From donations to 'family wealth': Who foots the bill for Bangladesh's political parties?

Questions about who finances the National Citizen Party (NCP) were raised when Chief Organiser (North) Sarjis Alam came under fire for an extravagant display at a political rally where he was accompanied by a motorcade of over a 100 vehicles. Photo: Collected

In the aftermath of the July Uprising and the ouster of a corrupt regime, a sense of transparency and accountability has awakened among the citizens of Bangladesh. And what else could be a more appropriate topic for transparency than how the nation's political parties fund their activities? 

The latest addition to this discussion is an 'open letter' by National Citizen Party (NCP) Senior Joint Secretary Dr Tasnim Jara, where she urged the party's Chief Organiser (North) Sarjis Alam to provide a 'clear and credible' explanation regarding the financing of a recent political rally in Panchagarh, where he was accompanied by a motorcade of over 100 vehicles. 

BNP Secretary General Mirza Fakhrul Islam Alamgir also weighed in, suggesting that such extravagant displays indicate significant undisclosed financial backing.

In response, Sarjis denied personal expenses, saying family, friends and well-wishers covered most of the costs, with his relatives being able to afford the Tk3 lakh for 50 rented cars. He also claimed that his family was able to afford it even 50 years ago. But people were quick to point out Sarjis's earlier statement that he was surviving on loans. 

Social media posts seeking clarification about finances talk about how the NCP, promising transparency and accountability, has become embroiled in the traditional funding model. Moreover, accusations of them receiving funds from certain oligarchs in the country have raised concerns. 

"The backbone of the 'new political settlement' should be financial transparency," said Maha Mirza, a development researcher and activist. "Some infamous companies are being named, and they control major stakes in the market. When you take funding from such influential oligarchs, you cannot take actions against them or pro-people policies. Then how can they stand up against the big corporations, who are funding their campaigns? It will be an anti-people stance." 

She added that when oligarchs fund political parties without any restrictions, no state institution can function properly. "The government can not operate in favour of public interest." 

Earlier in an interview, NCP's convener Nahid Islam had disclosed that prominent business figures are financing his party, but declined to name them, citing potential risks to their safety. 

Even before its official launch, questions arose regarding the funding sources of the party's student wing, particularly after its coordinators were seen using luxury vehicles and their prominent leader Hasnat Abdullah claiming that his luxury car was a 'gift'. 

The cost of office rent and grand Iftar parties at luxury hotels has only intensified the scrutiny.

By the elites, for the elites?

Historically, political parties have relied on donations from business elites, wealthy individuals and international well-wishers. These funds cover office rents, staff salaries, rallies, and various political activities. 

While parties are legally required to submit annual financial reports to the Election Commission, disclosures often lack transparency. Political financiers rarely contribute without expecting returns, whether in the form of policy influence or business advantages.

Political scientist Gordon Tullock theorised that rent-seeking enables a small elite to capture disproportionate wealth through political means rather than economic productivity. In Bangladesh, this is evident in the monopolisation of public contracts, patron-client networks and the consolidation of economic power in the hands of a few.

The backbone of the 'new political settlement' should be financial transparency. Some infamous companies are being named, and they control major stakes in the market. When you take funding from such influential oligarchs, you cannot take actions against them or pro-people policies. Then how can they stand up against the big corporations, who are funding their campaigns? It will be an anti-people stance.

Maha Mirza, development researcher and rights activist

Some right-wing parties, including Bangladesh Jamaat-e-Islami, have their own public fund 'Baitul Maal', where funds are collected from members and the people to fund their politics. 

Leftist parties, on the other hand, have usually relied on crowdfunding. Still, these parties too have corporate funding, albeit less. 

However, for larger parties like BNP or Awami League, donations from the wealthy have remained the most important source for funds. 

Regulating political donations

Imran Siddiq, a senior advocate and a member of the Constitution Reform Commission, thinks that it is important for Bangladesh to have strict financial disclosure laws that would make it mandatory for political parties to publicly declare donations above a certain limit.

"At the same time, there should be clear rules preventing donations from foreign entities from unduly influencing national politics. Openness and regulation in such form will help enhance public trust in the political system," he added.

He cited the example of the United Kingdom. 

"In the United Kingdom for instance, foreign entities and individuals who are not on the UK electoral register cannot make political donations. Also, donations or loans over £7,500 to the central party must be reported to the Electoral Commission. This ensures transparency while allowing parties to seek funding from various legal sources." 

Dr Asif Shahan, associate professor at the Department of Development Studies, University of Dhaka, does not think that corporate funding or donations are bad on their own, but the process should be regulated and monitored. 

"You need to disclose the amount and the donor's identity. We need to see whether the donors are getting undue benefits during the procurement process or policy-making. People should be able to check whether the donors are being benefited in exchange of money or have any conflict of interest," Dr Shahan said. 

"You can then blame the political parties or hold them accountable," he added. 

Maha Mirza thinks that donations from large corporations should be limited by law. 

"There should be a cap on how much a large company or a private individual can donate to a party. A corporation funding Tk5 lakh is not a big deal. But a corporation donating Tk500 crore to a political party would be an ominous sign, as they can have enough leverage on the party to influence their policy." 

During an NCP press conference on 8 March, Nahid Islam said they are exploring online and offline crowdfunding mechanisms to finance their operations and election campaigns. 

In the US, Barack Obama's 2008 presidential campaign leveraged millions of small-dollar donations to build a formidable election war chest. The Aam Aadmi Party in India also successfully mobilised small donations from the public, reducing its dependence on corporate financing. 

However, for crowdfunding to work effectively in Bangladesh, legal safeguards are necessary to prevent the misuse of anonymous contributions and foreign interference.

Bangladesh's Electoral Reform Commission has acknowledged that transparency must be ensured for crowdfunding. 

In an earlier interview with Prothom Alo, the reform commission's head Badiul Alam Majumdar emphasised that political parties should disclose financial transactions conducted via online platforms, ensuring that these records are available for scrutiny by the Election Commission.

According to the Representation of the People Order, 1972, a party that has fielded more than 200 candidates can spend up to Tk4.5 crore. A candidate can spend up to Tk10 per voter and Tk25 lakh for his whole election campaign. But that is difficult to enforce. 

"Unless you keep the donation process transparent, setting a bar on campaign spending will not be feasible in our country," Dr Asif Shahan opined. 

Jyoti Rahman, director of International Affairs at the Sydney Policy Analysis Center, said, "However, this rule [campaign spending] is almost always honoured in breach. Perhaps the best we can hope for in the near term is the questioning of individual candidates in mainstream and social media about the sources of funds they are spending on campaigns." 

Maha Mirza said every party should be legally obliged to show their fund sources. "Then it will expose which policies are benefiting which companies." 

But do we have the institutional capacity to ensure transparency?  

Jyoti Rahman was not particularly enthusiastic. 

"In the long run, we would want to have a transparent campaign finance mechanism such that voters have complete information about how each party is funded. However, it is not clear whether our institutions have the capacity to implement such a mechanism," he said.