Political financing: transparency and supervision

1. Political financing: transparency and supervision Some considerations in the light of GRECO reports 10th conference of Electoral Management Bodies (Venice Commission), Chisinau, 26-27/07/2013

2. PART 1 – General information 1994: Conference of Ministers of Justice of the CoE in Valetta, Malta: anti-corruption policies become a new topic for the intergovernmental cooperation (+ prioriy following 2nd Summit of Heads of State and Government 1997): → Preparation of programme of action against corruption (1996): multidisciplinary approach including prevention and repressive aspects; identification of issues to be addressed → Results: 6 anti-corruption instruments adopted between 1997 and 2003, including Recommendation (2003)4 of the Committee of Ministers to Member States on common rules gaianst corruption in the financing of political parties and election campaigns → Creation of GRECO in 1999 to monitor the implementation of all anti-corruption instruments (mutual evaluations, peer pressure): to date, 49 member States (+ negotiations EU), thematic evaluation rounds. Round 3 (2007-2011): transparency of political financing ( (2012…): Round 4; prevention of corruption of parliamentarians, judges and prosecutors); implementation of improvements examined through specific compliance procedure – about 300 reports in total to date

3. General information (cont.) Recommendation (2003)4: an autonomous set of standards on political financing (not corruption-specific) : issue of corruption appears only in relation to rules on donations to parties and candidates by legal entities (art.5): → Donations from legal entities must be registered in the books and accounts of such entities; → shareholders and other members must be informed; → donations from entities providing goods/services for any admnistration should be limited, prohibited or strictly regulated; → donations from state-controled or other public entities should be prohibited Articles 1 to 9 deal with general principles and sources of funding (incl. applicability of rules both to party funding and election campaign funding – art. 8) GRECO’s 4th round evaluations focused on TRANSPARENCY (article 10 to 13), SUPERVISION (articles 14, 15) and SANCTIONS which should be effective, proportionate and dissuasive in case of infringement to national legislation (article 16)

4. PART II - Transparency of party and campaign funding Article 10 Records of expenditure  States should require particular records to be kept of all expenditure, direct and indirect, on electoral campaigns in respect of each political party, each list of candidates and each candidate. Article 11 Accounts  States should require political parties and the entities connected with political parties mentioned in Article 6 to keep proper books and accounts. The accounts of political parties should be consolidated to include, as appropriate, the accounts of the entities mentioned in Article 6 [entities related dir/indir to or controlled by parties) Article 12 Records of donations a. States should require the accounts of a political party to specify all donations received by the party, including the nature and value of each donation. b. In case of donations over a certain value, donors should be identified in the records. Article 13 Obligation to present and make public accounts a. States should require political parties to present the accounts referred to in Article 11 regularly, and at least annually, to the independent authority referred to in Article 14. b. States should require political parties regularly, and at least annually, to make public the accounts referred to in Article 11 oras a minimum a summary of those accounts, including the information required in Article 10, as appropriate, and in Article 12.

5. PART II - Transparency of party and campaign funding – some remarks - variety of funding systems (e.g public/private, donations from natural vs legal persons) Examples of frequent insufficiencies identified in GRECO reports: - lack of adequate accounting/bookkeeping format - lack of consolidated accounts (local party structures, related entities such as NGOs and businesses, no rules on third parties) - lack of periodic publication of party accounts (and/or major donors), or not done timely in the context of elections - inconsistent rules on forms of supports: direct financial support, in-kind support, sponsoring, support at preferential prices, loans not addressed adequately etc. - anonymous donations not adequately dealt with - problems of distinction between membership fees and member contributions - misuse of public resources (infrastructures, equipment, administrative/ministerial staff, public finances, media...): an issue of integrity but also fairness etc. = often inexplicable over-spending + controversies on legitimacy of income

6. PART III – Supervision and sanctions of party and election campaign financing Article 14 Independent monitoring a. States should provide for independent monitoring in respect of the funding of political parties and electoral campaigns. b. The independent monitoring should include supervision over the accounts of political parties and the expenses involved in election campaigns as well as their presentation and publication. Article 15 Specialised personnel  States should promote the specialisation of the judiciary, police or other personnel in the fight against illegal funding of political parties and electoral campaigns. Article 16 Sanctions States should require the infringement of rules concerning the funding of political parties and electoral campaigns to be subject to effective, proportionate and dissuasive sanctions.

7. PART III – Supervision and sanctions - Some remarks: - a variety of models/bodies entrusted with supervision of political financing: ad hoc independent body, Electoral Commission, Parliament, Central public audit body, Ministry (finance, interior) – sometimes a combination - supervisory body often lacks operational independence (from the government, from the parties themselves), inadequate composition, inadequate decision process - supervisory body often lacks capacity of control (powers, e.g. access to info.) - supervisory body often lacks adequate other means (expertise, staff...) - supervisory body has limited approach to its role (“doing the maths”) and lack of proactivity; over-reliance on external auditors or other controls, external tips, - inadequate supervisory arrangements (one entity supervises income, another the expenditures + no full responsibility) - no sanctions available for all main requirements, sanctions are ineffective (minor fine even if large amounts of illegitimate funding involved) or applied

8. Thank you for your attention Christophe.speckbacher@coe.int