ELECTORAL PROCESS

Prior to the election, parties must declare all advertisement spending as well as all financial contributions, and formal documents must be filed. There is tight scrutiny from both legal bodies and respective parliamentary bodies.
After the election, all advertisement spending and contributions are scrutinized, in particular by multiparty, special parliamentary committees. Candidates who infringe the rules may, for instance, lose their right to be elected. This happened to a candidate from one of the main parties who ran for mayor. The candidate had violated spending limits and was replaced by another candidate from the same party.
Parties regularly have to submit detailed and well-documented financial reports, even outside of election periods, which are also strictly scrutinized.
There is thus a compelling legal apparatus, also effectively implemented, to keep tabs on party financing; party representatives too that sit in special committees are keen on checking the practices and figures of other rival parties. This is further facilitated by the fact that parties (at least those which manage to secure seats in both federal houses) receive ample public funding, and also at the regional level, on the condition that they strictly abide by financing rules.

The funding of political parties in Australia is an area of considerable complexity and conflict, as it is in many other countries. The position is further complicated in Australia by the existence of different laws at the federal level, and within each of the six states and two territories. Nonetheless, there are important common features of the jurisdictions. Public funding for state and federal election campaigns is provided to every candidate securing at least 4% of the first preference vote, and by its nature this is a transparent source of funding. For private funding, there are no limits on the value of donations, but candidates and parties must adhere to reasonably stringent disclosure rules. The AEC rigorously monitors and enforces disclosure requirements and there may be substantial penalties (including imprisonment) for failing to comply with the requirements. While there are no limits on donations, the federal government passed legislation in February 2010, the Tax Laws Amendment (Political Contributions and Gifts) Act 2008, which abolished tax deductions for donations to political parties and independent candidates and members. The new law also limits existing provisions that allow tax deductions for gifts and contributions by businesses to political parties and independent candidates and members. This was an election commitment by the Labor Party in the 2007 federal election.
At the state and territory level, two major reviews were established in the Australian Capital Territory (ACT) and in New South Wales in 2009. In the ACT the Standing Committee on Justice and Community Safety began an inquiry into campaign finance reform and will report in mid-2010. In New South Wales, debates on reform of the funding system have included a more robust and transparent disclosure scheme; limits on election spending by political parties; contribution limits by individuals (with an exemption for membership fees); the stricter regulation of fund-raisers; and enhanced accountability of government advertising. So far, these discussions are ongoing.

Political parties have members that pay membership fees. These fees, however, are inadequate for financing the activities of the parties, including the financing of electoral campaigns. Parties therefore depend on other sources of income. There are basically two other sources: support from other organizations or public support. Traditionally the Social Democratic Party has received support from the labor movement, from various trade unions. The parties on the right of the political spectrum, the Conservative Party and the Liberal Party, have traditionally received support from employers’ organizations. A law enacted in 1990 outlined that such contributions are voluntary, so 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 People’s Assembly (Folketing) receive financial support for their legislative work, including staff. Further, the parties receive electoral support. Parties that take participate in parliamentary elections and received at least 1,000 votes in the most recent election have a right to financial support. In 2010, a party was given DKK 27.50 per year, per vote they received in the last election.
There is full 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 not revealed. Smaller amounts are allowed to remain anonymous. It is possible to circumvent publicity by donating below the limit to local branches of political parties.

The Electoral Finance Act 2007 sought to reform party financing and election campaign financing in a comprehensive manner. However, the act was repealed in 2009 due to a number of problems resulting from legal definitions. Parliament is currently working on a modified version of the Electoral Finance Act to be put in place before the next general election. 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.

The funding of political parties is predominantly public. In average the parties receive about three quarters of their revenues from 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 (the largest party) receives funds from particular trade unions and the Conservative Party receives donations from individuals and business organizations. State support for parties is proportionate to previous election results but also parties not represented in parliament have access to state support, as have a wide range of political organizations, with or without party affiliation. In 2009, 2,850 political or voluntary organizations were in receipt of some state support.
Political parties have since 1998 been obliged to publish overviews of their revenues, and since 2005 in more detail. All party organizations, central and local, are obliged to submit detailed income reports annually with full information on income by sources. Contributions of NOK 30,000 or more must be informed separately, including the identity of the donor. Income reports are submitted to the Central Bureau of Statistics and are published in detail. It is under consideration to oblige parties to report not only incomes but also expenditures, property and debt.

Canada receives fairly high marks for transparent and effectively monitored procedures for private and public party financing and electoral campaign financing, and for the ways in which infringements are subject to sanction. 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 5. Elections Canada provides access to the full database online for public use.

A more general issue is whether party financing rules prevent special interests from having undue influence over the political process. In this regard, Canada rates highly. Corporations, trade unions, associations and groups are prohibited from contributing to political parties. Only individuals are allowed to contribute, to a maximum of CAD 1,100 per year to registered parties, a maximum of CAD 1,100 to electoral candidates, and finally an additional maximum of CAD 1,100 to candidates in political party leadership contests. Individuals receive generous tax credits for political donations. Political parties are also funded by the government. Parties receiving more than 2% of the national vote are given CAD 1.75 (adjusted for inflation) per year per vote cast for the party in the last general election, paid out as an allowance on a quarterly basis.

Germany’s political parties finance their activities in line with the PPA, through state funding, membership fees and donations. Sponsorship has recently drawn attention as a fourth but still minor source of revenue. In order to be eligible for state funding, parties must win at least 0.5% of votes in federal or EU elections and 1% in federal state elections. Every vote up to a 4 million cutoff point results in a state contribution to the party of €0.85; votes above that receive €0.70. Additionally, individual donations up to €3,300 are matched by the state with €0.38 per euro collected. According to the OSCE report, most parties are satisfied with the current arrangements (OSCE 2009: 16). German legislation does not contain any specific provisions regarding campaign financing or expenditure.
Transparency is a basic principle of the German party financing system, but is still open to improvement. The OSCE recommended that in order “(t)o further enhance transparency of party financing, including of electoral campaigns, consideration could be given to requiring immediate publication of information on large donations, as well as to speeding up the publication of annual reports” (OSCE 2009: 17).
With respect to campaign finance monitoring, German regulation is well developed, but again with room for improvement. The Basic Law and the PPA stipulate that the president of the Bundestag receives parties’ annual financial reports by the end of the third quarter of the following year. A certified auditor verifies the financial reports before the submission. The reports include detailed income, expenditure and asset accounting, and list all donations as well as the names of donors whose total contribution exceed €10,000. If a party does not meet these requirements, a fine double or even three times the amount of the misstated donation can be imposed. Recently, several parliamentary parties were confronted with accusations of circumventing the PPA regulations. In December 2009, the Free Democratic Party (FDP) and the Bavarian Christian Social Union (CSU) were accused of accepting donations made by a German billionaire and hotelier of approximately €2 million in exchange for supporting a value-added tax (VAT) reduction for the hotel industry. This scandal has not yet provoked any change in regulation. But the scandal ignited a heated debate lasting several weeks concerning the questionable quid pro quo relationship between political parties and their sponsors.
In the spring of 2010, the prime minster of the federal state North Rhine-Westphalia, Jürgen Rüttgers, drew negative international attention. In order to finance an election campaign, Christian Democratic campaign organizers had approached several companies proposing that in return for a contribution of €6,000, a personal conversation with Rüttgers would be arranged at the party’s convention. The scandal grew in size when party officials of the Christian Democrats in Saxony had to admit that they were conducting similar sponsorship practices. Although the affair resulted in the resignation of Rüttgers as secretary general, the lasting effects of the revelation seem to be minimal. The cases of questionable party-sponsoring led to an open letter by Transparency International Germany and other organizations asking the chairmen of the parliamentary parties to tighten the PPA. So far, initiatives to enhance transparency and to regulate sponsorship of parties more specifically in the PPA have been introduced in the Bundestag by the Left Party and the Greens (Bündnis90/Die Grünen). They will probably be rejected by the coalition majority, however. On the one hand, these debates indicate that there could be a problem with illegitimate influence by donors. On the other, the resulting negative attention shows that transparency works at least partially, and that parties risk sullying their reputation if they cannot dispel this criticism.

The Standards in Public Office Commission supervises the disclosure of interests, compliance with tax clearance requirements, the disclosure of donations and election expenditures, and the expenditure of state funds received by political parties. It has oversight authority and reports to the chairman of the Dáil Éireann on the following matters:
• the acceptance and disclosure of donations received by political parties, members of both houses and of the European Parliament, and candidates contesting Dáil, Seanad, European Parliament and presidential elections;
• the opening and maintenance of political donation accounts;
• the limitation, disclosure and reimbursement of election expenses;
• state financing of qualified political parties; and
• the registration of “third parties” (i.e., campaign/lobby groups or individuals which accept a donation for political purposes which exceeds €127 in value) and other persons.
The Standards Commission is required to facilitate the inspection and copying, by any person, of donation statements, election expenses statements and other documents furnished to it under the legislation.
The commission’s latest published annual report is for 2008. This shows that in 2007, total funding of €12,974,613 was paid to qualified political parties under the Electoral Acts and the Party Leaders Allowance Act.
Each of the 14 political parties registered to contest a Dáil or European election was required to furnish a donation statement to the Standards Commission by March 31, 2007. Donations received during 2007 which exceeded an aggregate value of €5,078.95 were required to be disclosed. The maximum value of donations a political party can accept from a single person in a single calendar year is €6,348.69. Donations received a single donor in the course of a single calendar year must be aggregated for the purposes of observing the disclosure and maximum acceptance limits. The total value of donations disclosed by parties during 2007 was €266,484.98.

The financing of parties is to a large extent public. State financing is regulated by a 1993 law (Legge del 10 dicembre 1993 n. 515, e successive modificazioni recante norme sulla “disciplina delle campagne elettorali per l’elezione alla Camera dei deputati e al Senato della Repubblica”), and is monitored by an independent judiciary organ, the Court of Accounts (Corte dei Conti), which checks the accounts provided by parties and can sanction infringements. Private financing must be declared by candidates and parties, and is controlled by regional judicial bodies.

Party financing was clarified by the law of December 21, 2007 (into force as of January 1, 2008), which introduces public funding of routine party activities, rules on transparency and monitoring, and penalties for breaches of regulation. The Council of Europe’s Group of States against Corruption (GRECO) applauded the law’s introduction, while noting that some gaps in regulation persist: “…in so far as insufficient account was taken of the financing of election campaigns and of candidates for election. Because the law breaks such new ground, the impact of the improvements in the area of transparency, monitoring (by the Court of Auditors) and sanctions still need to be determined; at least on paper, there are some lacunae.”
The GRECO Evaluation Team (GET) complained about the lack of a uniform assessment of various services and benefits in kind, such as the assistance of allied media during the election campaign and demanded a system of “effective, proportionate and dissuasive penalties” for those who break the law. The GET criticized that despite the new law, parties still have no specific legal status. The major finding of the evaluation was the lack of public control of the parties’ accounts, as the parties experience difficulties in setting up an accounting system.
Pointing to the need for a fully coherent monitoring system of political funding, the GET recommends that “a clear separation be made between the financing of parliamentary groups and that of political parties or that the Court of Auditors’ jurisdiction be extended to parliamentary groups.”

The private funding of political parties is allowed in Mexico, but there is a stipulation (it is not yet clear how this will be interpreted) that parties must not raise more money from private sources than they get from the state. The IFE monitors donations in order to enforce this provision, and parties are required to provide documentation of their accounts. Private funding is allowed via membership payments, voluntary donations, and direct earnings by the parties themselves (through interest on bank deposits, for example). However, some people and organizations are forbidden to make contributions to political parties. These include churches, foreign organizations and publicly funded bodies. Public funding of parties is generous, so the state can impose effective sanctions in the event that the laws are breached.

Introduced in 2001, the new Polish system of party financing provides for a high level of public funding while setting relatively strict limits on the private financing of parties. The system has made party financing more transparent, contributed to a decline in corruption, and strengthened those parties that cannot rely on assets from the communist period (Walecki 2005). The restrictions on private donations are sometimes circumvented and the National Election Committee (Państwowa Komisja Wyborcza – PKW), which supervises campaign and party financing, could be more effective. The main problem with the system, however, is the algorithm upon which the allocation of public funds is based. It favors the bigger parties and pushes up public spending when the concentration of the party system increases (Zbieranek 2009). The resulting surge in overall public support for parties from PLN 36 million in 2003 to PLN 107 million in 2008 has not gone well with the general public. A 2008 proposal by the governing PO to abolish the public support for parties and give citizens the right to donate part of their income tax payments to parties of their own choice instead did not find a majority. Instead, parliament passed a bill submitted by the leftist Democratic Left Alliance (SLD) that aimed at reducing the overall amount of public money given to political parties. However, this bill was vetoed and sent to the Constitutional Court by President Kaczyński.

Transparency is not a problem in American party financing. Indeed, one can enter a name in a search engine and find out how much an individual or organization has contributed to a party (outright corporation and union contributions to individual candidates are barred in the United States). Parties and candidates also must account regularly and in detail for their receipts and expenditures, and are subject to auditing. However, much of political fundraising and spending occurs outside this system, by means of independent political advertising by private groups. Efforts to regulate independent spending have run afoul of judicial policies concerning the freedom-of-speech guarantee of the Constitution, with the Supreme Court ruling that political spending is in effect a form of protected speech. A recent Supreme Court decision (January 21, 2010) rejected limits on private advertising in favor of or against candidates, which the McCain-Feingold Act of 2002 had applied to the period leading up to an election. The consequence is that corporations and unions (as well as other private organizations) can raise and spend unlimited amounts of money for political advertising, even during the “hot” phase of an election. The decision is shifting the balance toward private influence in election campaigns in ways that could have a major impact on such issues as climate change, and is removing a larger part of campaign spending from the potential for public scrutiny.

The financing of parties is regulated by the state. A major, and indeed often the main source of income of the Czech parliamentary political parties is various forms of state contribution. This follows a precise formula which benefits the larger parties while severely penalizing those with the smallest share of the votes. A small new party stands little chance without wealthy backers. The private funding of parties is subject to a number of legal restrictions. Parties are prohibited from accepting money from state-owned enterprises or foreign donors. All donations above €2,000 (CZK 50,000) have to take place via bank transfer and make use of a so-called donation voucher. Parties are obliged to publish information about donors and donations in audited annual reports that to be made publically available in the library of the parliament. The funding of political parties is supervised by the fiscal and tax authorities and overseen by parliament. Although these rules appear strict, they are not as rigid as some in western Europe. For instance, there is no requirement for a special bank account for financing an election campaign, nor is there any upper limit to election spending. Larger parties can take bank loans to fund their electoral campaign, or establish companies which then provide such loans. There have been many media reports on how control of party funding can be circumvented, along with less frequent threats of legal action.

Lacking a sufficient legal framework, party financing has been a source of recurrent scandals related to illegal practices. Nearly all parties, notably the parties of government, used to finance their activities by charging private companies working for local public entities or by taxing commercial companies requesting building permits. Only recently has a decent regulatory framework been put in place. It includes the funding of political campaigns by public resources paid according to the votes attracted by each party or candidate. The system favors large organizations to such an extent that they might have serious financial problems in the case of a major political setback. This happened to the extreme-right party National Front (Front National, or FN) after its defeat in the presidential elections in 2007, as it was forced to sell its headquarters as the partial reimbursement of its expenses did not cover the full cost of its electoral campaign. However, individual candidates are not overlooked as many elections are organized according to a single constituency system. In fact, one side effect of this legislation has been the mushrooming of candidates attracted by the possibility to voice their concerns at a low cost.
Ceilings have also been put on the maximum amount that candidates in an election can spend. In the end all candidates must present a detailed account of their spending during the campaign to an ad-hoc commission. There have been several cases of elections to be held again as initial winner was accused of overspending. Candidates might appeal the commission‘s decisions to the administrative courts. In the case of national or presidential elections, the control is ensured by the Constitutional Council (Conseil constitutionnel).
There is still progress to be made, however, in particular concerning the control of hidden support that elected officials may receive from local authorities. The tradition of cumulating different elective mandates is a powerful instrument of indirect support to incumbents, which discriminates against challengers.

Oversight responsibility regarding political party funding lies with the Constitutional Court, which has a specific body to monitor party financing and accounts, the Entidade das Contas e Financiamentos Políticos (EFPC). There are two main sources of funds: First, the government proves funding based on the number of votes a political party has received in previous elections; second, parties can receive private contributions, which must be registered with party electoral commissions at the local, district and national levels.
Parties’ annual accounts and separate electoral campaign accounts are published on the EFPC website, and are scrutinized by this entity. As of the time of writing, assessments of the 2009 election campaign accounts had not yet been published. However, taking into account previous experience, we can conclude that:
(1) There remains scope for irregularities in party financing and campaign financing; and
(2) The EFPC assessments have led to a tighter control of party funding in recent years, which is positive. However, sanctions take place long after infractions are committed. This situation was reflected in fines issued by the court in the 2008 – 2010 period. Thus, in February 2008 the PSD was issued a substantial fine related to illegal funds provided by the Somague company, an event which took place in 2001. Likewise, in March 2010 the court issued fines of €30,000 to the PS and PSD, of €20,000 to the CDU, and of €14,000 to the CDS for irregularities in campaign financing, including illegal funding. Once again, these decisions came very late, stemming from the 2005 local elections.
Overall, the consensus is that oversight of party funding is tightening, but is not sufficient to control all infringements.

Political parties in Sweden receive public financial support. From October 2009 until October 2010, the parties represented in parliament (Riksdagen) received SEK 164 million (approximately €17 million) from the state, contributed to the parties in regard to their relative strength. One party not included in the parliament, the right-wing SD, received SEK 990.000 because of the votes gained in the national election in 2006. In addition, the members of parliament receive further public support for several duties they have to accomplish (SEK 249 million, approximately €26 million). Of course, Swedish parties receive support from private sources too. There is no legislation that requires the parties to disclose the private sources of financial support. The political party organizations argue that by disclosing the names of donors they would compromise their political integrity. There is a voluntary agreement among the parties to disclose their budgets to each other but names of specific donors are not included. There is no public institution that effectively monitors contributions to the party organizations. However, despite the lacking legal framework, the intensive observation of party politics in the media and the public discussion about this salient issue makes corruption less probable compared to problems disclosed recently in other countries such as the UK or Finland.

Ranking first for several years, Finland was ranked only fifth in Transparency International’s Corruption Perceptions Index in 2009. This was because of secretive political financing scandals in 2008 and again in 2009. Parties and politicians were accused of violating the law by failing to disclose the source of campaign funds; also, the law in question was faulted for lacking any penalty for violations. An opinion poll showed that 60% of respondents said politicians’ credibility had dropped as a result of the scandals, and there was much speculation about whether business executives and others had been donating money to campaigns in order to garner favorable political decisions. In consequence, the parties have decided to open their records, and the government has been drafting new campaign finance legislation that will force the political elite to disclose political money sources and will also provide for independent and efficient monitoring.

According to a 2006 law on political party finances, public grants to political parties are of three kinds. First, any political party or movement with one or more member serving in parliament or which attained 2.5% of the total vote in the last election receives an annual grant sized according to its share of the vote. Second, parties in the parliament receive an annual disbursement according to the number of serving members. Parties in opposition also receive a special grant from the state. Third, every municipality with more than 500 inhabitants has to pay grants to every party with one member or more in the local council or which attained at least 5% of the vote in the previous local election. The same law also governs private contributions to political organizations and candidates. For example, parties are not allowed to accept more than ISK 300,000 (about €1,700) from any private actor, company or individual.
The National Audit Office (Ríkisendurskoðun) monitors the finances of parties and candidates, and is tasked with publishing an annual summary of their finances, including total outlays as well as income. This income must be classified by origin, companies and other legal entities contributing to the parties’ electoral campaigns. Similar rules apply to contributions to candidates during pre-election (prófkjör) periods.
These laws went into force in January 2007. At the same time, the political parties made an agreement governing the maximum amount of money to be spent on TV, radio and newspaper advertisements in the 2007 election. This amount was at that time ISK 28 million (€161,000). However, it proved easy to circumvent this limit. There is currently no upper legal limit on advertising expenditure. These laws on party finances have been under revision since 2009.
In accordance with the 2006 law, the National Audit Office published a report on political party finances during the 2002 – 2006 period. The report showed that during this period, three of the four main parties (all except the Left Greens) accepted large private donations. From 2002 to 2006, the Progressive Party accepted the equivalent of ISK 13,000 (€74) per vote cast in the 2007 parliamentary election. The Independence Party accepted the equivalent of ISK 5,000 (€28) per vote cast, and the Social Democrats accepted the equivalent of ISK 4,000 (€23) per vote cast. These figures do not include donations to individual candidates and local party associations. The largest donors were the three main commercial banks and affiliated companies. The donations were made during the boom before the financial crash of 2008, which brought down the banks and several affiliated firms.

Appropriate campaign financing and cases of finance-law infringement have been hot political topics in Japan for decades. To some extent, the problems are structural. The multi-member constituency system in place until 1993 implied that candidates would be hard-pressed to distinguish themselves by party programs alone, but had to elicit support on a more personal basis, a costly proposition. Personalized local support groups (koenkai) thus became a deeply entrenched system for winning voter approval, and due to the tacit personal networking involved, are always dangerously close to engaging in illicit financial and other transactions. Moreover, the strict rules of the Election Campaign Law have the consequence that politicians always face incentives to somehow circumvent rules on electioneering.

Influential Liberal Democratic Party (LDP) politician Kaoru Yosano, who was finance minster in the Aso cabinet, for instance, was implicated in mid-2009 in a scheme involving a dummy organization from which he received funds. Prime Minister Hatoyama was accused of receiving unregistered donations from his mother, which he said he was unaware of; this news angered citizens, and was said to have contributed significantly to his subsequent loss of popularity. The powerful secretary general of the DPJ, Ichiro Ozawa, has also been incriminated through a scheme to support his funding organization through a dubious land purchase. Aides to both Hatoyama and Ozawa have been arrested. Ozawa had to step down as leader of the opposition in early 2009 because of funding issues, to be replaced by Hatoyama. Despite these scandals, it is noteworthy that Japanese prosecutors and the media have in general played a positive role in countering the misbehavior of politicians.

In Slovakia, the means by which parties are financed was given new footing in 2005. The single most important source of income is state contributions, the size of which depends on the number of a party’s voters and mandates. Provoked by a scandal about a dubious cash donation to the governing L’S-HZDS, an amendment of the Act on Political Parties and Movements in 2009 tightened the rules on private funding by putting a cap on donations (cash and otherwise), and by requiring parties to publish on a quarterly basis a list of donors on their websites. Nonetheless, the regulations governing party financing are not adequately enforced, as is evidenced by recurring finance scandals. Monitoring is formalistic and fragmented, and rests with organizations lacking the requisite expertise of investigative capacity, such as the Committee on Finance, Budget and Currency of the National Council or the Ministry of Finance.

The funding of political parties is overseen by the Electoral Commission, an independent institution set up by Parliament. The Commission‘s tasks include ensuring the transparency and integrity of election funding. Both public funding and contributions by party members are of minor importance compared to the amounts parties receive from institutional sponsors (trade unions in the case of the Labour Party, associations and businesses in the case of the Conservative Party) and individual donors.
The Electoral Commission provides voters with information about donations, campaign spending and party finances; it also identifies inefficient controls, rejects impermissible donations and holds those who fail to comply with the law to account.

Over the period from 2008 to 2010, there were several high-profile cases focusing on the propriety of certain forms of party funding, notably from rich individuals, some with non-domiciled tax status: A major donor to the Conservative Party (Lord Ashcroft) was highlighted in this regard, but some donors to Labour and the Liberal Democrats were also mentioned.

Party financing is a critical problem in Austrian democracy. Political parties, usually under the condition of being represented in parliament, receive public funds on the national, regional and local levels. Whereas the public influx of money is known, how and where this money is spent is not monitored. As parties represented in parliaments at the different levels determine the amount of money they receive (this is usually linked to their parliamentary strength), they have comparatively enormous funds to use for several purposes, in particular electoral campaigns.
Private donations, which are also not properly monitored, have not ceased as a result of the public financing system. In fact, they add to the abundant resources parties can use for campaigning. Only private donations to the party above a threshold sum of € 7,260 must be publicly declared. All other donations to associations closely or directly linked to the party itself go unaccounted for.

In general, party and campaign financing processes are not very transparent. There are upper limits to campaign financing set by law, but enforcement and oversight is not very effective. Electoral campaign expenditures are financed by public funds and private financing, but ineffective monitoring often enables the latter to be rather nontransparent.

Party financing regulation has been changed in recent years (Organic Law 8/2007) but this legal innovation has not eliminated the traditional enforcement and oversight problems associated with loans and donations to political parties. The Audit Office (Tribunal de Cuentas) is the body charged with auditing the political parties’ accounts, but its members are appointed by the parties and are not sufficiently independent, as explained below. This body’s reports, particularly the most recent publications, show that parties and their associated foundations in many cases do not follow proper accounting rules, do not respect spending thresholds in campaigns, do not publish accounts regularly, and do not specify the nature and value of private donations received. The Audit Office’s sanction powers are inadequate, and the modest fines for infringements can be easily paid by the parties over several years through deductions from future contributions, thus serving little or no dissuasive role. Recent corruption scandals (e.g., the so-called Gürtel or Pretoria affairs) show that the financing of parties, particularly at the local level, attracted scarce supervision during the years of Spain’s real estate bubble (particularly in the late 1900s and early 2000s), and was often linked with arbitrary changes in urban planning by local authorities. Various reports recently issued by international organizations such as the Council of Europe or NGOs such as Transparency International have criticized the opacity and impunity of party financing in Spain.

Party and campaign financing is a controversial topic in Korea. Due to the relatively low rate of membership in political parties, candidates in elections have to spend huge amounts of money to hire supporters and place advertisements. Parties receive public subsidies according to their share of the vote in the last-held elections. However, a larger amount of campaign financing comes from private donations. Although election laws strictly regulate political contributions, efforts to make the political funding process more transparent have met with only limited success. Many cases of violations of the political funds law are revealed after almost every election, and many elected officials or parliamentarians have lost their office due to violations. The heavy penalties associated with breaking the political funds law seem to have had only limited effect on the actual behavior of politicians. Breaking the election law seems to carry little stigma, as can be seen in the case of current President Lee, who lost his parliamentary seat due to an election law violation in 1996 but was elected to be Seoul’s mayor in 2002 and president in 2007. While no slush-fund scandals of the type seen in the 1990s have recently emerged, party finance reform remains one of the most pressing issues in Korean party politics

Article 60 of Law No. 2820 requires political party organs at every level to keep a membership register, a book of decisions, a register for incoming and outgoing documents, an income and expenditure book and an inventory list. According to Article 73 of Law No. 2820, the final accounts of political parties, including the party headquarters and affiliated provincial organizations must be prepared so as to illustrate the previous year’s revenues and expenditures. Turkish legislation contains no provision concerning the financing of electoral campaigns run by political parties or independent candidates. Additionally, there is no specific record-keeping obligation for campaign contributors, apart from the general requirement – based on the Tax Procedure Code – that legal persons declare their expenses (including contributions to political parties) to the tax authorities. Pursuant to Article 69 of the 1982 constitution, Article 74 of Law No. 2820 stipulates that the finances of political parties shall be audited by the Constitutional Court, which verifies whether property acquisitions by political parties and their revenues and expenditures are in compliance with the law. Financial audit decisions by the Constitutional Court are to be published in the Official Gazette (Article 153 of the 1982 constitution). The court’s expert rapporteurs examine the accuracy of the information contained in the final accounts, and assess the legality of the recorded revenues and expenditures on the basis of the information provided. Before the court’s examination, party accounts must be audited by certified experts. Law No. 2820 includes several criminal, administrative and civil sanctions that can be imposed on political parties, party officials or party candidates, or other persons (e.g., donors). However, election laws do not provide for any sanctions in the area of political financing or election campaign funding. The court has imposed several criminal judgments, largely on the major parties, in the area of party financing. The state provides annual financial support to political parties that received at least 7% of the valid votes in the last general elections (Additional Article 1 of Law No. 2820). On average, about 90% of party income comes from the state. Ceilings for donations to political parties by private and legal persons are revised each year (currently standing around €12,000), but donations are often not recorded properly.
More importantly, cash and in-kind contributions/expenditures for parties and candidates during elections are not recorded, and constitute the major source of “soft money.”

Party and campaign financing in Hungary suffer from substantial problems. Parties are prone to corrupt and illegal practices because they receive little money from the state, and the regulation of private donations is intransparent and ineffective. A case in point, which attracted much public attention, was the case of János Zuschlag, a young MP of the Hungarian Socialist Party (MSzP), who abused funds for public projects (worth about €280,000) for campaign financing and was sentenced in March 2010 to 8 ½ years in prison. It is well known that parties outspend the official spending limits – tenfold according to some estimates – and submit misleading financial reports to the State Audit Office (ÁSZ). In 2009/2010, Transparency International and Freedom House pushed for a campaign reform bill that aimed at making campaign financing more transparent. However, this bill was rejected by Fidesz, the major opposition party, and thus did not get the two-thirds majority required for passage.

Parties are obliged to keep financial accounts, and to publish them on an annual basis. However, they are not required to specify either the sources or the value of donations received. While the state budget funds parties on the basis of their performance in the most recent parliamentary elections, parties’ electoral campaign costs in practice far exceed the funds allocated to them by the state. The very high costs are the result of the high prices of printing and distributing electoral material, organizing electoral rallies, and buying time in the electronic media, a sector which in Greece has the structure of an oligopoly. Thus, parties regularly resort to soliciting funds from private sources (e.g., private donors or big business leaders). Such revenue is not included in the parties’ published accounts. In other words, parties essentially keep two sets of accounting books. After the close of parliamentary elections, a parliamentary commission is supposed to audit the finances of candidates who won parliamentary seats. In practice, the committee performs a largely rubber-stamp role. The lack of enforcement of the relevant legislation, pertaining (for example) to candidate expenditure ceilings, means that in Greece today there is no real way to monitor party financing.
Moreover, there is no independent body or other effective mechanism to oversee, investigate and sanction parties in regard to their finances. The political class as a whole resists any substantive inspection of its finances. There is even one party (the Communist Party of Greece) which has consistently refused to publish its accounts. Finally, infringements of the relevant legislation are not punished.

Party finances, until recently, were not a contested issue in Dutch politics. In general, the electorate was not particularly concerned with the issue, apart from mild concerns raised about small newcomer parties receiving foreign funding or the effect of one political party making its parliamentarians financially dependent on party leadership by demanding salaries be donated in full to the party. However, as one observer remarked, the absence of controversy over party finances is understandable given that the rules within the present legislation are so weak and underdeveloped, it would be hard to use them in creating a scandal and pinpointing gross violations.
According to the Group of Countries Against Corruption, Dutch legislation regarding transparency in and the surveillance of party financing falls short of the obligations stipulated in Recommendation Rec (2003)4 of the Committee of Ministers of the Council of Europe for joint regulations in fighting corruption in political campaigns and party financing. Dutch law does not guarantee the electorate sufficient access to information on the financial interests of political parties (and other groupings in parliament). Sufficient oversight and a system of balanced sanctions effective in deterring corruption are absent.

Glaring shortcomings in this area include: the absence of legislation forbidding anonymous gifts by third parties (so-called alternative means of finance, or Umwegfinanziering); individuals or organizations may cite privacy issues and object to their names being made public in financial reports; lack of definitional clarity on what constitutes a “gift” of “donation”; the regulatory exemption of local and regional branches of national parties, some of which can be quite influential politically in larger metropolitan areas like Rotterdam; and the absence of an independent monitoring body mandated with the ability to enforcing sanctions against violators.
Although the cabinet has for several years promised a new bill on Financing of Political Parties, its introduction has been postponed until after the elections of May 2010. The bill is likely to be highly contested. New parties with one or a few members (e.g., Party for Freedom, PVV) reject government subsidies on principle. In April 2009, the influential Advisory Council of Public Administration recommended that donors who were not formally party members ought to be able to give unlimited gifts to political parties and afforded real influence (next to party members) in shaping the party platform, candidacy lists and choice of party leadership.

Switzerland does not finance parties with public money on the federal level. In return there are no constraints applied. It is a case of “une legislation absente” (Gunziger 2008: 2-4). There is some financing of parties on the cantonal level in Geneva and Fribourg (Gunzinger 2008: 40). A considerable part of the political parties’ revenues come from the subsidies to party factions in the national parliament or reimbursement of parties for services, amounting in some cases to 30% of total party income (Brändle 2002: 123). Another important source of income is the attendance fee granted to members of parliament, which can be considered as a form of party financing. In general, parties won constitutional status only through the constitutional revision of 1999, and there is deep-seated aversion to any public financing of political parties.
In return, there is little to no public scrutiny of party activities, since no public money is at stake (see also Z’graggen 2009 and Z’graggen/Linder 2004).