Electoral Processes

   

To what extent is private and public party financing and electoral campaign financing transparent, effectively monitored and in case of infringement of rules subject to proportionate and dissuasive sanction?

EUOECD
 
The state enforces that donations to political parties are made public and provides for independent monitoring to that respect. Effective measures to prevent evasion are effectively in place and infringements subject to effective, proportionate and dissuasive sanctions.
10
Belgium
All political parties represented in parliament are largely financed by the state, based on the number of votes cast and the number of parliamentary seats, and private contributions are limited. Electoral campaigns at all levels are subject to tight regulations on allowed spending, both in terms of amount and item. After each election, all advertising and campaign spending and contributions are scrutinized in detail by a special parliamentary committee, with limited partisan bias. Candidates who infringe the rules may, for instance, lose the right to be elected, even though such instances are rare. In most cases, a range of more modest (financial) sanctions are implemented, typically seeing the candidate forced to repay non-eligible expenses or overspending.

Tight financial control over the party accounts is also exerted during non-electoral periods, again by a special largely nonpartisan parliamentary committee. In 2015, two parties received modest sanctions following some remarks on their accounting techniques. This was quite hotly debated and framed in terms of majority/opposition tensions, but can generally be seen as an indication that the system of checks and balances functions quite well.
9
Australia
All candidates in state and federal elections are entitled to public funding, subject to obtaining at least 4% of the first preference vote. The amount to be paid is calculated by multiplying the number of votes obtained by the election-funding rate for that year. The funding rate is indexed every six months to increases in the Consumer Price Index; for the 2013 election, it was 248.8 cents per eligible vote in both houses of parliament (House of Representatives and Senate). The total election funding paid in the 2013 federal election was AUD 56.4 million. The Australian Electoral Commission (AEC) administers the distribution of funding and provides full public accounts of payments made.

For private funding, there are no limits on the value of donations, and while there are disclosure rules, they are not comprehensive and vary considerably across state governments. At the federal level, for example, candidates endorsed by a registered political party may roll their reporting of donations received into their annual party return, which, in the case of the July 2016 federal election, was not due for release until October 2017. The AEC does, however, rigorously monitor and enforce the disclosure requirements in place. Several of the state and territory governments have in recent years legislated to improve disclosure requirements for private funding and in some cases limit donations. While other states, such as Victoria, introduced a non-binding Code of Conduct in October 2011.

In June 2017, an investigation by journalists into Chinese attempts to influence Australian political parties revealed that both major political parties accepted donations believed to have originated with the Chinese government. The prime minister subsequently ordered an inquiry into espionage and foreign interference laws. The conflict between Australia and China escalated in late 2017. The Australian government accused China of undue interference, while Chinese commentators have labeled Australia an agent of the United States. The tensions might continue in the medium term.
Citations:
Joint Standing Committee on Electoral Matters, Inquiry into the funding of political parties and election campaigns, December 2011: http://www.aph.gov.au/Parliamentary _Business/Committees/House_of_Representatives_Committees?url=em/politi cal%20funding/index.htm

Brenton Holmes ‘Political financing: regimes and reforms in Australian states and territories,’ Parliamentary Library, 19 March 2012: http://www.aph.gov.au/About_Parliam ent/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2011-2012/PoliticalFinancing

http://www.lo c.gov/law/help/campaign-finance/australia.php

http://www.aec.gov.au /About_AEC/Publications/Reports_On_Federal_Electoral_Events/2010/disclosure.htm#thresholds

http://www. aec.gov.au/About_AEC/Publications/Reports_On_Federal_Electoral_Events/ 2010/fad-report.pdf

http://www.abc.net.au/news/2016-08-22/foreign-donations-could-skew-australias-democracy-politicans/7775060

http://www.abc.net.au/news/2017-06-06/turnbull-orders-inquiry-following-revelation-asio-warned-parties/8592308

http://www.smh.com.au/world/china-criticism-grows-over-australian-foreign-interference-stance-20171211-h02in1.html

Australien legt sich mit China an. FAZ, 12.Dezember 2017, S. 18.
Estonia
Financing of political parties is regulated by the Act on Political Parties (APP). All parties have to keep proper books and accounts, specify the nature and value of donations and membership fees, and publish their financial records regularly on their party’s website. An independent body, the Political Party Financing Supervision Committee (PPFSC), monitors whether parties have properly declared all financial resources and expenditures; the committee can also impose sanctions when parties have violated the law.

The regulatory and investigative powers of the PPFSC have been expanded several times through amendments to the APP. Despite significant progress some loopholes in financing regulations still exist. One of the major concerns is that PPFSC’s access to the information necessary to deal efficiently with financial fraud remain limited. To tackle the problem, PPFSC regularly proposes amendments to the APP. The latest one under consideration in the parliamentary committee proposes that third parties associated with donations and services to political parties must provide relevant documents to PPFSC upon request.
Finland
New campaign-finance legislation was implemented between 2008 and 2009, in the wake of several political financing scandals. This legislation requires politicians to disclose funding sources, and has provided for independent and efficient monitoring. There are now bans on donations from foreign interests, corporations holding government contracts and anonymous donors. In addition, there are limits on the amount a donor can contribute over a time period or during an election. Candidates are required to report on the sources of their campaign funds and these reports are filed with ministries and auditing agencies as well as made public. Financing scandals involving parties and candidates continue to attract media coverage, and studies indicate that parties are likely to lose electoral support if they are involved in finance scandals. As a result of the new rules, the quality of party financing has improved and public opinion polls indicate that the credibility of politicians has increased.
Citations:
http://www.idea.int/parties/finance;
Demokratiapuntari 2012: Yhteenveto. Ministry of Justice/MTV3/tnsGallup, 02/2012;
Mattila, Mikko and Sundberg, Jan 2012: Vaalirahoitus ja vaalirahakohu. In: Borg, Sami (ed.): Muutosvaalit 2011. Oikeusministeriön selvityksiä ja ohjeita 16/2012. Oikeusministeriö (Ministry of Justice), pp.227–238.
Norway
Funding for political parties in Norway is predominantly public. On average, parties receive about three-quarters of their revenues through state subventions (ranging from 60% to 80%). Membership fees are now an insignificant source of party finances. Parties also receive private donations; for example, the Labor Party receives funds from particular trade unions, while the Conservative Party receives donations from individuals and business organizations. State support for parties is proportionate to the results of the last-held election, but even parties not represented in parliament have access to state support.

Since 1998, political parties have been obliged to publish an overview of the source of their revenues, with detailed reports required since 2005. Thus, all party organizations, central and local, are today obliged to submit detailed income reports, with full information on the source of income, on an annual basis. Information on contributions of NOK 30,000 or more must be provided separately, with the identity of the donor included. Income reports are submitted to the Central Bureau of Statistics and are published in detail. A new provision under consideration as of the time of writing would obliges parties to report expenditures, property holdings and debt as well as income.
 
The state enforces that donations to political parties are made public and provides for independent monitoring. Although infringements are subject to proportionate sanctions, some, although few, loopholes and options for circumvention still exist.
8
Canada
The Canada Elections Act requires registered parties or electoral-district associations to issue income-tax receipts for contributions, and to make public reports on the state of their finances. Furthermore, the act requires registered parties to report and make public all contributions of more than CAD 20. Elections Canada provides access to the full database online for public use. Corporations, trade unions, associations and groups are prohibited from contributing to political parties. Only individuals are allowed to contribute. The amount that candidates and leadership contestants may contribute to their own campaigns is CAD 5,000 and CAD 25,000, respectively. Individuals receive generous tax credits for political donations. Annual contributions to registered parties, registered associations, electoral candidates, and nomination and leadership contestants are capped at a relatively modest amount of CAD 1,550. However, transparency in political financing is still seen as a problem. Public debate over transparency recently reignited after it was revealed in the press that the prime minister and other senior ministers were raising millions of dollars at private “cash-for-access” fundraisers, giving donors secretive cabinet access. Furthermore, provincial practices and rules regarding political donations vary widely. Fixed contribution limits, for example, range from only CAD 100 per year in Quebec to CAD 6,000 per year in New Brunswick. Yet, in other provinces like British Columbia, any individual, corporation, union or special interest group can make a political contribution of any size to a provincial political party.

In addition to individual donations, political parties are funded by the government. Each registered federal political party that received at least 2% of all valid votes in the last general election, or at least 5% of the valid votes in the electoral districts in which it has a candidate, is reimbursed 50% of its national campaign expenses and further “election rebates” for riding-specific expenses. Until 2015, such parties were also given a per-vote subsidy, largely considered to be the most democratic financing regime. A bill passed in 2012 reduced and later eliminated this subsidy, seen as negative from the perspective of fairness in party financing.
Citations:
Elections Canada, Administrative Compliance Policy for Political Financing, retrieved 2015 from http://www.elections.ca/pol/acp/adcom_e.pdf.
Denmark
Political parties are financed by membership fees as well as support from other organizations/corporations and the state. Traditionally, the Social Democratic Party has received support from the labor movement and the Conservative Party and Liberal Party have received support from employers’ organizations. A law enacted in 1990 made such contributions voluntary, implying that members of these organizations who do not want their membership fees used to support political parties can opt out.

Public support for political parties is becoming more important. The party groups in the parliament (Folketinget) receive financial support (recently increased) for their legislative work, including staff. Further, the parties receive electoral support depending on the number of votes garnered.

There is transparency about such public support. Concerning private support, the name of contributors donating more than DKK 20,000 should be made public, but the amount donated is confidential. Smaller amounts are allowed to remain anonymous. It is possible to circumvent publicity by multiple donations below the limit to local branches of political parties and there are also examples of other indirect ways of supporting parties. The Danish branch of Transparency International has criticized these rules as insufficiently transparent. Discussions about the need for members of parliament to make all their economic interests public are ongoing.

The Danish People’s Party has run into problems regarding their use of EU money to fund political activities in Denmark not related to the European Union. There is an ongoing EU investigation into the campaign spending of Morten Messerschmidt, a member of the European Parliament for the Danish People’s Party.
Citations:
Partistøtte på grundlag af deltagelse i seneste folketingsvalg, http://valg.sim.dk/Valg/Partistoette/Folketingsvalg.aspx(Accessed 8 October 2015).

Oversigt over partistøtte for 2014 på grundlag af deltagelse i folketings-valget den 15. september 2011, http://valg.sim.dk/media/750802/2014_oversigt_partist_tten.pdf (Accessed 8 October 2015).

Partistøtte [Party support], https://www.borger.dk/Sider/Partistoette.aspx (accessed 16 April 2013).

Transparency International Danmark, “Privat Partistøtte,” http://transparency.dk/wp-content/uploads/2012/12/Policy-Paper_Privat-partist%C3%B8tte_elektronisk-version.pdf (accessed 20 October 2014).

Zahle, Dansk forfatningsret 1, pp. 159-160.
Germany
In general, Germany’s political parties finance their activities under the terms of the Political Parties Act (PPA) through state funding, membership fees, donations and sponsorships. In order to be eligible for state funding, parties must win at least 0.5% of the national vote in federal or EU elections, or 1% in state elections. A party’s first four million votes qualify for funding of €1.00 per vote; for every vote thereafter, parties receive €0.83. In addition, individual donations up to €3,300 are provided with matching funds of €0.45 per €1.00 collected. State funding of political parties has an upper limit, which in 2016 was €160.5 million. This cap is annually adjusted for inflation.

Public financing, however, must be matched by private funding. Thus, parties with little revenues from membership fees and donations receive less than they would be entitled to based on votes alone.

After a recent change of the constitution extremist parties that fight against the free and democratic constitutional order or against the existence of the Federal Republic of Germany by abusing the basic freedoms may be excluded from public financing, and from enjoying tax advantages on donations and state grants. The exclusion must be decided on by the Constitutional Court (Bundestag 2017).

The insufficient transparency of party finances continues to receive criticism. The Group of States against Corruption (GRECO) has identified some progress with respect to transparency, but continues to point out shortcomings in the German system. In its 2017 report, GRECO concluded that “Germany has implemented satisfactorily or dealt with in a satisfactory manner three of the eight recommendations contained in the Fourth Round Evaluation Report. Of the remaining recommendations, two have been partly implemented and three have not been implemented” (Greco 2017: 11). In addition, a recent assessment based on the accounting reports of all major parties, the nonprofit organization LobbyControl found that three-quarters of all donations to parties lacked transparency. All donations less than €10,000 and revenues coming from party sponsorship remain opaque. By law, the names and addresses of campaign donors must be made public only if donations from that source exceed €10,000 per year.
Citations:
Bundestag (2017):
https://www.bundestag.de/dokumente/textarchiv/2017/kw25-de-parteienfinanzierung/509770

GRECO (2017) https://rm.coe.int/fourth-evaluation-round-corruption-prevention-in-respect-of-members-of/168072fd68

http://www.bundestag.de/blob/189364/7ebd436e401e15cd784ec7b8e0884a8a/staatl_partei_finanz-data.pdf
Ireland
Financing of Parties:
The financing of political parties in Ireland is supervised by the Standards in Public Office Commission (SIPO). Each of the political parties registered to contest a parliamentary or European election is required to furnish a donation statement to the commission and to publish annual accounts. The commission’s last published annual report is for 2014.

Political parties that obtained at least 2% of the first-preference votes in the last general election qualify for public funding under the Electoral Acts. The amount payable to a qualified political party is based on its share of the votes received in the last election. In 2014, funding was paid to four qualifying parties: Fianna Fáil, Fine Gael, Sinn Féin and the Labour Party. In total they received €5.5 million, with the larger of the government parties, Fine Gael, receiving 42% of the share. The total value of donations from private sources disclosed by parties during 2014 was €166,392, of which Fine Gael received €102,567. The second largest donations total was recorded by the new Stop the Water Tax – The Socialist Party, which received €30,405.

Financing of Elections:
In contrast, the financing of elections still lacks transparency. By any comparative standard (see Van Biezen and Kopecky, 2015), Ireland’s parties are well funded by the state.

The quid pro quo for generous state funding is supposed to be state regulation of party financing. During elections, this does not appear to be happening to an acceptable standard. For example, during the 2011 general election, the parties reported spending just under €9.3 million. Parties are not allowed to use any of their public funds to cover campaign expenses, but parties have to declare any donations over €5,078. Farrell (2015) observes that “In 2011, a year in which the parties between them spent over €9 million chasing votes, the total amount of donations they claimed to have received amounted to €30,997 – leaving a grand total of €9,246,640 of party income unaccounted for. In its annual report for that year, SIPO noted that this was ‘the lowest amount disclosed since the introduction of the disclosure requirement 15 years ago’” (Farrell, p. 644).
Citations:
The most recent report on the funding of political parties is available here:

http://www.sipo.gov.ie/en/reports/state-financing/expenditure-of-state-funding/2014-exchequer-funding-received-by-political-parties/exchequer-funding-received-by-political-parties-for-2014.html
Israel
Israel has strict rules concerning party financing and electoral campaigns. The most important are the Parties Law (1992) and the Party Financing Law (1992). The two require all parties to document their finances and report them to the State Comptroller. These laws also stipulate the means by which parties can receive income, limiting such sources of income to: 1) party membership dues and fundraising from members, within limits allowed by the Party Financing Law; 2) funds received from the state in accordance with the Party Financing Law; 3) non-public contributions received in accordance with the Party Financing Law; 4) funds received for the purpose of elections in the New Histadrut trade union association, as approved by the New Histadrutl; or 5) funds obtained from party activities, directly or by means of party associations, involving the management of party property and funds under Article 21 of the law.

Furthermore, in order to ensure the application of these two laws, all party financial activities during election time are subject to supervision by the State Comptroller, who has on several occasions issued instructions that have the status of subsidiary legislation. The State Comptroller publishes regular reports regarding party finances, and is in charge of ruling whether there has been a breach of the law regarding party financing and election financing. Moreover, the State Comptroller can rule that a party group must return funds to the state due to illegalities in the receipt of non-public contributions.

A report published by the State Comptroller reviewing the 2015 election campaign indicated that several parties had been fined due to violations of the party financing law, including a ILS 1.8 million fine against the “Bait Hayeudy” party and an ILS 850 thousand for the Likud. Several parties’ funding were not approved during the campaign.

A relatively new amendment to the Party Financing Law was passed on March 2017. This amendment, also known as the V15 bill, aimed at limiting the activities of various non-party bodies seeking to influence the outcome of elections in Israel. It requires these bodies to report their funding sources to the State Comptroller. The amendment was named “V15 bill” after V15, an entity funded by organizations from the United States and Europe that contributed funds during the 2015 election campaign against the Likud party and Prime Minister Netanyahu.
Citations:
ACRI. “Anti-NGO Legislation in the Israeli Knesset.” February 2016, http://www.acri.org.il/en/wp-content/uploads/2016/02/Anti-NGO-Bills-Overview-Updated-Febuary-2016.pdf

Drukman, Yaron,“The State Comptroller Report: High Fines to the “Bait Hayeudy,” the Likud, and Hadash,” Ynet, 18.10.2016, http://www.ynet.co.il/articles/0,7340,L-4867070,00.html

Hattis Rolef, Susan, Ben Meir, Liat and Zwebner, Sarah, “Party financing and elections financing in Israel, Knesset Research Institute, 21.7.2003 (Hebrew).

Keidar, Nitsan. “Knesset approves ‘V15 Law’,” Artuz Sheva (Hebrew), 21.3.2017: http://www.israelnationalnews.com/News/News.aspx/227024

“Knesset passes controversial ‘transparency’ law on NGO funding,” Jewish Telegraph Agency, 12.07.2016, http://www.jta.org/2016/07/12/news-opinion/israel-middle-east/knesset-passes-controversial-transparency-law-on-ngo-funding

Levinson, H. and Lis, Y. “Netanyahu: the NGO Legislation is too weak, We Shall forbid Foreign Funding of Organizations, Haaretz, 11.6.2017, https://www.haaretz.co.il/news/politi/1.4161298
Luxembourg
Party financing is regulated by a law passed on 21 December 2007. The implementation of the law was positively evaluated by the Group of States against Corruption (GRECO) which was established by the Council of Europe. While the law introduced rules on transparency and monitoring, as well as penalties for breaking the law, a GRECO report mentioned that “(…) some gaps still remain, in so far as insufficient account was taken of the financing of election campaigns and of candidates for election.” The impact of the improvements on the law, made during the period, to improve transparency, monitoring of the Court of Auditors and sanctions, still need to be determined.

The GRECO Evaluation Team (GET) has complained about the lack of a uniform assessment method to evaluate various services and benefits in kind, such as positive coverage by partisan media during the election campaign. The GET demands a system of “effective, proportionate and dissuasive penalties” for those who break the law. Despite the new law, GET has pointed out that political parties are still not mentioned in the constitution of Luxembourg. The major finding of the evaluation was the lack of public control over political party accounts, since parties often have had difficulties setting up an accounting system. Most of the issues raised in the GRECO report have been since corrected through more legislation. However, political parties must ultimately pay more attention to such concerns. Due to the complexity of the legislative changes, the implementation of additional measures has been delayed. The fourth GET evaluation again called for the rapid integration into national law of 13 anti-corruption recommendations.
Citations:
EU Anti-Corruption Report. European Commission, 2014. www.ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/organized-crime-and-human-trafficking/corruption/anti-corruption-report/docs/2014_acr_luxembourg_chapter_en.pdf. Accessed 21 Dec. 2017.

Evaluation Report on Luxembourg on the “Transparency of Political Party Funding.” Group d’états contre la corruption, 2012. www.legislationline.org/download/action/download/id/5239/file/GrecoRC320128_Second_Luxembourg_EN.pdf. Accessed 21 Dec. 2017.

“Mémorial A n° 261 de 2011.” Journal officiel du Grand-Duché de Luxembourg, 21 Dec. 2011, www.data.legilux.public.lu/eli/etat/leg/loi/2011/12/16/n3/jo. Accessed 21 Dec. 2017.

Pereira, João N., and Jochen Zenthöfer. Einführung in das luxemburgische Recht. C.H.Beck, 2017, pp. 51-57.
New Zealand
Party financing and electoral campaign financing is monitored by the independent Electoral Commission. Registered parties have upper ceilings regarding election campaign financing (including by-elections). Upper limits for anonymous donations as well as donations from abroad are comparatively low. In 2012, a government minister, John Banks, was accused of breaching the Local Government Act 2002 by failing to disclose the sources of three substantial donations made to his 2010 Auckland mayoral campaign, which he declared as anonymous. In mid-2014 the Local Government Amendment Act came into force, which aims to bring local election laws into line with the provisions of the aforementioned Electoral Amendment Act. The long-standing public-private mix of party financing continues to draw criticism. Private funding in particular is criticized for being insufficiently transparent, unfair to less well-off parties or smaller parties lacking access to parliamentary sources of personnel and funding.
Citations:
Annual Report of the Electoral Commission for the year ended 30 June 2012 (Wellington: Electoral Commission 2012), pp. 13-15.
Local Government Amendment Act 2014, http://www.legislation.govt.nz/bill/government/2013/0165/latest/versions.aspx (last accessed 6 November 2014).
7
Czech Rep.
The rules for party and campaign financing and their enforcement have been a major political issue for some time. In April 2015, the Ministry of Interior eventually submitted an amendment to the law on political parties to parliament. The proposal was based on the Group of States against Corruption of the Council of Europe (GRECO) recommendations to the Czech Republic issued in 2011 and came into force in January 2017. President Zeman named the first president of the Office for the Oversight of the Political Parties and Political Movements (Úřad pro dohled nad hospodařením politických stran a politických hnutí, ÚHHPSH), an independent regulatory authority for monitoring and oversight of party and campaign finance. The first campaign scrutinized by the UHHPSH was the October 2017 parliamentary elections; its first annual report will be published in 2018. The law also introduces financial limits for party financing and electoral campaigns, the mandatory establishment of transparent accounts, and greater revenue regulation of political parties and movements. The website of the UHHPSH includes direct links to transparent accounts of all parties (at their respective banks), where all transactions can be viewed in real time. In 2017, two cases of party finance irregularities emerged. First, it became public that ANO owes a large debt to its chairman. The second case involved now-defunct party Dawn of Direct Democracy, which imploded after it was discovered that the party chairman, Tomio Okamura, was receiving a monthly payment for consultancy services (CZK 1 million, €40,000). The party disintegrated over this issue, but Okamura founded a new party, Freedom and Direct Democracy, and entered the parliament in a stronger position than in 2013.
France
Lacking a sufficient legal framework, party financing has long been a source of recurrent scandals. Nearly all political parties used to finance activities by charging private companies working for local public entities or by taxing commercial enterprises requesting building permits. Only since 1990 has a decent regulatory framework been established. Since then, much progress has been made in discouraging fraud and other illegal activities. Nonetheless, not all party financing problems have been solved. Current legislation outlines public funding for both political parties and electoral campaigns, and establishes a spending ceiling for each candidate or party. The spending limits cover all election campaigns; however, only parliamentary and presidential elections enjoy public funding. Individual or company donations to political campaigns are also regulated and capped, and all donations must be made by check, except for minor donations that are collected, for instance, during political meetings. Donations are tax-deductible up to certain limits. Within two months after an election, a candidate has to forward the campaign’s accounts, certified by an auditor, to the provincial prefecture, which conducts an initial check and then passes the information on to a special national supervisory body (Commission Nationale des Comptes de Campagne et des Financements Politiques). In presidential elections, this review is made by the Constitutional Council (Conseil Constitutionnel).

These controls have made election financing more transparent and more equal. Yet loopholes remain. The Constitutional Council has reviewed former President Sarkozy’s presidential re-election campaign in 2012, and decided in July 2013 that he had exceeded his spending limits. His party had to return €11 million in penalties to the state. An ongoing inquiry has found evidence that Sarkozy’s Union for a Popular Movement (UMP) party flagrantly ignored the rules and forged false invoices in order to appear to have remained under the spending ceilings set by law. Presently, the National Front and its leader, Marine Le Pen, are being prosecuted for violating financing regulations. The tradition of cheating persists in many areas. Another example involves the practice by some parties (including the National Front and the centrist party MODEM) of using assistants paid by the European Parliament for purely partisan purposes. Finally, the Fillon scandal (in which Fillon used public money available for hiring parliamentary assistants to hire his wife and children – a practice that in itself is not forbidden – without any documented work being undertaken) led to the introduction of a new piece of legislation in June 2017.

Macron announced that the very first bill of his term would deal with the “moralization” of political life. The law was adopted in August 2017 and introduced further restrictions (such as the prohibition of hiring family members with public money). Though, ironically, the main sponsor who tabled the bill, the minister of justice, was forced to resign as he was suspected of misusing European funds for the benefit of his party.

When these rules are violated, three types of sanctions can be exercised: financial (expenditures reimbursed), criminal (fines or jail) and electoral (ineligibility for electoral contests for one year, except in the case of presidential elections).
Latvia
Political parties are financed primarily through individual donations and public financing. Donation amounts are capped and legal entities, such as corporations, are prohibited from financing political parties. Financing is transparent, with donations required to be made publicly available online within 15 days. Campaign spending is capped. As of 2012, paid television advertisements are also limited, with a ban on advertising for a 30-day period prior to elections. Political party and campaign financing is effectively monitored by the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs, KNAB), with local NGOs playing a complementary role in monitoring and ensuring transparency. Infringements have been sanctioned, with political parties facing sizable financial penalties. The court system has been slow to deal with party-financing violations, enabling parties that have violated campaign-finance rules to participate in future election cycles without sanction. Ultimately, however, those parties that have faced stiff penalties have been dissolved or voted out of office. Following the 2014 parliamentary elections, KNAB sanctioned six parties for campaign-finance violations; five parties paid the requisite fines, but one party appealed the decision to the courts.

In fulfilling Group of States Against Corruption recommendations on improving political-party finance regulations, the limitation period for administrative violations of party-financing rules was increased to two years in 2012. In 2011, the illegal financing of political parties was made a criminal offense. To date, no cases have been brought under this new regulation.

Beginning in 2012, Latvia instituted public financing for political parties, with parties receiving public funds proportionate to their share of the vote in the preceding parliamentary elections. Political parties have been sanctioned by KNAB for the misuse of public funds. In 2016, KNAB fined two parties – Vienotība and Saskaņas Centrs – for party financing violations; the parties had to repay €3,000 and €4,840 respectively that were obtained from illicit sources. Later, KNAB completely withdrew public funding for Vienotība due to campaign finance violations. KNAB investigations into illegal financing are ongoing, with two cases currently pending.

There are still other ongoing issues with campaign financing, including the use of off-the-books funds to secure favorable media coverage, the illegitimate use of public funds and administrative resources to support political campaigns, and the alleged use of marketing funds by local-government-owned enterprises to support incumbent politicians’ election campaigns.
Citations:
1. Amendments to the Criminal Law Regarding Illegal Party Financing (2011), Available at (in Latvian): http://www.likumi.lv/doc.php?id=236272

2. Group of States Against Corruption (GRECO)(2012), Third Evaluation Round, Second Compliance Report on
Latvia: Transparency of Party Funding, Available at: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoRC3%282012%2913_Second%20Latvia_EN.pdf, Last assessed: 21.05.2013

3. Law on the Financing of Political Organizations (Parties), Available at (in Latvian): http://www.likumi.lv/doc.php?id=36189, Last assessed: 21.05.2013

4. “Overview of Violations of Campaign Finance Regulations in the 2014 Saeima elections,” KNAB (published in Latvian). Available at: http://www.knab.gov.lv/uploads/free/parskati/12.saeimas_finansu_parbaudes_1.07.2015.pdf, last assessed: 16.11.2015.
Lithuania
Political parties may receive financial support from the state budget, membership fees, bank loans, interest on party funds and through citizens’ donations of up to 1% of their personal income tax, as well as through income derived from the management of property; the organization of political, cultural and other events; and the distribution of printed material. State budget allocations constitute the largest portion of political parties’ income, as corporations are no longer allowed to make donations to political parties or to election campaigns. All donations exceeding about €11,800 must be made public, and there is an expenditure limit (about €765,000) linked to the number of voters.

Campaign-finance regulations are detailed, and sanctions for violating the law were recently increased. However, since third parties can potentially circumvent the legal prohibitions and directly finance electoral campaigns, following the 2016 parliamentary elections, the OSCE suggested clarifying the term “third parties” for campaign-finance purposes, and extending regulations affecting donations, expenditure limits and reporting requirements to cover these groups. For instance, the Lithuanian Central Electoral Commission recently found the Liberal Movement guilty of gross violations of the law on campaign financing because of a financial donation received from a third party during the electoral campaign. Furthermore, implementation of the rules should be more closely monitored and enforced. For example, the Labor Party, part of the 2012 to 2016 coalition government, was taken to court for failing to make public about €7 million in income and expenditure through the 2004 to 2006 period. After several years examining the case, the appeals court found two party members and one party official guilty of fraudulent bookkeeping, though they escaped prison sentences. The Lithuanian Prosecutor General’s Office has appealed this ruling to the supreme court.
Citations:
OSCE/ODIHR Election Assessment Mission Report on the 2012 parliamentary elections in Lithuania, see http://www.osce.org/odihr/98586.
OSCE/ODIHR Election Assessment Report on the 2014 presidential elections in Lithuania, http://www.osce.org/odihr/elections/116359?download=true.
OSCE/ODIHR Election Assessment Mission Report on the 2016 parliamentary elections in Lithuania, see http://www.osce.org/odihr/elections/lithuania/296446
Poland
Party and campaign financing regulation is clear and effective. While party financing is regulated by the 2001 Political Parties Act, the rules governing campaign financing are part of the 2011 election code. Parties depend heavily on public funding, which is provided only to parties that win at least 3% of the vote. Party spending is monitored by the National Election Office (KBW), the executive body of the National Election Commission (PKW). Monitoring is strict, but focuses exclusively on spending financed by public funds. According to the election code, only registered electoral committees can finance campaigns, and there is a maximum spending limit for campaign purposes of approximately €7 million. In practice, separating party and campaign financing has sometimes turned out to be challenging. Other problems include the insufficient coverage of pre-campaign spending, the short window of time in which objections can be raised by the National Election Commission, and the lack of detail transparency in commission reports of electoral committee revenues and finances. A 2014 amendment to the Political Parties Act limited parties’ risk of losing money as a result of minor accounting mistakes. However, the fact that an election committee’s financial and criminal liability rests with its financial officer makes it difficult to find individuals willing to be nominated to the position. A referendum in September 2015 put the reform of party financing on the public agenda. While the referendum ultimately failed because of a low participation rate of 7.8%, more than 80% of those participating voted to abolish the existing system. Debates about party and campaign financing rules have also been prompted by decisions of the National Election Commission to sanction two opposition parties for procedural errors and inaccurate bookkeeping. In the period under review, however, the rules for the financing of parties and campaigns were left unchanged.
Citations:
Markowski, R., M. Kotnarowski, M. Wenzel, M. Żerkowska-Balas (2015): Democratic Audit of Poland 2014. Frankfurt/M.: Peter Lang, 144-148.
OSCE/ODIHR (2016): Election Assessment Mission Final Report Poland: Parliamentary Elections 25 October 2015, Warsaw, 10-12 (http://www.osce.org/odihr/elections/poland/217961?download=true).
Sawicki, A. (2015). Finansowanie partii politycznych i kampanii wyborczych w Polsce. Warszawa: Instytut Spraw Publicznych.
Wittman, F., T. Zapart (2015): Ein gescheitertes Referendum ohne Gewinner? Wahlrecht und Parteienfinanzierung im polnischen Parteiensystem auf dem direktdemokratischen Prüfstand. Polen-Analysen Nr. 168, Bremen (http://www.laender-analysen.de/polen/pdf/PolenAnalysen168.pdf).
Portugal
Political-party funding oversight lies with the Constitutional Court (Tribunal Constitucional), which has a specific independent body tasked with monitoring party financing and accounts – the Entidade das Contas e Financiamentos Políticos (ECFP). There are two main sources of funds for political parties. First, the state provides funding to all parties that received vote shares above a certain threshold in previous elections (over 100,000 votes in the case of legislative elections); second, parties receive private contributions, which must be registered with the electoral commissions of each of the parties at the local, regional and national levels.

Parties’ annual accounts and separate electoral-campaign accounts are published on the ECFP website and are scrutinized by this entity, albeit with considerable delay.

As noted in previous reports, ECFP reviews do identify irregularities and/or illegalities. However, sanctions for infractions are relatively small and infrequent. A 2012 study examining oversight of party accounts – based on interviews with both the ECFP and party representatives – noted that the ECFP lacked resources, which limited its capacity to monitor party and election funding fully. This appears to have remained true in the current review period.

The 2003 law on party and electoral-campaign financing (Financiamento dos partidos politicos e das campanhas eleitorais), which goes into tremendous detail both in defining financing and how it will be monitored, was updated for a fourth time in January 2017. Among other items, this recent legal change reduced public subsidies to parties and campaigns by 10% and 20% respectively.
Citations:
Financiamento dos partidos politicos e das campanhas eleitorais Lei no. 19/2003, 20 junho 2003, most recently amended by Lei no. 4/2017 of 16 January 2017.
Slovenia
According to the Act on Political Parties, parties can be financed by membership fees, donations, estate revenues, the profits of their companies’ revenues and public subsidies. If a political party wins at least 1% of all votes in the previous parliamentary elections, it is entitled to financial resources from the national budget: 25% of the total budget amount is divided equally between all eligible parties. The remaining 75% is divided among the parties represented in the National Assembly according to their vote share. In addition, parliamentary party groups can obtain additional support from the national budget for their parliamentarians’ education purposes, and for organizational and administrative support. All political parties must prepare annual reports and submit them to the National Assembly. The reports, which are submitted to the Agency of the Republic of Slovenia for Public Legal Records and Related Services, must disclose aggregate revenues and expenditures, detail any property owned by the party, and list the origins of all donations that exceed the amount of five times Slovenia’s average gross monthly salary (around €8,000). Parties are also required to submit post-electoral reports to the Court of Audit, which holds official responsibility for monitoring party financing. Following many calls to further increase transparency and strengthen the monitoring and sanctioning of party financing, legislation on the issue was finally amended in January 2014, barring donations from private companies and organizations. However, donations from individuals have remained allowed and reached a record high of €171,000 in 2016. Local communities autonomously set compensation for political parties during the electoral campaign at local elections.
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Austria
Political-party financing in Austria has been characterized by unsuccessful attempts to limit the ability of parties to raise and spend money. Austrian electoral campaigns are among the most expensive (on a per-capita basis) in the democratic world, thanks to the almost uncontrolled flow of money to the parties. These large flows of money create dependencies, in the sense that parties tend to follow the interests of their contributor groups, institutions and persons.

However, some improvements have been made in recent years, for instance by making it necessary to register the sums given to a party. An amendment to the Austrian act on parties made it mandatory for parties to declare the sources of their income, beginning in 2012. Additionally, parties are required to keep records of their accounts and publish a yearly financial report. This annual report must include a list of donations received. Therefore, and for the first time, policymakers have sought to render the flow of private money to parties transparent. The yearly reports are subject to oversight by the Austrian Court of Audit, and violations of the law can be subject to penalties of up to €100,000. The fact that some parties violated set limits during the 2013 campaign has prompted a new debate regarding stronger oversight and sanctions.

This regulatory structure does have loopholes, however, as parties do not need to identify the sources of donations below the amount of €3,500. As long as parties can spend money without oversight or limitations, it can be assumed that they will find ways to raise money outside the system of official scrutiny.

A system of public political-party financing on the federal, state and municipal level was established in the 1970s. This can be seen as moderating the dependencies established by private funding, but has not significantly changed these private flows as can be seen in the overspending of parties (like the ÖVP) during the electoral campaign 2017.

The presidential elections of 2016 demonstrated that the regulations concerning party financing do not include presidential elections. Presidential elections are officially seen as electoral contests between persons and not political parties. But as the candidates are usually nominated and backed by parties, exempting presidential elections from an overall system of campaign finance regulation must be seen as inconsistent.
Citations:
Hubert Sickinger, “Politikfinanzierung in Österreich”. Vienna 2009 (Czernin)
Chile
In general, party and campaign financing processes have not been very transparent in the past. Upper limits to campaign financing are set by law, but enforcement and oversight are not very effective. Electoral campaign expenditures are financed by public funds and private financing, but ineffective monitoring often enables the latter to be rather opaque. De facto, there are no real mechanisms for applying penalties in the event of irregularities. Law No. 20,640, approved in October 2012, made it possible for a political coalition to support candidates on a joint basis. This process is voluntary and binding, and joint campaign expenditures are limited by the current public-transparency law (Ley de Transparencia, Límite y Control del Gasto Electoral). This limit is set at 10% of the amount allocated for normal elections.

At the end of 2014, wide-ranging evidence of corruption in political-party funding came to light. As the investigation progressed, more and more politicians and political parties have turned out to be involved, across the political spectrum. Known as “Pentagate,” the scandal reached such a dimension that the former head of the Chilean General Accounting Office (Contraloría de la República) said in his end-of-term speech in April 2014: “We can’t shut our eyes, corruption has arrived.” The scandals have been particularly striking given that Chile has always tended to be considered an exception to the endemic corruption found elsewhere in Latin America.

As a response to this crisis, President Bachelet convoked an anti-corruption council that proposed several anti-corruption measures, including new restrictions on private campaign funding, which were largely enacted in April 2016. With the new Law No. 20,900, which modifies former Law No. 19,884, a higher base amount is provided by the state for electoral campaigns, but enterprises are barred from providing funding to political parties or campaigns. In addition, anonymous donations have become illegal and all donations must be transparently registered. During the period under review, court hearings on irregularities in political party funding and relating to some of the already mentioned corruption scandals were still ongoing. Imposed sanctions have tended to be rather light. It remains to be seen how the new law will impact electoral campaigns and political financing, especially in the context of the presidential elections of 2017, and if the responsible authorities will be able to monitor the law’s adherence.
Citations:
http://www.servel.cl/financiamiento-de-campanas/

http://www.latercera.com/noticia/politica/2016/04/674-676080-9-estas-son-las-normas-que-fija-la-nueva-ley-para-regular-el-financiamiento-de.shtml
Japan
Infringements of the law governing political-party financing are common in Japan. To some extent, the problems underlying political funding in Japan are structural. The multi-member constituency system that existed until 1993 meant that candidates from parties filing more than one candidate per electoral district found it difficult to distinguish themselves on the basis of party profiles and programs alone. They thus tried to elicit support by building individual and organizational links with local voters and constituent groups, which was often a costly undertaking. Over time, these candidate-centered vote-mobilizing machines (koenkai) became a deeply entrenched fixture of party politics in Japan. Even under the present electoral system, many politicians still find such machines useful. The personal networking involved in building local support offers considerable opportunity for illicit financial and other transactions. While the Political Funds Control Law requires parties and individual politicians to disclose revenues and expenditures, financial statements are not very detailed.

A number of new scandals became public during the period under review. For example, Hakubun Shimomura of the LDP, a former education minister, was reported to have received JPY 2 million (about €15,000) from private-school operator Kake Gakuen. While the law requires an amount of this quantity to be reported, the rule was bypassed by channeling the money through 11 different individuals attending a fundraiser.

It is disappointing that while individual cases are dealt with one way or another, no action to revise the laws has been taken despite the repeated recurrence of similar issues. This lack of action has undermined trust in the political process.
Citations:
Philip Brasor, Fundraising loopholes, a political norm, The Japan Times, 15 July 2017, https://www.japantimes.co.jp/news/2017/07/15/national/media-national/fundraising-loopholes-political-norm/
Slovakia
After long debate and various failed attempts, new rules on campaign finance were eventually adopted in May 2014 and became effective in July 2015. The new rules limit campaign expenditures to €3 million for parties and €500,000 for candidates for presidential, regional and communal elections. Parties or candidates that exceed these limits can be fined up to €300,000. Parties and candidates are required to have a transparent bank account for electoral purposes that serves as a mechanism for monitoring transactions and donors. Vote-buying is subject to penalty, as is “stealing” the name of another party shortly before it is registered. Since August 2015, a newly created state commission for elections and political party financing has overseen campaigns and elections. The appointment of the 14 members of the commission in August 2015 confirmed concerns about its independence. The governing Smer-SD had a clear majority in the commission, since ten members were chosen by the parliamentary parties on the basis of their shares in seats and four members were nominated by state institutions dominated by Smer-SD (Constitutional Court, Supreme Court, General Prosecutor, Audit Office). No representative of a watchdog institution made it into the commission. Reflecting Smer-SD’s weaker showing in the 2016 elections, the party’s dominance in the commission weakened in the recent parliamentary term. All parties have continued to send party officials rather than more independent persons into the commission. The opposition members have not challenged the parties’ financial reports for 2016 and the campaign for the regional elections in November 2017.
Citations:
OSCE/ODIHRR (2016): Election Assessment Mission Final Report Slovakia: Parliamentary Elections March 5. 2016. Warsaw, 9-11 (http://www.osce.org/odihr/elections/slovakia/235591?download=true).
Sweden
Political parties in Sweden receive public as well as private support. Despite extensive debate, political parties still do not make their financial records available to the public and there is no regulation requiring them to do so.

This lack of disclosure has become increasingly frustrating to the public, as the parties receive extensive financial support from the state. The current support (central, regional and local) amounts to a total of some SEK 440 million (equal to €52 million) per annum. The only information that is made available about party financing is scattered and provided on an ad hoc basis by the respective parties.

The political party organizations, following legal advice, argue that disclosing the names of donors would compromise their political integrity.

Neither is there any public institution that effectively monitors fiscal contributions to party organizations. The media monitors and reports on the parties, however.
Citations:
http://www.riksdagen.se/sv/Dokument-Lagar/Utskottens-dokument/Betankanden/kad-insyn-i-partiers-och-valk_H101KU35/
UK
The Electoral Commission oversees all political financing in the United Kingdom. The commission is an independent institution set up by parliament, which publishes all its findings online to make them easily accessible. Although all donations above a certain threshold must be reported to the commission, the fact that political parties are largely dependent on donations for their ever-increasing spending on national campaigns has repeatedly led to huge scandals in the past. There have also been highly publicized cases where individual party donors have been rewarded by being granted honors. Changes have also been made to prevent donations from individuals not resident in the United Kingdom. Although these cases have generated considerable media interest, there is not much evidence that donations have influenced policy.

In 2011, the Committee on Standards in Public Life published a report recommending a cap of £10,000 on donations from individuals or organizations. This recommendation was welcomed, at the time, but has not been introduced.

Contributions from party members or local associations (through local fundraising) are relatively minor, though still useful to parties, compared to the amount parties receive from institutional sponsors (trade unions in the case of the Labour Party, business associations in the case of the Conservative Party) and individual donors. There is also some state financing of parties (known as “Short Money” after the politician who initiated it in the 1970s), which will be cut following the latest government expenditure review. The previous coalition government pledged to reform party financing but made no substantial progress on the issue. The Conservative government elected in 2015 passed a Trade Union Act, which includes new restrictions on trade union financing for political parties. This will reduce the Labour Party’s income.
USA
The U.S. system of political finance has evolved to become only partly transparent. At the federal level, campaign-finance law is enacted by Congress and enforced by the Federal Election Commission (FEC). The Federal Election Campaign Act of 1974 and the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold Act) established a strictly regulated and transparent system to monitor contributions to candidate campaigns and political parties. However, so-called independent expenditures (spent on behalf of a candidate, e.g., for advertising, without coordination with the candidate) have been subject to fewer, and steadily diminishing, constraints. More significantly, in the 2010 Supreme Court ruling Citizens United v. Federal Election Commission, the court rejected any limits on private advertising in election campaigns.

As a result, recent elections have seen the rise of so-called Super PACs – political action committees able both to make unlimited contributions on behalf of parties or candidates, and to receive unlimited contributions from individuals, corporations, unions or other entities. Neither the contributor nor the candidate or party can be held accountable. In the 2014 McCutcheon case, the Supreme Court went further, striking down the limit (then set at $123,200) on aggregate contributions by an individual directly to political parties or candidates (as opposed to independent groups).

Candidates of both parties, though especially Republicans, have relied increasingly on independent expenditures originating from extremely wealthy individuals or large businesses. In some cases, the donations are laundered through intermediary organizations to obscure their source.
 
The state provides that donations to political parties shall be published. Party financing is subject to some degree of independent monitoring but monitoring either proves regularly ineffective or proportionate sanctions in case of infringement do not follow.
5
Bulgaria
Party financing in Bulgaria is regulated by the Political Parties Act originally adopted in April 1990. Parties are financed through a combination of a state subsidy, membership dues, property income, and sale of publications and royalties. They are also allowed to draw bank credit up to a set cap. Anonymous donations are not allowed, and donations can be made only by individuals, not by companies or other legal entities. The audit office oversees party financing in Bulgaria. Every year parties are obliged to submit a full financial report, including a description of all their properties and an income statement. Reports from parties with budgets larger than €25,000 must be certified by an independent financial auditor. In addition to the annual reports, parties, coalitions or nominating committees are obliged to submit special financial reports after each electoral campaign. The audit office is obliged to publish all these reports online, perform a thorough audit of the reports, and prepare and publish online its own auditing report. Parties are subject to sanctions for irregularities in their financial reporting. The likelihood of political sanctions being exercised is increased by the fact that all reports are made available online.

Despite legal provisions to the contrary, in practice, non-regulated party financing seems to be available, as all parties have “concentric circles” of firms that finance the parties in exchange for political patronage. A second problem with party financing in Bulgaria is that the legal framework has tended to favor the larger parties because the funding that parties receive from the state is linked to the number of votes cast for them in the most recent parliamentary election. This has made it difficult for small new parties to emerge without significant private financial support.

In the national referendum that accompanied the presidential elections in November 2016, a majority of three-quarters of voters opted for limiting state subsidies to parties to BGN 1 per voter, down from BGN 11 per voter presently. Since turnout was slightly lower than in the 2014 parliamentary elections, however, the referendum was not binding. In 2017, parliament did not consider the proposal.
Citations:
Rashkova, E., M. Spirova (2014): Party regulation and the conditioning of small political parties: evidence from Bulgaria, in: East European Politics 30(3), 315-329.
Croatia
With the adoption of the Law on Political Parties and Campaign Funding in February 2011, the regulation of political finance has become more transparent and effective. The new law has made it obligatory to disclose party revenues and expenditures, introduced limits on private donations, donations from the business sector and campaign spending and established a ban on foreign donations. In order to limit the burden on the already strained budget, campaign financing for the snap elections in November 2016 was limited. After the elections, MOST insisted on a limit to public party financing as a precondition for forming a coalition with HDZ. As a result, the Law on Financing of Political Activates and Election Campaigns was amended in October 2016 with a view toward limiting the annual financing of political parties.

While the legal framework has improved, public control of party and campaign budgets has remained insufficient. The key problem in implementing effective bans on inappropriate campaign funding is the weakness in enforcing the law. In-kind services and various forms of indirect money transfers from the business sector mean that legal restrictions can be circumvented, and make it difficult to obtain a clear picture of party finances. The monitoring capacity of the State Electoral Committee is weak, as it can open its own investigations only after having received official financial reports from political parties or individual candidates. While the State Audit Office has also begun to carry out systematic audits of the campaign budgets of political parties and individual candidates, it can neither conduct random audits nor react to external complaints.
Greece
Party financing for national elections is regulated by Law 4304/2014, which adheres to guidelines established by the Council of Europe, constrains the size of budget outlays to parties, increases transparency regarding donations to parties and bars the practice of parties’ obtaining bank loans against future revenue which the parties expect to receive from the state. Every year, the interior minister issues a ministerial ordinance which distributes funds to parties which have received at least 1.5% of the total vote in the most recent elections.

Ιn the past, state-owned and private banks lent millions of euros to Greek political parties. However, the banks proved unable to force the parties repay their loans, as successive governments protected over-indebted parties. For example, while the aforementioned 2014 law provided that banks could confiscate assets from political parties up to 90% of the debt owed to them, in July 2017 the Syriza-ANEL coalition government reduced this value to 60% of the total debt owed.

A new state committee, the monitoring mechanism of electoral campaign spending, has been established under an August 2016 decision of the Greek parliament. However, monitoring remains ineffective and the real sources of party financing are not known in full. For example, the new legislation contains a provision reinstating anonymous coupons for financing political parties. Such anonymous coupons can now represent up to 5% of the state financing of a party. This is not in line with the recommendations of the Council of Europe.
Citations:
A brief article on the new law in English is available at http://www.ekathimerini.com/162022/article/ekathimerini/news/bill-introduces-new-rules-for-funding-of-greek-political-parties. Accessed on 03.11.2015.

See also European Commission, Compliance Report. The Third Economic Adjustment Programme for Greece
Second Review, June 2017.
Iceland
The 2006 law regulating the financing of political parties provides three types of public grants. First, an annual grant, proportional to the national vote share in the previous election, is awarded to any party or independent group with at least one member of parliament or attained at least 2.5% of the national vote in the last election. Second, an annual grant, proportional to the number of seats in parliament, is awarded to all parliamentary parties or independent groups. Third, a grant is awarded to any party or independent group, in a municipality of 500 inhabitants or more, with at least one member in the local council or attained at least 5% of the vote in the last municipal election. The law also regulates private contributions to politics. For example, parties are not allowed to accept more than ISK 400,000 (€3,100) from any private actor, company, or individual.

The National Audit Office (Ríkisendurskoðun) monitors party and candidate finances, and publishes annual summaries that include total expenditure and income. Income must be classified by origin, identifying companies or other entities contributing to party finances before and during election periods.

Before the 2007 election campaign, political parties reached an agreement that a maximum of ISK 28 million could be spent on TV, radio, and newspaper advertisements. Despite this agreement, there is legal limit on electoral spending. Since 2009, regulation on party finances has been under review, but no final agreement has been reached.

The law on party financing was originally drafted by a committee comprising party representatives, including the chief financial officers of the main political parties. This followed the disclosure by the National Audit Office that, among other things, fishing firms gave 10 times as much money to the Independence Party and the Progressive Party between 2008 and 2011 as to all other parties combined. The Independence Party and the Progressive Party have been and remain particularly generous toward the fishing industry. Similarly, the Special Investigation Committee disclosed that huge loans and contributions were provided by the Icelandic banks to political parties and politicians between 2006 and 2008, on a per capita scale significantly greater than in the United States.

The extent to which the rules are circumvented is not known. The Progressive Party, for example, is known to have received an anonymous loan of ISK 50 million before the 2016 election, a loan that turned out to have been granted by an investment bank headed by the brother-in-law of the discredited former prime minister from the Progressive Party who, months earlier, had resigned in the wake of the Panama Papers scandal.
Citations:
1. Lög um fjármál stjórnmálasamtaka og frambjóðenda og um upplýsingaskyldu þeirra, nr. 162/2006 (Law on the finances of political organizations and candidates and about their information duties nr. 162/2006).
2. Lög um breytingu á lögum nr. 162/2006, um fjármál stjórnmálasamtaka og frambjóðenda og um upplýsingaskyldu þeirra nr. 119 21. september 2010.
3. Kristinsson, G. H. (2007): Íslenska stjórnkerfið. 2. útgáfa. Reykjavík, Háskóli Íslands. (The Icelandic political system. Second edition)
4. Special Investigation Committee (SIC) (2010), “Report of the Special Investigation Committee (SIC),” report delivered to Althing, the Icelandic Parliament, on 12 April. See http://www.rna.is/eldri-nefndir/addragandi-og-orsakir-falls-islensku-bankanna-2008/skyrsla-nefndarinnar/english/
Italy
State financing was regulated until February 2014 by a 1993 law (Legge del 10 Dicembre 1993 no. 515) and was monitored by an independent judiciary organ – the Court of Accounts (Corte dei Conti) – which checked the accounts provided by parties and could sanction infringements. Private financing must be declared by candidates and parties, and is controlled by regional judicial bodies. The existing rules about private and public financing of parties and their enforcement are largely inadequate for a fully transparent system. The degree of publicity over private contributions is largely left to the parties and in many cases is very defective. In recent years, many cases of individual or institutional abuse or even fraud of public party funding emerged in almost all of the political parties.

A new reform (Law 21 February 2014, no. 13) has significantly reduced public financing for parties. It has introduced a new regime of fiscal exemptions for private contributions and created a new oversight institution, the “Commissione di garanzia degli statuti e per la trasparenza e il controllo dei rendiconti dei partiti politici,” whose members are nominated by judicial bodies. The new system only became fully effective in 2017. The main financial source should be the “due per mille” policy, which enables citizens to nominate a political party to receive 0.2% of their income tax. So far, this system has proven highly unsuccessful. In 2015, only 1.1 million out of 41 million people who paid income tax (2.7%) exercised this option. This percentage went down to 2.38% in 2016, a sign of the apathy Italians have for political parties. Private donations are also very low in spite of the fiscal exemptions. An important source are the funds distributed by the two chambers to parliamentary groups, approximately €50,000 for each member of parliament. Part of these funds are transferred to the party organizations, while members of parliament contribute part of their parliamentary salary to their party.
Mexico
Mexico’s elections are highly regulated by the state. This reflects a history of electoral fraud and rigged elections which resulted in distrust between parties and a desire to formalize rules. The National Electoral Institute (INE) is in charge of monitoring party compliance with electoral rules and regulations. It is also responsible for administering and auditing the public funding of parties.

By international comparison, public funding of political parties in Mexico is extremely generous. Political parties are mostly financed by the state and there are restrictions on the amount of fundraising permitted. INE also coordinates campaign advertisements for parties. Electoral expenditures have been similarly controlled. INE can and does impose significant sanctions on political parties if they fail to comply with funding rules. However, oversight is incomplete and INE audits have revealed illegal undisclosed funding to parties. Moreover, there is considerable evidence that the federal government provided illegal subsidies to co-partisan governors to strengthen the PRI’s chances in gubernatorial elections.

There are two important challenges in the run-up to the 2018 federal elections. First, organized crime and corruption continue to represent a serious threat to the integrity of the political system. There is widespread evidence of successful attempts by organized criminal and other illicit interests in society to influence electoral processes and public officials. Thus, while INE’s bureaucracy is by and large efficient and impartial, the weak rule of law and ineffective criminal courts undermine the integrity of elections. Second, public support for the lavish system of party financing is eroding quickly, as major political parties are widely distrusted and seen as self-serving. A petition to re-direct the seven billion pesos that parties can use for the 2018 election to earthquake relief obtained a record number of signatures on change.org. Major parties quickly jumped onto this bandwagon and offered to partially donate their public funds and even to reform the funding system. This proposal drew skepticism, however, as it is likely to ossify the party system even further, and to restrict opportunities for new political forces.
Citations:
Latin American Regional Report: Mexico & NAFTA (October 2017) “Earthquake produces politico-electoral reform debate.”

New York Times (20 Dec 2017) “Mexico Graft Inquiry Deepens With Arrest of a Presidential Ally”
Romania
The legal framework for party and campaign financing was amended in 2016. One important amendment has required parties to declare all contributions received along with the sums earmarked for television ads and posters while identifying the contributors. A second amendment strengthened the obligation of parties to document the use of public funds, which constitute a significant portion of party resources. While these amendments have enhanced the transparency and accountability of party financing, other changes have pointed in the opposite direction. In early 2016, the two biggest parties, PSD and PNL, both highly indebted, colluded and reduced the possibility for creditors to get their money back from parties. In 2017, parliament passed controversial amendments to the law on the financing of political parties and electoral campaigns which were declared unconstitutional on procedural grounds by the Constitutional Court in November. However, the main problem still is lagging implementation. Parties circumvent regulations through a variety of methods such as the creation of fictitious positions and party structures, thus enabling them to hide additional sources of income. As a result, spending by parties and candidates surpasses their declared resources, and true donor support exceeds parties’ stated income. Sanctions are rare even in cases of blatant legal breaches.
South Korea
Since being enacted in 1965, the Political Fund Act in Korea has undergone 24 revisions for the purpose of guaranteeing that political funding is fairly and transparently provided. According to financial reports submitted by political parties in 2015, the total amount of membership fees collected from party members was $52 million, representing only 25.8% of the parties’ total income of $201.3 million. Parties also receive public subsidies according to their share of the vote in the most recent previous election. However, a larger share of campaign financing comes from private donations. Today, many election candidates raise funds in the form of special investments. A system encouraging people to report illegal electoral practices, introduced in 2004, has played a positive role in reducing illegal campaign financing. Although election laws strictly regulate political contributions, efforts to make the political funding process more transparent have had only limited success. Many violations of the political funding law emerge after almost every election, and many elected officials or parliamentarians have lost their offices or seats due to violations. However, breaking the election law carries little stigma. For example, after the 2016 general election, Ahn Cheol-soo resigned as co-leader of the People’s Party following a party financing scandal, but was still nominated to be his party’s presidential candidate in the May 2017 presidential elections.
Citations:
OECD. Korea – Financing Democracy. February 4, 2016.
http://www.keepeek.com/Digital-Asset-Management/oecd/governance/financing-democracy/korea_9789264249455-12-en#page1
“People’s Party lawmaker appears for questioning over rebate allegation,” The Korea Herald, 23 June 2016.
http://www.koreaherald.com/view.php?ud=20160623000719
“People’s Party falls into crisis as Ahn resigns,” The Korea Times, 29 June 2016.
http://www.koreatimes.co.kr/www/news/nation/2016/08/116_208219.html
Spain
Party-financing legislation was reformulated in 2015 (Ley Orgánica 3/2015) as part of an anti-corruption plan seeking to increase transparency and impose sanctions for violations, passed following the emergence of a significant number of scandals in recent years. The previous, less strict law was ineffectual in preventing opaque donations received by think tanks and charities associated with parties, backdoor funding in the form of the cancellation of parties’ bank loans or debts, and even plainly illegal direct financing in large volumes (such as the famous Gürtel and Barcenas cases, involving the PP or the Palau case, involving the nationalist Catalan CDC).

Under the current rules, political parties are deemed private associations with a mixed revenue system. They are assigned funds from the public budget in proportion to their parliamentary representation but can also collect private money from individuals (including the largely insignificant membership fees) and corporations. The new law imposes spending thresholds in electoral campaigns, and the contributions made by businesses are at least in theory subject to limits and conditions (e.g., anonymous donations are forbidden, and companies that supply goods or services to the state cannot contribute to campaigns). The Audit Office (Tribunal de Cuentas) is the body charged with auditing the parties’ accounts but has no capacity to control them effectively. On the one hand, this office suffers from a lack of political independence as its members are appointed by the parties themselves. On the other, it lacks staff resources and suffers delays in the publication of audit reports.
Citations:
Ley Orgánica 3/2015:
www.boe.es/diario_boe/txt.php?id= BOE-A-2015-3441
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Malta
Malta passed its first party financing law in July 2015, which requires that political parties should be subject to international standards of accounting and auditing; cannot accept donations from companies associated with the government; cannot accept donations from entities, foundations, trusts and nominees whose beneficiaries are unknown; donations in excess of €7,000 must be recorded online and reported to the Electoral Commission; and donations from individuals must be capped at €25,000. As a consequence of this legislation, political parties in 2016 were forced to publish details on the financing of their electoral campaigns. However, the effectiveness of this legislation has been challenged by a loan scheme launched in 2016 by the opposition party, which it claims allows it to keep the names of donors secret. The electoral commission lacks the power to ensure compliance since it is unable to control sources of income beyond donations. Other flaws of the new legislation include the absence of a requirement to use a designated bank account or to disclose donations to entities owned by political parties as well as an excessive disclosure threshold, a failure to cap spending at €2 million, and a lack of detailed and timely reporting. It has also been noted that there is insufficient harmonization of the regulations relating to the Financing of Political Parties Act (FPPA) and General Elections Act, raising concerns over which act would take legal precedence. The role of the electoral commission as the appropriate body to act as investigator and adjudicator with regard to the FPPA has also been questioned.
Citations:
http://www.timesofmalta.com/articles/view/20150721/local/pns-conditional-yes-to-party-funding-bill.577469
http://www.maltatoday.com.mt/news/national/55315/party_financing_bill_passes_into_law_both_parties_vote_in_favour#.ViNkq34rKM8
Party Financing a lost opportunity Malta Today 23/07/2015
http://www.timesofmalta.com/articles/view/20160917/local/pn-refusing-to-disclose-cedoli-scheme-donor-details.625240
http://www.timesofmalta.com/articles/view/20160911/local/cedoli-make-3m-as-pn-prepares-for-an-election.624637
tvm.com.mt 09/12/15 Malta off GRECO blacklist thanks to legislation on party financing
Times of Malta 07/11/17 Four Electoral Commission Members opted not to apply party financing law fearing human rights breach
Netherlands
Until about a decade ago, political-party finances were not a contested issue in Dutch politics. Financing of political parties comes largely from membership contributions (40-50%), “party tax” of elected members’ salaries and acquisitions (festivities, bazaars, dinners) and government subsidies (30-35%, or €16.5 billion in 2016). However, newcomer parties like the Pim Fortuyn List (Lijst Pim Fortuyn, LPF), and later the Party for Freedom (Partij voor de Vrijheid, PVV) received substantial gifts from businesses and/or foreign sources, while the Socialist Party (Socialistische Partij, SP) made its parliamentarians completely financially dependent on the party leadership by demanding that their salaries be donated in full to the party.

As government transparency became a political issue, these glaring opacities in the Dutch “non-system” of party financing were flagged by the Council of Europe and the Group of Countries against Corruption (GRECO) – resulting in increasing pressures to change the law. Political expediency caused many delays, but the Rutte I Council of Ministers introduced a bill on the financing of political parties in 2011.

This new law eradicates many – but not all – of the earlier loopholes. Political parties are obliged to register gifts starting at €1,000, and at €4,500 they are obliged to publish the name and address of the donor. This rule has been opposed by the PVV as an infringement of the right to anonymously support a political party. Direct provision of services and facilities to political parties is also regulated. Non-compliance will be better monitored, and an advisory commission on party finances will counsel the minister on politically sensitive issues. The scope of the law does not yet extend to provincial or local political parties. The law’s possible discrimination against newcomer political parties remains an unresolved issue.
Citations:
Wet financiering politiek partijen: einde in zicht - maar wat een gaten! (montesquieu-instituut.nl, consulted 5 november 2014)

Parlement & Politiek, Partijfinanciering, 2016 (parlement.com, consulted November 9 2016

Ontvangen politieke partijen giften en subsidies?, 2016 (rijksoverheid.nl, consulted 9 November 2016)

NRC.nl, “Laksheid partijen met regels eigen financiering blijft zorgelijk,” 17 May 2017
Turkey
Article 60 of Law 2820 requires political-party organs at every level to keep a membership register, a decision book, a register for incoming and outgoing documents, an income and expenditure book, and an inventory list. According to Article 73 of Law 2820, political parties must prepare yearly statements of revenues and expenditures, at both the party-headquarters and provincial levels. However, Turkish law does not regulate the financing of party or independent-candidate electoral campaigns. Presidential candidates’ campaign finances are regulated by Law 6271; these candidates can legally accept contributions and other aid only from natural persons having Turkish nationality. However, the Supreme Election Board has allowed political parties to organize campaign activities and purchase advertisements for their candidates in a way unregulated by law. Thus, the state aid provided to the political parties can be used indirectly for presidential-campaign activities.

There is no legal ceiling for campaign expenditures. The finances of candidates in local and parliamentary elections are not regulated by law. There is no specific reporting obligation for campaign contributors, apart from a general requirement, based on the Tax Procedure Code, for individuals to declare expenses (which could include political contributions) to the tax authorities. Pursuant to Article 69 of the constitution, Article 74 of Law 2820 stipulates that political-party finances must be audited by the Constitutional Court to verify whether the parties’ property acquisitions, revenues and expenditures are in compliance with the law. Auditing decisions by the Constitutional Court are published in the Official Gazette. The review report of the Supreme Election Board on presidential candidates’ campaigns must be announced within a month of the audit’s completion. However, the law does not specify where the audit result shall be announced.

The Constitutional Court, with the assistance of the Court of Accounts, examines the accuracy of information contained in a party’s final accounts and the legality of recorded revenues and expenditures on the basis of information at hand and documents provided. However, the court’s examination of the main parties’ accounts is slow and sometimes takes longer than three years. Law 2820 contains criminal, administrative and civil sanctions on political parties’ unlawful income or expenditures, with fines accruing to the state treasury.

Ceilings for donations to political parties by private individuals are evaluated each year. This level was approximately €10,349 in 2017. However, donations are often not properly or systematically recorded – for example, cash and in-kind contributions or expenditures made in support of parties or candidates during elections are not recorded. The funds collected and expenditures incurred by individual elected representatives or candidates during political party activities, including electoral campaigning, are not included in party accounts. Party accounts published in the Official Gazette provide only general figures and potential infringements. The accuracy of the financial reports posted by political parties online needs to be examined. Critics have argued that discretionary funds controlled by the Prime Minister’s Office (PMO) and the president were used for the incumbent party’s campaigns.
Citations:
GRECO, Third Evaluation Round Evaluation 3rd Interim Compliance Report on Turkey, 2 December 2016, https://rm.coe.int/third-evaluation-round-third-interim-compliance-report-on-turkey-incri/168072247a (accessed 1 November 2017)
Ö. Faruk Gençkaya, Umut Gündüz and Damla Cihangir-Tetik, Political Finance and Transparency İstanbul: Transparency International Turkey Chapter, 2016. http://www.seffaflik.org/wp-content/uploads/2016/01/Siyasetin-Finansman%C4%B1-EN.pdf. (accessed 16 January 2016)
Ö. Faruk Gençkaya, “Financing of Political Parties and Electoral Campaigns in Turkey,” S. ASayarı, P. Ayan-Musil and Ö. Demirkol, Party Politics in Turkey: A Comparative Perspective, Routledge, 2018.
Money, Politics and Transparency, Turkey Report, 2015, https://data.moneypoliticstransparency.org/countries/TR/ (accessed 27 October 2015)
OSCE/ODIHR (2015b) Republic of Turkey Early Parliamentary Elections, 1 November 2015. OSCE/ODIHR Limited Election Observation Mission Final Report, http://www.osce.org/odihr/elections/turkey/219201?download=true
OSCE/ODIHR (2015a) Republic of Turkey Parliamentary Elections, 7 June 2015 Limited Election Observation Mission
Final Report, http://www.osce.org/odihr/elections/turkey/177926?download=true.
OSCE/ODIHR (2014), Republic of Turkey Presidential Election 10 August 2014 OSCE/ODIHR Needs Assessment Mission Report, 7-9 May 2014, http://www.osce.org/odihr/elections/turkey/119439?download=true.
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Cyprus
State funding of political parties and affiliated organizations was established in 1989. The most recent amendment of the law in November 2015, in response to GRECO and other organizations’ recommendations, sought to regulate private funding and fight corruption. Financial or other donations up to €50,000 are allowed; the list of donors has to be published except for sums below €500. All parties and candidates accounts including election-related (i.e., income, expenditure, assets and debts) must be audited annually by the auditor general, forwarded to him by the director-general of the Interior Ministry (registrar for political parties). Parliamentary candidates have an electoral expenditure cap of €30,000; this goes up to €1 million for presidential candidates. The law lists activities that constitute corruption and which must be avoided by candidates. Non-compliance and corruption are subject to fines and/or imprisonment, depending on the offense.

In its March 2016 report, GRECO noted that most of its recommendations are only partially implemented. Per party and candidate electoral accounts for 2016 were submitted and audited. In his report, the auditor general noted some problems that limit the scope and efficiency of control; among others, the lack of legal obligation in the law for submitting payment documents as well as no clear definition of the term “personal expenses.” The auditor general also noted omissions and discrepancies in submitted accounts and announced more robust auditing for reviewing parties annual accounts for 2016.

The caps set for donations and per-candidate expenses seem excessively high given the small size of the electorate (550,000 voters) and the market. Also, the criteria used to set the level of annual or extraordinary state subsidies to political parties remain opaque.
Citations:
1. Audit boss flags party election expenses, Cyprus Mail, 23 June 2017 http://cyprus-mail.com/2017/06/23/audit-boss-flags-party-election-expenses
2. No tangible progress on transparency in party funding, GRECO says, Cyprus Mail, 24.03.2016, http://cyprus-mail.com/2016/03/24/no-tangible-progress-on-transparency-in-party-funding-greco-says
3. CoE – GRECO, Fourth Evaluation Round, Cyprus, July 2016, http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/Eval%20IV/GrecoEval4Rep(2016)7_Cyprus_EN.pdf
Hungary
The Orbán government has kept the public financing of bigger, parliamentary parties low. An amendment of the law on party financing in 2013, shifted funds toward individual candidates and smaller parties, thus contributing to the record-high number of candidates in the 2014 parliamentary elections. While it has become easier for small parties to enter the political arena, the political landscape has got more fragmented, to the detriment of bigger opposition parties. The financial gap between Fidesz and the opposition has been large. With membership declining, the non-governing parties have lost revenues from membership fees and have become dependent on rich donors. While Jobbik has benefited from the support by Simicska, the time of tycoons with leftist leanings has passed. Even more importantly, Fidesz has been able to circumvent the restrictions on campaign spending by involving formally independent civic associations.
 
The rules for party and campaign financing do not effectively enforce the obligation to make the donations public. Party and campaign financing is neither monitored independently nor, in case of infringements, subject to proportionate sanctions.
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Switzerland
Switzerland does not finance parties with public money on the federal level. In return, there are no constraints applied to party fundraising. There is some financing of parties on the cantonal level in Geneva and Fribourg.

National parties won recognition only in the constitutional revision of 1999 and there remains a deep-seated aversion to public financing. In consequence, there is little to no public scrutiny of party activities, since no public money is at stake. However, a considerable portion of political parties’ revenues comes from the subsidies given to party factions in the national parliament or through reimbursement for services; these together amount in some cases to 30% of total party income. Another important source of income is the attendance fee granted to members of parliament, which can be considered a form of party financing.

Since 2011, the Council of Europe’ Group of States Against Corruption (GRECO) has argued that Switzerland’s system of party donations lacks transparency. The attempt by Social Democratic Minister of Justice Simonetta Sommaruga to draft a law on political party financing failed due to political opposition. The government has insisted on maintaining the current rules. In 2017, GRECO regretted “that the federal authorities are maintaining their position of not legislating on the transparency of party and campaign funding” (GRECO 2017:5).

In 2017, the required number of signatures for a vote on a popular initiative for transparency have been collected. It would lead to a new constitutional article, stipulating that political parties must name any donors who donate at least CHF 10,000. Similarly, if a person spends more than CHF 100,000 on a federal election or a popular campaign, they must inform the Federal Chancellery and name any donors who gave at least CHF 10,000.
Citations:
GRECO (Group of States against Corruption/Council of Europe) 2017: Fourth Interim Compliance Report on Switzerland. “Transparency of Party Funding,” GRECO: Strasbourg (https://www.coe.int/en/web/greco/evaluations/switzerland)
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