TI POLICY POSITION
No. 01/2005 STANDARDS ON POLITICAL FUNDING AND FAVOURS
The need to clean up political finance Corruption in political party and campaign consider the importance of vigilance by civil finance damages democracy because it society and the media and of internal political undermines elections and distorts political party and business controls. The development of competition. But the damage is not confined to the Standards reflects the importance of the the electoral process. The quality of issue to the Transparency International (TI) government is marred when subsequent movement and responds to the body of decisions by elected politicians are taken to knowledge built up by TI’s National Chapters. pay back those who funded their ascent to power, rather than for the benefit of the Transparency: cornerstone of regulation population as a whole. Equally, when a In order for any political finance regulation to be political party resorts to paying for votes rather implemented, there has to be a way of checking than focusing on the quality of its campaign parties’ and candidates’ finances. Transparency message, democracy suffers. of political finance, via disclosure, is therefore the Corruption in political finance erodes trust in the institutions of democracy, when scandal after scandal reveals politicians sharing the spoils of power with their financial KEY RECOMMENDATIONS backers. Transparency International's Global Corruption Barometer 2004 found that in 36 • Detailed disclosure by political parties and out of 62 countries polled, political parties candidates of assets, income and were considered to be the most corrupt expenditure institution, followed by parliaments. Faced with evidence that voters do care • Limits on the duration and cost of election about the ways in which electoral politics is campaigns, and on large private donations. financed, governments around the world have taken steps to regulate political party • Mechanisms to safeguard ethical standards and campaign financing. Many have in public life, including conflict of interest introduced disclosure laws, whereby parties laws. must publish details about who gave them money, how much, and what they used it for. • Adequately resourced, independent Others have banned certain types of oversight bodies. donations that are considered more prone to corruption, such as corporate donations. starting point of any regulatory framework. Another route taken by countries is to lessen Transparency also empowers voters to make the need for money by providing state informed choices on election day. subsidies, shortening campaigns, providing The importance of disclosure to the problem subsidised access to the media or curbing the of corruption in politics is reflected in international amounts parties may legally spend. law. The United Nations Convention against International IDEA has complied a detailed list Corruption calls on states to “enhance of regulations in 111 countries. transparency in the funding of candidates for While there is no model for how to regulate elected public office and, where applicable, the corruption in politics, some attempts have funding of political parties. The African Union been more successful than others. Convention goes a step further and is the only Transparency International's Standards on convention to have mandatory provisions on the Political Party Funding and Favours (in boxes, subject of political finance, requiring members to below) reflect best practice. The Standards go “incorporate the principle of transparency into further than external regulation, however, and funding of political parties”. The Council of
Europe has also carried important work in this presentation of party balance sheets including field, and in 2003 issued guidelines for its invoices for money spent. members on political finance, which call for disclosure. Ensuring that business plays a positive role Despite this, surprisingly few countries Private interests must be prevented from have good disclosure laws. A study by USAID subverting the democratic process through the finds that of 118 countries studied, 28 have no purchase of control and favours. From the disclosure laws and only 15 require parties perspective of business, clear rules can help and candidates to disclose income and/or mitigate exposure to demands for bribes and expenditure accounts and disclose the identity subsequent reputational damage if quid pro quo of donors to political parties. donations or bribes are exposed; indeed the TI Political parties, candidates and Business Principles for Countering Bribery politicians should disclose assets, identify political contributions as one of the high- income and expenditure to an risk areas where bribery takes place. Donations independent agency. Such information should not be used to gain advantage in business should be presented in a timely transactions, whether made to parties, fashion, on an annual basis, but candidates, elected officials or third-party particularly before and after elections. organisations such as research institutes. It is It should list donors and the amount of worth mentioning that a significant failing of the their donations, including in kind OECD Anti-Bribery Convention, which proscribes contributions and loans, and should bribery of foreign public officials, is that it does also list destinations of expenditure. not prohibit bribery of foreign party officials. The information should be made Banning corporate money in political finance publicly available in a timely manner is one answer, but could be counterproductive if so that the public can take account of the result is to inhibit diversity of parties within a democracy, or drive donations under the table. it prior to elections. Where they are not banned, transparency and limits on donations are important. Levelling the playing field Companies should list all donations and publish The motivation behind efforts to regulate their policy on political donations (defined campaign finance has not only been to curb broadly, to include donations to parties, corruption, but also to promote fair competition candidates and third parties). They should not between political parties and to nurture make political donations in countries where they emerging parties. This is usually done through have no legal presence and, in line with a the provision of public funding, whether in movement toward enhanced shareholder direct subsidies, or via indirect subsidies such activism around the globe, listed companies as broadcasting time on public television should give very serious consideration to the stations, franking of campaign materials, use option of requiring shareholder approval for such of telephones or public office space and tax donations. relief on political donations. Donations to political parties, candidates Careful consideration should be given to and elected officials should not be a means the benefits of state funding of parties and to gain personal or policy favours or buy candidates and to the encouragement of access to politicians or civil servants. citizens' participation through small donations and membership fees. Parties, too, need rules for transparency Consideration should also be given to The aim of campaign finance regulations is not to limiting corporate and foreign support, as hamper the performance of political parties. well as large individual donations. Political parties matter. Representative To control the demand for political democracies cannot function without political financing, mechanisms such as spending parties and, in turn, political parties and candidates limits and subsidised access to the media to elected office need money to communicate their should be considered. platforms and policies to voters. This need for money has become more acute in recent decades The aim in all cases is to reduce the as election campaigns become more sophisticated comparative advantage of wealthy parties and and party membership wanes. Televised spots and stem the “arms race” for campaign funds. The costly opinion polls have to some degree replaced provision of public funding has additional door-to-door canvassing by party volunteers as the benefits in terms of transparency since method of choice for campaigning. The challenge disbursement is generally conditional on is therefore to limit the opportunities for corruption in political finance, while promoting political
equality and recognising the demands upon continue to suffer scandals. One reason for this is political parties and candidates. that regulations are not adequately enforced, Any effort to curb corruption in campaign because oversight bodies are inadequately finance needs to directly engage with political equipped, laws are too complex and parties. If parties are not committed to clean cumbersome to be practicable, or there is a lack politics, regulation is unlikely to succeed. of political will to allow enforcement bodies to Political parties need to demonstrate willingness carry out their functions free from political to abide by external regulations. Not only are interference. (For more details see Policy Position clear and simple regulations more successfully # 02/2005, 'Political Finance Regulations'.) enforced than laws that are unclear or difficult to Oversight bodies must be adequately monitor, but they are easier for political parties resourced, and must be supported by an effective and candidates to comply with. Party judicial system. Oversight bodies must be able to representatives in the legislature need to investigate possible cases of corruption – if support good laws governing campaign finance checks are merely procedural rather than and ensure that such laws are effectively probing, they are unlikely to succeed in detecting enforced, by backing the creation of strong or deterring corrupt practices. Sanctions should oversight bodies. TI maintains that parties also also be suitable to the offence. Candidates need to introduce internal reforms, such as fair should not be disqualified for minor failures to candidate-selection procedures and comply with reporting requirements, for instance. transparency funding requirements for internal Certain infractions must be punished harshly, party elections. however, such as using the proceeds of organised crime to fund political parties. Parties and candidates must themselves practise transparency and demonstrate Public oversight bodies must effectively commitment to ethical standards in supervise the observance of regulatory public life. laws and measures. To this end, they must be endowed with the necessary resources,
skills, independence and powers of Establishing a robust legal framework investigation. Together with independent At the same time, campaign finance courts, they must ensure that offenders be regulations need to be analysed with held accountable and that they be duly reference to the broader legal framework and sanctioned. The funding of political parties political context. Party finance laws need to with illegal sources should be criminalized. interface with laws such as political party laws or trade union laws (in the case where bans on donations from trade unions are introduced) that have a bearing on the funding Getting the role of the media right of politics and behaviour of political actors. The media has a dual role to play in the fight As a means of fighting political corruption, against corruption in electoral processes. First, it party funding laws are one piece of the is a forum for the business of politics. A large, if puzzle. Conflict of interest laws (including laws not the largest share of campaign spending goes that regulate the conditions under which an towards media campaigns and, in addition, media elected official may hold a position in the outlets sometimes provide in-kind donations to private sector or in a state-owned enterprise), parties by giving discounted or free airtime to periodic declarations of assets held by their favoured contender. Controls or bans on parliamentarians and party officials and their campaign broadcasting, and the provision of free families, time bars against elected politicians airtime on public stations are important remedies. moving into corporate positions, and clear Hidden advertising – campaign messages immunity rules are all necessary to limit the masquerading as news – is another, more influence of business on government. negative aspect of this role, which should be permanently regulated by the broadcasting Governments must implement adequate authority. conflict of interest laws that regulate the The second role the media plays during circumstances under which an elected elections is that of watchdog. Journalists are official may hold a position in the private often at the frontline of those monitoring ties sector or a state-owned company. between moneyed interests and political power – and here they depend on properly functioning disclosure laws in order to do their job. Media Oversight that works reports are also the trigger for enforcement A strong regulatory framework is important, agencies to investigate suspected corruption in but insufficient to counter political corruption. the financing of political parties, for instance by Countries with sophisticated regulations cross referencing news stories about campaign
rallies with invoices presented by the party or because of an inherent contradiction governing candidate. the regulation of this sphere. Those responsible for designing the regulations are the same people Candidates and parties should have fair who will be affected by them: elected politicians. access to the media. Standards for Civil society organisations can contribute by achieving balanced media coverage and participating at hearings of legislative media integrity must be established, commissions entrusted with revising campaign applied and maintained. The media finance legislation or through partnerships with should play an independent and critical monitoring bodies charged with supervising role, both in election campaigns and in accounts, for example. In the end of course, it is the broader political process. critical that information about reform of political Instruments such as conflict of interest finance – including obstacles to reform – enter legislation should be used to prevent the public domain, to heighten awareness of the political control of public and private standard to be expected, and to enable a better media from creating a bias in the informed electorate, who can register their coverage of politics. concern at the voting booth.
What the public can do Civil society should actively participate in Citizens must be active and vigilant if they are promoting adequate legislation in the field to help stop corruption in politics. Civil society of political finance and in the monitoring of groups have already shown that this is political finance and its impact on political possible, by monitoring campaign spending representation. The legal framework, both and scrutinising party accounts. The evidence regulatory and institutional, must enable produced by such efforts – including proof that civil society organisations, in conjunction campaign spending is higher than that with independent media, to undertake declared by parties and candidates, and that such activities. This framework should state resources such as public television and also provide access to information, the the time of civil servants are misused to favour opportunity for civil society input on incumbents – has in some countries been the pending legislation, and legal remedies, starting point for debate over campaign among other measures. finance laws. Civil society voices are especially important in the debate over campaign finance
References: • African Union Convention on Preventing and Combating Corruption, Article 10. The convention was adopted in Maputo on 11 July 2003, but at this writing did not have the 15 ratifications needed for it to enter into force. • Council of Europe Recommendation 1516 (2001)[1] on the Financing of political parties, assembly.coe.int/Documents/AdoptedText/ta01/EREC1516.htm • Marcin Walecki, 'Ukraine: the authoritarian abuse of disclosure', in TI's Global Corruption Report 2004 (London: Pluto Press, 2004). • The Business Principles for Countering Bribery, www.transparency.rg/global_priorities/private_sector/business_principles • Transparency International, Global Corruption Barometer 2004, 9 December 2004, www.transparency.org/surveys/ • United Nations Convention against Corruption, Article 7. The convention was adopted on 9 December 2003 but at this writing did not have the 30 ratifications needed for it to enter into force. www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdf • USAID, Money in Politics Handbook: A Guide to Increasing Transparency in Emerging Democracies (USAID: Washington D.C., 2003). • Work by the National Democratic Institute for International Affairs with East Asian political parties shows that internal reform efforts can pay dividends at the ballot box and can raise the bar of probity for other parties. • International IDEA, 'Funding of Parties and Election Campaigns Handbook' (2003) and Political Finance Database, www.idea.int/parties/finance/db
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