In my last post, I explained how loopholes in India’s legal system have enabled self-proclaimed “godmen” to amass fortunes by facilitating money laundering. But these corrupt godmen could not build their illicit empires without protection from politicians. After all, the government could crack down on godmen’s activities by changing the laws, or even by ensuring adequate enforcement of the flawed laws that currently exist. The government has not done so in part because of a corrupt relationship between godmen and politicians. The politicians provide the godmen with political favors, special privileges (including sweetheart deals for the godmen’s business ventures), patronage appointments, and, perhaps most importantly, the preservation of the system of legal loopholes and minimal oversight that enables the godmen to amass their fortunes. In return, godmen provide politicians with a number of services. These services include the same money laundering services that godmen provide to businessmen. But the godmen also provide politicians with three other services in exchange for the politicians’ complicity.
- First, godmen use their religious trusts to facilitate illegal campaign financing. Say you’re a crooked politician preparing to run for reelection. You’d like to boost your chances of winning by giving voters generous handouts— cash, free meals, TVs, or even cars. But buying votes is illegal. Furthermore, Indian campaign finance law imposes strict caps on donations to candidates and on the amounts that candidates can spend on their campaigns, so even if you could disguise payments to voters as legitimate campaign expenditures, the caps on overall campaign donations and campaign spending would prohibit you from raising and spending as much as you’d like on these sorts of activities. A friendly godman and his religious trust can help you evade these legal restrictions, as follows. First, you direct your wealthy supporters to make anonymous donations to the religious trust. (As discussed in my previous post, under Indian law it’s possible to make large anonymous donations to a religious trust without any tax penalty, and this anonymity makes it easy to circumvent the rules against the trust spending money in ways that help, or are directed by, the donor.) After taking its cut, the trust then uses the money to provide handouts to voters, as you direct. The trust makes it clear to voters that you, the politician, are their benefactor, on the official books the trust characterizes the handouts to voters as charitable spending—which would not look intrinsically suspicious to an auditor, given that Indian religious organizations routinely feed and clothe the poor.
- Second, crooked politicians can use religious trusts to launder money stolen while in office, to be used (illegally) for the politician’s next election campaign. To do this, the politician takes the “black” (illicit, unaccounted money) that he has acquired while in office and donates it (anonymously) to the trust, parking it there until the reelection campaign. The donated funds may be black money for the politician, but they are lawful for the trust. Given the loopholes described above, the politician can direct the trust to spend the money in ways that help the politician get re-elected.
- Third, godmen offer politicians captive vote banks, in the form of followers who will vote as the godman directs. Many Indian godmen have devoted cult-like followings, who will follow their guru’s guidance with blind obedience. Certain godmen have even been rumored to have political affairs wings within their operation, which advise “the faithful” on how to vote. Because an influential godman’s endorsement brings with it a large number of guaranteed votes, party leaders curry favor with godmen before elections, and often rival politicians will compete for godmen’s sponsorship. In exchange for sponsorship, godmen receive material benefits and special treatment.
The increasing expense of India’s elections, and the rise of Hindutva politics, are further cementing the ties between godmen and politicians. The former increases the value of the services offered by religious trusts, while the latter makes the religious approval and branding offered by godmen more attractive to politicians. Addressing this significant form of corruption will therefore be extremely challenging. But unless Indian activists and reform-minded politicians can muster the courage to attack this unholy alliance, criminals masquerading as holy men will continue to amass enormous fortunes and build their empires without impediment.