OECD Public Governance Reviews OECD Public Governance Reviews Financing Democracy FUNDING OF POLITICAL PARTIES AND ELecTION CAMPAIGNS OECD Public Governance Reviews AND THE RISK of POLICY CAPTUre Contents Financing Democracy Part I. Funding of political parties and election campaigns, risks of policy capture and policy options Chapter 1. Addressing the risks of policy capture FUNDING of POLITICAL PARTIES AND ELecTION Chapter 2. Promoting a level playing field through balanced funding CAMPAIGNS AND THE RISK of POLICY CAPTUre Chapter 3. Increasing transparency and accountability through disclosure of political party and election-campaign funding Chapter 4. Fostering a culture of integrity among political parties, public officials and donors Chapter 5. Ensuring compliance with political finance regulations Part II. Country case studies Chapter 6. Canada Chapter 7. Chile Chapter 8. Estonia Chapter 9. France Chapter 10. Korea Chapter 11. Mexico Chapter 12. United Kingdom Chapter 13. Brazil Chapter 14. India Financing Democracy Financing Consult this publication on line at http://dx.doi.org/10.1787/9789264249455-en. This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information. ISBN 978-92-64-24944-8 42 2015 26 1 P OECD Public Governance Reviews Financing Democracy FUNDING OF POLITICAL PARTIES AND ELECTION CAMPAIGNS AND THE RISK OF POLICY CAPTURE This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2016), Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture, OECD Public Governance Reviews, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264249455-en ISBN 978-92-64-24944-8 (print) ISBN 978-92-64-24945-5 (PDF) Revised version, February 2016. Details of revisions available at: http://www.oecd.org/about/publishing/Corrigendum-Financing-Democracy.pdf The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Photo credits: Cover © Alexandru Nika/Shutterstock.com Corrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm. © OECD 2016 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. FOREWORD – 3 Foreword Understanding and addressing the role of money and its influence in politics can no longer be a taboo subject. When public policy making is captured by private interests, the “rules of the game” for markets and opportunities may be bent to favour the few and violate the interest of the many. The consequences include the erosion of democratic governance, social cohesion, and equal opportunities for all, as well as the decline of trust in democracy itself. The laborious recovery from the financial crisis, together with the widening income gaps between rich and poor, heighten the risk of policy capture while testing the ability of governments to develop and deliver policies and programmes that benefit all citizens. It is not enough to put in place policies to promote growth. Governments are expected to ensure that the benefits of such growth are shared more evenly across society. The design and implementation of structural reforms to create conditions for economic recovery and sustain inclusive growth require a high-quality policy-making process that citizens can trust. This report takes a comparative approach to examining how the funding of political parties and election campaigns has evolved, and how political finance regulations across OECD member and partner countries have been established. In particular, the report assesses the risks of policy capture through the funding of political parties and electoral campaigns, identifies regulatory loopholes and implementation gaps in existing policies, and suggests a comprehensive approach to integrity, including issues such as lobbying and conflict of interest. One clear-cut lesson from this study is that ensuring the effective implementation of political finance regulations still remains challenging in many countries. The Framework on Financing Democracy presented in this report is intended to shape the global debate on risks and policy options, and provides tangible advice for the funding of political parties and electoral campaigns. Efficient oversight and auditing, meaningful sanctions, greater transparency and public scrutiny play a major role in averting policy capture. In this regard, independent electoral management bodies are becoming increasingly important. Such bodies currently exist in less than one-third of OECD countries, and there is no one-size-fits-all model. But whatever the structure, the institutions responsible for enforcing political finance regulations should have a clear mandate, legal power and the capacity to conduct effective oversight and impose sanctions. FINANCING DEMOCRACY: FUNDING OF POLITICAL PARTIES AND ELECTION CAMPAIGNS AND THE RISK OF POLICY CAPTURE © OECD 2016 4 – FOREWORD This report is part of the policy toolkit being developed by the OECD Public Governance Committee and contributes to the OECD agenda on inclusive growth and trust. In democracies, public policy should never be for sale to the highest bidder. Better policy making is a shared responsibility of governments, businesses and citizens. The OECD brings together a wide range of stakeholders to make financing democracy a subject of evidence, data, and good practices across countries. Angel Gurría OECD Secretary-General ACKNOWLEDGEMENTS – 5 Acknowledgements This report was prepared by the Public Sector Integrity Division of the Directorate for Public Governance and Territorial Development. Under the guidance of Janos Bertok, the co-ordination and drafting of this report was led by Yukihiko Hamada. Invaluable input and guidance were provided by Julio Bacio Terracino. The preliminary draft report was prepared by Emma Cantera and Ulrika Bonnier. Data cleaning and follow-up were carried out by Chad Burbank. Editorial and administrative assistance was provided by Thibaut Gigou, Julie Harris, Anaísa Goncalves and Anastasia Slojneva. Special thanks go to the experts who drafted the country chapters, namely: Stephane Perrault, Deputy Chief Electoral Officer, Regulatory Affairs, Elections Canada; Pamela Figueroa Rubio, Chief of the Studies Division and Francisco Espinoza Rabanales, Advisor of the Studies Division, Ministry General Secretariat of the Presidency of Chile; Vello Pettai, Professor of Comparative Politics, University of Tartu, Member of Estonian Party Funding Supervision Committee; Yves-Marie Doublet, Expert on Political Finance Legislation for the Group of States against Corruption (GRECO), Deputy Director of the National Assembly of France; Heeman Koo, International Cooperation Division, National Election Commission of the Republic of Korea; Raphael Riva-Palacio, Director of International Cooperation and Liaison, National Election Institute of Mexico; Rupert Grist, Regulatory Lawyer and Nick Wright, Senior Project Officer, United Kingdom Electoral Commission; José Antonio Dias Toffoli, President of the Superior Electoral Court of Brazil, Justice of the Federal Supreme Court of Brazil; Shahabuddin Yaqoob Quraishi, Former Chief Election Commissioner of India. Particular appreciation goes to all the speakers and participants who actively engaged in the debates and exchanged views during the OECD Forum on Financing Democracy and Averting Policy Capture, organised in co-operation with the International Institute for Democracy and Electoral Assistance (IDEA) and the Organization of American States on 3-4 December 2014 in Paris, and the OECD Policy Forum on Restoring Trust in Government: Addressing Money and Influence in Public Decision Making on 14-15 November 2013 in Paris. The Public Governance Committee and the Working Party of Senior Public Integrity Officials reviewed and approved the report in the autumn of 2015. FINANCING DEMOCRACY: FUNDING OF POLITICAL PARTIES AND ELECTION CAMPAIGNS AND THE RISK OF POLICY CAPTURE © OECD 2016 TABLE OF CONTENTS – 7 Table of contents Executive summary .............................................................................................................. 15 Regulating political finance to minimise risks .................................................................. 15 Loopholes