of 7.5 per cent of the company’s average three-year net profit for political donations. The companies are no longer required to disclose the names of the parties to which political donations are made. The said amendment has resulted in ensuring complete opacity to the detriment of the various corporate stakeholders. Removal of previous limits not only heightens the odds of conflict of interest but will also drastically increase black money and corruption. This will also lead to the creation of shell companies and rise of benami transactions to channelise the undocumented money into the political and electoral process in India.”

Justice Shah, who works with Whistle Blower Forum, is of the view that corporate political funding will increase manifold as there is no limit to how much the companies can donate.

Removal of the statutory ceiling of 7.5 per cent of the average profit on donation to political parties will enable even loss-making companies to make donations of any amount to political parties out of their capital or reserves at the cost of poor shareholders.

Published on August 03, 2018

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