Sergiu Lipcean Cornel Ciurea Leonid Litra Cornelia Cozonac FINANCING POLITICAL PARTIES: BETWEEN TRANSPARENCY Nr. 8, 2010 Public AND OBSCURITY Policies Institute for Development and Social Initiative (IDIS) „Viitorul” Public Policies NR. 8, 2010 FINANCING POLITICAL PARTIES: BETWEEN TRANSPARENCY AND OBSCURITY Sergiu Lipcean Cornel Ciurea Leonid Litra Cornelia Cozonac FINANCING POLITICAL PARTIES: BETWEEN TRANSPARENCY 3 AND OBSCURITY The first two chapters of this study were conducted as part of the project “Promoting an Informed Vote in 2010 General Elections” implemented with the financial support of the East-European Foundation from the resources provided by the Swedish International Development Agency (SIDA), the Ministry of External Affairs of Denmark / DANIDA, and the National Fund for Democracy (NFD). The opinions expressed in this paper belong to the authors and do not necessarily reflect the point of view of the funders. ................................................................................................................................................. The fifth chapter of this study was developed by the Journalistic Investigation Center, in the framework of the campaign “Know your candidate”, supported by Soros Moldova Foundation. ................................................................................................................................................. Neither the management of IDIS „Viitorul”, nor the Administrative Board of the Institute for Development and Social Initiatives „Viitorul” are responsible for the estimations and opinions presented in this publication. For more information on this publication or about the subscription to the publications published by IDIS, please contact directly the Press and Public Communication Service of IDIS „Viitorul”. Contact person: Laura Bohantov - [email protected]. Contact address: Chisinau, Iacob Hincu 10/1, 2004, Republic of Moldova Phone: (373-22) 21 09 32 Fax: (373-22) 24 57 14 www.viitorul.org Any extracts or opinions of the author of this Study used elsewhere should contain a reference to the series of Public Policies and IDIS „Viitorul”. FINANCING POLITICAL PARTIES: 4 BETWEEN TRANSPARENCY AND OBSCURITY SUMMARY CHAPTER I. DEFICITARY ASPECTS OF THE MECHANISM OF FINANCING POLITICAL PARTIES IN REPUBLIC OF MOLDOVA SERGIU LIPCEAN ................................................................................. 6 CHAPTER II. FINANCING PARLIAMENTARY ELECTION CAMPAIGNS IN THE LIGHT OF FINANCIAL REPORTS SERGIU LIPCEAN .......................................................................................... 10 2.1 REVENUES OF ELECTORAL CONTENDERS ................................................................. 10 2.2 THE EXPENDITURES OF ELECTORAL CONTENDERS ................................................... 23 CHAPTER III. UNOFFICIAL CAMPAIGN COSTS OF IMPORTANT POLITICAL PARTIES IN THE ELECTIONS OF 28 NOVEMBER 2010 CORNEL CIUREA ................................................................. 30 CHAPTER IV. POLITICAL CONSULTANTS AND THEIR REMUNERATION IN THE REPUBLIC OF MOLDOVA LEONID LITRA ............................................................................................................. 39 CHAPTER V. TRANSPARENCY OF DONATIONS OF PARTIES AND CANDIDATES’ INCOMES TAKING PART IN PARLIAMENTARY ELECTIONS IN 2010 CORNELIA COZONAC ................................ 43 CONCLUSIONS AND RECOMMENDATIONS ............................................................................... 49 FINANCING POLITICAL PARTIES: BETWEEN TRANSPARENCY 5 AND OBSCURITY CHAPTER I. DEFICITARY ASPECTS OF THE MECHANISM OF FINANCING POLITICAL PARTIES IN REPUBLIC OF MOLDOVA Sergiu Lipcean the current regulations on financing parties and campaigns (April 5, 2009, July 29, 2009, and November 28, 2010). During this period, The statement that an appropriate things did not evolve in a positive way, and the mechanism for political financing is essential issues related to financing parties and campaigns for the functioning of democracy in terms of have multiplied and re-surfaced. The election ensuring equal chances of effective participa- campaign for the Parliamentary election of tion of all citizens in the political process has November 28, 2010 is the most representative become a truism. Unfortunately, it is not yet example to this end. the case of Republic of Moldova due to the defi- The regulations on financing contained cient mechanism of political financing. The re- in the election legislation and the Law on politi- luctance of politicians to take notice of this top- cal parties either do not cover all the areas asso- ic is confirmed by the fact that it was kept away ciated with financing or are sufficiently permis- from the institutional agenda and public debate sive and ambiguous, and provide a lot of room for a long time. But even when it was included for maneuvering to political parties. The lack in the agenda and some solutions were formu- of clarity creates a lot of opportunities for in- lated, they turned out to be partial and defi- terpretation as well as eluding these provisions, cient. Therefore, we are facing a situation when which diminishes the capacity of political ac- most latent or obvious issues related to financ- tors to manage financial resources without any ing parties and election campaigns derive from impediments. the deficiency of the normative framework. In The lack of clear distinction between a previous study analyzing this topic, we have ordinary or routine financing of parties as op- considered in more detail the most problem- posed to financing of election campaigns pro- atic aspects related to financing parties1. That vides even more maneuvering opportunities to is why, in this study, we shall briefly point out parties. the main deficiencies of the system of political However, the most serious issue is the financing and shall conduct an empirical evalu- ceiling set for donations from individuals and ation of the way money is collected and spent legal entities to party budgets. Here, regulations by the electoral contenders during campaigns. are very generous with political parties setting As much as three campaigns for the very high ceilings for donations granted by po- election of Parliament were organized under tential donors. 1 Sergiu Lipcean, Assessment of the financing of political parties Thus, the equivalent of a donation from and election campaigns in Republic of Moldova.//Public Policies no.5, 2009, IDIS „Viitorul”. an individual to a party represents 500 monthly FINANCING POLITICAL PARTIES: 6 BETWEEN TRANSPARENCY AND OBSCURITY average salaries in a budget year. This amount The issue of undeclared revenues and also includes the membership fee, if the indi- expenditures is a fashionable topic, being the vidual is a member of the party. The equivalent focus of public opinion. Undeclared revenues of a donation of a legal entity should not ex- and expenditures should be approached as a ceed 1000 monthly average salaries per national whole since they represent two sides of the same economy2. During the last election campaign, medal. If some revenues are not declared, it au- the monetary equivalent of regulations on the tomatically means that there are some hidden value of a donation was approximately 1.5 mil- donors, whose identity is to be kept secret either lion lei for individuals and 3 million lei for legal due to concerns related to some intimidations entities. It is very difficult to believe that this and prosecution, or due to concerns related to kind of private financing regime could decrease staining the reputation of the party if the donor risks associated with political corruption, es- themselves has a questionable reputation, or the pecially those referring to selling seats in the reluctance to show the clientele relationship be- party lists, which was widely discussed but not tween the party and the sponsor. proven so far. Also, it is unlikely that these cir- Another reason for not declaring reve- cumstances could ensure equal conditions for nues is a fiscal one and was one of mass-media’s all citizens to participate in political life. favorable topic during the election campaign. Even if all the other necessary condi- The topic of fictive donors was approached by tions such as transparency and control over fi- media institutions in a persistent way, clearing nancing were ensured, such a ceiling is way to up several cases of problematic donations from high taking into consideration the standard of alleged fictive donors to the campaign budgets living of Moldovan citizens. It also cannot be of political parties3, which represent only the justified by the current lack of public financing. visible part of the iceberg, i.e. undeclared rev- The claim that private financing of such propor- enues. tions is justified in the absence of public financ- Not declaring revenues for the cam- ing can be accepted only partially, but it does paign implicitly means that these revenues are not justify such a high ceiling for donations. not fiscally registered, i.e. are not taxed. Thus, It is only natural that party leaders are the source of origin of these revenues is the fun- concerned with finding funding that would damental question that needs to be answered, maintain political parties operational as funda- something that political parties are not willing mental institutions of democracy, but the in- to do. Since political parties are not willing to creased dependency on some groups with spe- shed light on how they acquired