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Political Finance Oversight Handbook

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Political Finance Oversight Handbook Training in Detection and Enforcement (TIDE) Political Finance Oversight Handbook Edited by Magnus Ohman 2013 Training in Detection and Enforcement (TIDE) Political Finance Oversight Handbook 2013 Edited by Magnus Ohman International Foundation for Electoral Systems Training In Detection and Enforcement (TIDE) Political Finance Oversight Handbook © 2013 by IFES. All rights reserved. Permission Statement: No part of this work may be reproduced in any form or by any means, electronic or mechanical, includ- ing photocopying, recording or by any information storage and retrieval system without the written permission of IFES. Requests for permission should include the following information: A description of the material for which permission to copy is desired. The purpose for which the copied material will be used and the manner in which it will be used. Your name, title, company or organization name, telephone number, fax number, e-mail address and mailing ad- dress. Please send all requests for permission to: International Foundation for Electoral Systems 1850 K Street, NW, Fifth Floor Washington, D.C. 20006 E-mail: [email protected] Fax: 202.350.6701 Cover photo by Robert Clare This report is made possible by the support of the American people through the U.S. Agency for International Development (USAID). The contents are the sole responsibility of IFES and do not necessarily reflect the views of USAID or the U.S. Govern- ment. Table of Contents ACKNOWLEDGEMENTS ......................................................................................................................2 INTRODUCTION .................................................................................................................................3 THE CONTEXT OF DETECTION AND ENFORCEMENT IN POLITICAL FINANCE ...........................................5 PART ONE: THE CONTEXT OF DETECTION AND ENFORCEMENT IN POLITICAL FINANCE CHAPTER 1: THE IMPORTANCE OF MONEY IN POLITICS .......................................................................6 Why is Political Finance Important? ............................................................................................................. 6 Definition of Political Finance ....................................................................................................................... 7 Global Key Understandings in Political Finance ............................................................................................ 9 CHAPTER 2: REGULATING POLITICAL FINANCE .................................................................................. 10 A Brief History of Political Finance Regulations .......................................................................................... 10 Types of Regulations ................................................................................................................................... 11 Prevalence of Political Finance Laws .......................................................................................................... 19 CHAPTER 3: BASIC ISSUES OF ENFORCEMENT .................................................................................... 21 Definition of Enforcement .......................................................................................................................... 21 Requirements for Effective Enforcement ................................................................................................... 23 Stages of Enforcement ................................................................................................................................ 23 CHAPTER 4: CAUSES OF NON-ENFORCEMENT ................................................................................... 27 Blatant Disregard Versus Subtle Avoidance ................................................................................................ 30 Explanations for Non-enforcement ............................................................................................................ 31 Dangers of Biased Enforcement ................................................................................................................. 36 PART TWO: PRACTICAL ASPECTS OF DETECTION AND ENFORCEMENT IN POLITICAL FINANCE CHAPTER 5: STRENGTHENING THE INDEPENDENCE OF POLITICAL FINANCE ENFORCING BODIES ........ 40 Finding the Right Structure for the Regulatory Body.................................................................................. 40 Clarifying Responsibilities of Enforcement Bodies ..................................................................................... 43 Secure Tenure of Commissioners at Political Finance Enforcement Bodies .............................................. 45 Ensuring the Financial Independence of Regulatory Bodies ...................................................................... 48 Acting Independently .................................................................................................................................. 49 Consultations with Different Stakeholders ................................................................................................. 50 Organizing Units for Detection and Enforcement ...................................................................................... 50 CHAPTER 6: ENHANCING DISCLOSURE .............................................................................................. 53 Promoting Reliable Bookkeeping and Internal Control .............................................................................. 53 Disclosure as a Necessary Condition for Effective Enforcement ................................................................ 56 Aspects of Disclosure Requirements .......................................................................................................... 57 Practical Considerations about Reporting Forms ....................................................................................... 64 CHAPTER 7: ASSESSING COMPLIANCE, AUDITING AND INVESTIGATING POTENTIAL BREACHES........... 73 Prioritization System ................................................................................................................................... 73 Audit ............................................................................................................................................................ 75 Performing Random Checks ........................................................................................................................ 80 Receiving Complaints .................................................................................................................................. 80 Investigation of Wrongdoings ..................................................................................................................... 82 CHAPTER 8: IMPOSING SANCTIONS .................................................................................................. 87 Violations and Sanctions ............................................................................................................................. 87 International Norms in the Sanctioning of Political Finance Violations ..................................................... 90 Principles of Political Finance Sanctions ..................................................................................................... 93 Types of Sanctions ...................................................................................................................................... 97 Involvement of the Judicial System .......................................................................................................... 105 CHAPTER 9: USING DATABASES TO ENHANCE TRANSPARENCY ........................................................ 112 Introduction .............................................................................................................................................. 112 Main Alternatives in Money and Politics Databases................................................................................. 112 Examples of Money and Politics Databases by Political Finance Enforcers ............................................. 113 General Recommendations ...................................................................................................................... 116 CHAPTER 10: THE ROLE OF CIVIL SOCIETY IN ENFORCEMENT ........................................................... 119 Compliance Checklist or Implementation Diary ....................................................................................... 121 Analyzing, Interpreting and Simplifying Information ................................................................................ 122 Political Finance Monitoring by NGOs ...................................................................................................... 124 Litigation ................................................................................................................................................... 125 The Role of Academic Experts and Formal Education Initiatives .............................................................. 127 The Role of Mass Media ............................................................................................................................ 128 PART THREE: DETECTION AND ENFORCEMENT OF RULES AGAINST ABUSE OF STATE RESOURCES CHAPTER 11: ABOUT THE ABUSE OF STATE RESOURCES .................................................................. 131 Introduction
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