Republic of Serbia Anti-Corruption Agency The
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REPUBLIC OF SERBIA ANTI-CORRUPTION AGENCY THE FIRST REPORT ON OVERSIGHT OF POLITICAL ENTITES 2012 ELECTION CAMPAIGN COSTS Belgrade, May 2013 Translation of this document has been provided through a USAID funded Judicial Reform and Government Accountability Project. 2 TABLE OF CONTENTS INTRODUCTION 5 1. DATA USED FOR THE ANALYSIS AND OVERSIGHT OF FINANCIAL REPORTS 8 1.1. Collection of data during the election monitoring campaign 8 1.1.1. Concept and structure of monitoring 8 1.1.2. Collection and exchange of data 10 1.1.3. Purpose and importance of monitoring 10 1.2. Collection of data from state authorities, banks, legal entities and natural persons 10 1.2.1. Advertising via media outlets 11 1.2.2. Advertising by election material 12 1.2.3. Public event organization 12 2. SUBJECT TO OVERSIGHT 14 3. FINANCIAL INDICATORS 18 3.1. Income 19 3.1.1. Contributions from natural persons 19 3.1.2. Contributions from legal entities 24 3.2. Expenditures 25 3.2.1. Public advertising 29 3.2.2. Election Material 31 3.2.3. Other expenses 33 3.2.4. Public events 34 4. COMPARISON OF PRESENTED INCOME AND EXPENDITURES 36 4.1. Comparative Review of Income and Expenditures 36 5. ELECTORAL BOND 37 6. RECOMMENDATIONS IN THE COURSE OF OVERSIGHT 38 7. FACTS INDICATING VIOLATIONS OF THE LAW ON FINANCING OF POLITICAL ACTIVITIES AND PHENOMENA OBSERVED DURING INCOME AND EXPENDITURES OVERSIGHT 40 7.1. Facts indicating violations of the Law observed in income and expenditures oversight 40 7.1.1. Failure to submit the report on election campaign costs 40 7.1.2. Formal irregularities 40 7.1.3. Failure to present the election campaign income and costs 41 7.1.4. Unspent funds from the election campaign 46 7.1.5. Settling the expenses of an election campaign using an account opened for raising funds and paying the expenses of another election campaign 46 7.1.6. Settling election campaign expenses using an account that was not opened for election campaign financing 47 7.1.7. Contributions from legal persons that failed to satisfy their dues on the basis of public income 48 7.1.8. Failure to submit data on the request of the Agency 49 7.2. Phenomena indicating violations of the Law during income and expenditure oversight 50 7.2.1. Uncovered Liabilities 50 7.2.2. Indebtedness 50 7.2.3. Donors and Donor Income 50 7.2.4. Election Campaign Donors Registered After Call for Elections 52 7.2.5. Local Government Entities As Donors Of Contributions 52 8. NEXT STEPS 53 ANNEX 1 OVERVIEW OF LISTS OF CANDIDATES BY LOCALES FOR WHICH THE REPORTS WERE NOT SUBMITTED BY 24 APRIL 2013 ANNEX 2 OVERVIEW OF THE HIGHEST AND LOWEST DONATIONS MADE BY NATURAL PERSONS AND LEGAL ENTITIES LISTED BY ELECTORAL LEVELS ANNEX 3 OVERVIEW OF NON-FINANCIAL CONTRIBUTIONS MADE BY NATURAL AND LEGAL PERSONS, LISTED BY ELECTORAL LEVEL, WITH AN INDICATION OF NON- FINANCIAL CONTRIBUTION TYPE ANNEX 4 REVIEW OF POLITICAL ENTITIES DUES NOT SATISFIED BY THE DAY OF FILING OF THE AGENCY’S REPORT ANNEX 5 LIST OF LEGAL ENTITIES WITH DEBTS NOT SETTLED ON THE DAY OF REPORT SUBMISSION 4 INTRODUCTION On May 6, 2012, in the Republic of Serbia, elections were held for the President of the Republic, Members of Parliament (MPs) of the National Assembly of the Republic of Serbia, deputies of the Autonomous Province of Vojvodina (APV) Assembly, and councilors of assemblies of the local self- government units1. All participants in the election campaign in the period from the day of calling the elections till the day of proclamation of the final results were generically named „political entities‟, which we may, in terms of the Law on Financing of Political Activates2, differentiate into political parties, coalitions, and groups of citizens. Every political entity that participated in the election campaign, whether it nominated a candidate or filed an electoral list, had the following obligations in terms of the Law: Obligation to open a special-purpose account for funds raised to finance every election campaign, and to pay all election campaign expenses from that account (Article 24); Obligation to appoint a person responsible for lawful financing of political campaigns and submission of a report, as well as to inform the Agency about the appointment of said person within three days of his/her appointment (Article 31); Obligation to submit to the Agency a report on election campaign costs containing data on the origin, amount, and structure of raised and spent funds from both public and private sources; to submit the report in a form, whose content is established by the Rulebook on Contribution and Asset Records, Annual Financial Report, and the Report on Election Campaign Expenses of a Political Entity3 (“Official Gazette of the RS”, nos. 72/11 and 25/12), in a way stipulated by the Law and Rulebook and in compliance with the time limit of 30 days from the day of publication of final election results for electronic submission plus a written report 8 days after the electronic submission; 1 In the city of Belgrade Assembly and assemblies of other 22 towns of the republic of Serbia (Valjevo, Vranje, Zajeĉar, Zrenjanin, Jagodina, Kragujevac, Kraljevo, Kruševac, Leskovac, Loznica, Niš, Novi Paraz, Novi Sad, Panĉevo, Poţarevac, Smederevo, Sombor, Sremska Mitrovica, Subotica, Uţice, Ĉaĉak and Šabac), Municipal Assemblies (except for AranĊelovac, Bor, Kosjerić, Kovin, Negotin, Odţak and Vrbas) and City Municipla Assemblies (except for Voţdovac and Zemun). 2 “Official Gayette of the Republic of Serbia”, No. 43/11. 3 “Official Gayette of the Republic of Serbia”, Nos. 72/11 and 25/12. 5 Obligation to, upon the Agency‟s request, submit all data, during the campaign and afterwards, needed by the Agency so as to conduct all tasks related to oversight of election campaign financing (Article 32). The Anti-Corruption Agency, whose competence comprises (Article 5 of the Law on the ACA) the tasks stipulated by the Law on Financing of Political Activities, which regulates source and mode of financing of political activities of political parties, coalitions and group of citizen, has the following rights (Articles 27-29 and 32-34): Right to have direct and free access to bookkeeping records and documentation and financial reports of both political entity and endowment and foundation founded by political party; Right to send a request to a political entity to submit all requested documents and information within a time limit not exceeding 15 days (during the election campaign, not exceeding 3 days); Right to send a request to any authority of the Republic of Serbia, Autonomous Province, and local self-government units, banks, as well as to natural persons and legal entities financing political entities, or which on their behalf and for their account provided certain service, asking them to send information, in which process all prohibitions and restrictions regarding submission of information stipulated by other regulations are not implemented; Possibility to engage relevant experts and institutions; Possibility to, after financial report oversight, send a request to the State Audit Institution to audit the reports in accordance with the law regulating competencies of the SAI; Right to organize independent monitoring of election campaigns within the election campaign expenses oversight tasks, for which funds from the budget of the Republic of Serbia are allocated to the Agency; Right to adopt by-laws regulating the content and manner of keeping of records on assets and contributions, as well as those regulating the content of the annual financial statement and report on election campaign expenses. Furthermore, the Agency was granted certain authorities in case of violation of the Law (Articles 35- 40 and Articles 42-43): To impose a warning measure on a political entity if in the oversight procedure it establishes some irregularities that might be corrected; To file a motion to institute a criminal or misdemeanor proceedings; 6 To, after the start of a criminal or misdemeanor proceedings, send a request to the ministry competent for financial affairs, or the relevant province authority, or local self-government authority, to issue a decision on temporary suspension of transfer of funds from public sources to a political entity until a final decision in the criminal or misdemeanor proceedings is rendered; To, in case of conviction for a criminal offense or if a political party or a responsible person in a political entity is convicted for a misdemeanor, issue a decision on the loss of rights to public funds for financing of regular work of a political entity for the next calendar year. The decision also established the amount of funds to be suspended. 7 1. DATA USED FOR THE ANALYSIS AND OVERSIGHT OF FINANCIAL REPORTS 1.1. Collection of data during the election monitoring campaign 1.1.1. Concept and structure of monitoring The new Law on Financing of Political Activities, which entered into force in June 2011, introduced an important novelty when it comes to an oversight of the money flows through the transactions of political entities. This complex and responsible task was entrusted to the Anti-Corruption Agency. The first step undertaken by the Agency to ensure financial transparency in the campaign was through the organization of a monitoring process in 2012 so as to monitor the activities of political entities during their campaign for the president of the Republic, MPs, deputies, and councilors. This process is very important in the period of election cycles, when the dynamic of financial transactions of political entities is at the highest level. In November 2011, the Agency initiated all preparations for the monitoring processes. In the same month, the Agency adopted a Rulebook on Election Campaign Monitors, regulating organization, competences, rights, obligations, terms, and manner of selection of monitors for the election campaign cost oversight procedure.