SGI 2020 | Robust Democracy | Quality of Democracy | 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.

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.

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. At the end of 2021, the Ministry of Justice started preparing a further series of amendments that will significantly expand the powers of the PPFSC, and introduce tougher sanctions for individuals and firms that have made illegal donations to political parties.

Citations:
https://www.err.ee/1608388751/seadusemuudatus-annaks-erjk-le-pisut-oigusi-juurde (visited 22.12.2021)

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. Currently, a single private donor can donate up to €6,000 to a candidate standing in a parliamentary election. Candidates are required to report the sources of their campaign funds. These reports are filed with ministries and auditing agencies, and made publicly available. 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;
https://www.idea.int/data-tools/country-view/105/55
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

Political parties in Norway are funded primarily by public grants that are proportional to the number of votes received by a party during the last held parliamentary election. On average, parties receive about three-quarters of their revenues through state subsidies (ranging from 60% to 80%). Membership fees are 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.

Since 1998, political parties have been obliged to publish an overview of the source of their revenues, and detailed reports have been 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 35,000 or more must be provided separately, with the identity of the donor included. In election years, contributions of NOK 10,000 or more must be reported. Income reports are submitted to the Central Bureau of Statistics and are published in detail.

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.

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 increase in line with the consumer price index. For the 2019 election, it was AUD 0.2756 per eligible vote in both houses of parliament (House of Representatives and Senate). The total election funding paid in the 2019 federal election was AUD 69.6 million. The Australian Electoral Commission 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 2019 federal election, was not due for release until October 2020. 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. 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 from 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.

Following the rise in public scrutiny of Chinese influence within the Australian political system, legislation was passed in November 2018 that bans donations of more than AUD 100 from foreign governments or state-owned enterprises to any “political actor” – including parties, individual candidates and significant political campaigners. Additionally, The Foreign Influence Transparency Scheme commenced on 10 December 2018. Its purpose is to provide public and governmental decision-makers with a view of the nature, level and extent of foreign influence on Australia’s government and political process. The scheme introduces registration obligations for persons and entities who have arrangements with or undertake certain activities on behalf of foreign principals.

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

https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/Quick_Guides/ElectionFundingStates

https://www.ag.gov.au/Integrity/foreign-influence-transparency-scheme/Pages/default.aspx

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 2016 that the prime minister and other senior ministers were raising millions of dollars at private “cash-for-access” fundraisers, giving donors secretive cabinet access. The 2018 Act to Amend the Canada Elections Act (political financing) stipulates that party fundraisers must be advertised in advance, conducted in a public place, and be open to the media. Provincial practices and rules regarding political donations vary widely (Brock and Jansen, 2015). 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 Saskatchewan, 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.

Citations:
David M. Brock and Harold J. Jansen, “Raising, Spending, and Regulating Party Finances in the Provinces,” Canadian Political Science Review, vol. 9, no.1, 2015, 55-74.

Denmark

Political parties are financed by membership fees, support from other organizations/corporations and state subsidies. 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.

Private sources that contribute more than DKK 20,000 should be made public, although the amount donated can remain confidential. It is possible to circumvent this requirement by making multiple donations below the threshold limit to local political party branches. There are also, repeatedly, reported examples of other indirect ways by which supporting parties have circumvented this rule. The Danish branch of Transparency International has criticized these rules for failing to achieve sufficient transparent.

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 costs. Further, the parties receive electoral support depending on the number of votes won.

There is an ongoing case regarding the possible use of EU money to fund political activities in Denmark unrelated to the European Union by the Danish People’s Party. An investigation conducted by OLAF, the European Commission’s Anti-Fraud Office, concluded in October 2019 that €583,047 should be paid back. Since OLAF has no power to prosecute, the case was sent to the Danish State Prosecutor for Serious Economic and International Crime. The case is under consideration within the Danish court stystem.

Citations:
Partistøtte på grundlag af deltagelse i seneste folketingsvalg, http://valg.sim.dk/Valg/Partistoette/Folketingsvalg.aspx(Accessed 8 October 2015).

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.

“EU’s svindeljægere overdragerDF-sag til Bagmandspolitiet,” https://www.msn.com/da-dk/nyheder/krimi/eu-svindeljægere-overdrager-eu-sag-med-df-til-bagmandspoliti/ar-AAIReWw (accessed 17 October 2019).

France

Lacking a sufficient legal framework, party financing has long been a source of recurrent scandals. Nearly all political parties used to finance their activities by charging private companies working for local public entities, or by taxing commercial enterprises requesting building permits. Former President Jacques Chirac’s sentencing once he lost his presidential immunity provided a spectacular illustration both of the illegal practices and the changing attitudes toward illegal financing. The first reasonably robust regulatory framework was established only in 1990. 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 or credit card, 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, as evidenced by the Constitutional Council statement identifying irregularities in the financing of former President Sarkozy’s campaign in 2012. The former president and close aides were found guilty by a penal court for overspending and hiding these unauthorized costs. The case is still under examination by the highest court. As of the time of writing, the National Rally and its leader, Marine Le Pen, were being prosecuted for violating financing regulations. The tradition of cheating persists in many areas. Another example concerns the practice by some parties (including the National Rally and the MODEM centrist party) of using assistants paid by the European Parliament for purely partisan purposes. Finally, the Fillon scandal (in which the former prime minister used public money earmarked for parliamentary assistants to hire his wife and children – a practice that in itself was not forbidden – without any documented work being undertaken) led to a new piece of legislation in June 2017. Immediately after the presidential election, Macron introduced a new law to deal with the “moralization” of political life. The new law addressed several legal loopholes that allowed for morally ambiguous political behavior. For example, the new law prohibited members of parliament from hiring family members. Conflicts of interest are more strictly controlled and all ministers are subjected before appointment to a screening by an independent authority on financial transparency. When these rules are violated, three types of disciplinary action can be taken: financial (expenditures reimbursed), criminal (fines or jail) and electoral (ineligibility for electoral contests for one year, except in the case of presidential elections).

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 4 million votes qualify it for funding of €1 per vote per year to support smaller parties; for every vote thereafter, parties receive €0.83. In addition, individual donations of up to €3,300 are provided with matching funds of €0.45 per €1 collected. State funding for political parties has an upper limit which, in 2021, was almost €200 million (Deutscher Bundestag 2021). The cap is adjusted annually for inflation. However, public financing must be matched by private funding. Thus, parties with little revenue from membership fees or donations receive less from the state than they would if the calculation were based exclusively on the number of votes received.

The German system of party financing generally provides an appropriate level of support to ensure political involvement and party competition. However, critics continue to point to the relatively high thresholds set for disclosing party financing sources as a problem with regards to transparency. Donations under €10,000 do not need to be reported, and the immediate disclosure requirement for large donations applies only to amounts exceeding €50,000. The Council of Europe’s Group of States against Corruption (GRECO) and several OSCE experts therefore recommend lower thresholds and making individual campaign financing reports public immediately after elections (OSCE 2021). The new government has announced its intent to comply with some of these recommendations, including reducing reporting thresholds (Koalitionsvertrag 2021, p. 10).

Citations:
Deutscher Bundestag (2021): Unterrichtung durch den Präsidenten des Deutschen Bundestages, Drucksache 19/30123, 27.05.2021.

Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.

OSCE (2021): Federal Republic of Germany. Elections to the Federal Parliament (Bundestag). 26 September 2021, ODIHR Needs Assessment Mission Report, 22 July.

Ireland

Financing of Parties:

The financing of political parties in Ireland is supervised by the Standards in Public Office (SIPO) commission. 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 publishes reports routinely after elections and published its last annual report in 2020 following the general election (SIPO, 2020a).

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 previous election.

Direct public funding is of two types. The first is a contribution to political parties’ annual running costs (excluding elections). Each qualifying party receives a fixed sum of about €130,000, plus an additional share based on the number of first-preference votes it won in the previous election. In 2020, the total funding from this source was some €4.7 million, down from €6.3 million in 2019 (SIPO, 2020b). This drop can be explained by the drop in political activity during the pandemic. The second source is annual allowances to party leaders to cover expenses arising from work in parliament. The allowance for each leader is based on the size of their parliamentary group, although the amount given to government parties is reduced by one-third in order to lessen the “resource gap” between governing and opposition parties. Independent members of parliament are also entitled to this funding, which is currently €41,000 per annum.

In 2020, Sinn Féin received €3.45 million in state funds, while Fianna Fáil received €3.4 million, Fine Gael €2.97 million, the Greens €1.2 million and Labour just less than €1 million. Smaller parties, including the Social Democrats, People Before Profit and Aontú shared more than €1.3 million between them (Gataveckaite, 2021).

The figures above do not cover the reimbursement of election expenses, which are treated separately. In the 2020 general election, each candidate (that secured at least one-quarter of the quota at any point in the count) was entitled to receive a reimbursement of up to €8,700. Candidates in European and presidential elections can claim up to €38,092.14 and €200,000 respectively, if their vote tally is at least 25% of the quota for the constituency (CI, 2021). The overall spend in general elections has continued to fall and in 2020 was down 13% to €7,336,723 compared to 2016. Over €2.5 million was reimbursed by the state to qualified candidates (SIPO, 2020b).

Combining all of these different funding sources, the total sum paid to political parties and candidates was just over €16 million in 2015. As Liam Weeks comments, state funding “amounts to 84% of parties’ total income and indicates the extent to which they have become dependent on the state for survival.”

While a lack of transparency in the sources of political finance used to be a big problem in Irish politics, the very considerably increased levels of state funding have reduced this problem, and strengthened regulation of political donations and campaign spending during elections. Candidates are required to declare all donations over €600, while political parties are required to declare all donations over €1,500. The maximum donation that may be accepted by a teachta dálas (member of parliament); senator; member of the European Parliament; Dáil, Seanad or European election candidate; or a presidential candidate/election agent from any individual or registered corporate donor in a calendar year is €1,000 (SIPO, 2015).The amount of reported private donations to parties is now relatively low, totaling €152,000 in 2020, with Sinn Féin accounting for almost half of all donations (McQuinn, 2021).

During elections (i.e., from the date of dissolution of the Dáil until polling day) there are strict limits on how much candidates can spend. For the 2020 general election, this ranged from €30,150 in a three-seat constituency to €45,200 in a five-seat constituency (CI, 2021). One caveat is that, outside of the “official” campaign period (defined above), there are no limits on what selected or prospective candidates may spend – which seems to be an odd omission.

Citations:
CI (2021) Election expenses, Citizens Information, available at: https://www.citizensinformation.ie/en/government_in_ireland/elections_and_referenda/running_for_office/election_expenses.html

Gatavekaite, G. (2021) Sinn Féin received the most State funding in 2020, Irish Independent, September 24, available at: https://www.independent.ie/irish-news/politics/sinn-fein-received-the-most-state-funding-in-2020-40886284.html

McQuinn, C. (2021) Sinn Féin accounts for bulk of reported political party donations in 2020, The Irish Times, 23 November, available at: https://www.irishtimes.com/news/politics/sinn-f%C3%A9in-accounts-for-bulk-of-reported-political-party-donations-in-2020-1.4736402

SIPO (2015) Guidelines for Political Parties; Steps to be taken concerning donations and prohibited donations, Standards in Public Office, available at: https://www.sipo.ie/acts-and-codes/guidelines/donations/Guidelines-for-political-parties-on-donations-and-prohibited-donations.pdf

SIPO (2020a) Annual Report 2020, Standards in Public Office, available at: https://www.sipo.ie/reports-and-publications/annual-reports/2020-SIPOC-ARFinal-English-Web.pdf

SIPO (2020b) Exchequer Funding of Political Parties in 2020, available at: https://www.sipo.ie/reports-and-publications/state-financing/expenditure-of-exchequer/Exchequer-Funding-of-Political-Parties-2020.pdf

 Standards in Public Office Commission, 2017. Political Parties’ Statements of Accounts, available at http://www.sipo.gov.ie/    

Weeks, L. (2018), ‘Parties and Party System,’ in John Coakley and Michael Gallagher (eds) Politics in the republic of Ireland, 6th edition.  

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), which require all parties to document their finances and report them to the State Comptroller. These laws set strict limits on party membership dues, and fundraising from members and supporters. In addition, the laws define how funds received from the state in accordance with the Political Parties (Financing) Law are allocated. Since 2018, the Parties Law also limits the amount of funding that candidates can raise when participating in intra-party elections.

All financial activities during elections are subjected to the supervision of 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, it is the State Comptroller who can also rule that a party group must return funds to the state because of breaches in the receipt of non-public contributions.

Party funding regulation has been politicized in recent years. Since 2018, an amendment to the party financing law limits the funding that joint parties receive from the state budget so that a joint list of three or four parties would be given the funding of only two parties. In practice, this applies only to the Joint List of four Arab parties and it has been argued that the law was directly intended to break up the Joint List. A year before, another amendment of the party financing law, aimed at limiting the activities of various non-party-political bodies that seek 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 organization that was funded by organizations from the United States and Europe, and which funded efforts during the 2015 election campaign against the Likud party and Prime Minister Netanyahu.

Citations:
Amendment to the Party Financing Law, 2018: https://fs.knesset.gov.il//20/law/20_ls2_501466.pdf
Hattis Rolef, Susan, Ben Meir, Liat and Zwebner, Sarah, “Party financing and elections financing in Israel, Knesset Research Institute, 21.7.2003 (Hebrew).

Klein, Z. “The State Comptroller: A fine to The Likus and the Bayit Yehudi,” Israel Hayom: 15.10.2018: https://www.israelhayom.co.il/article/599301

“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

Shapira, Asaf. “This is how elections are funded in Israel,” Israel Democracy Institute, 19.7.2019 (Hebrew):
https://www.idi.org.il/articles/25939

The State Comptroller. “The functions and powers of the State Comptroller”: https://www.mevaker.gov.il/En/About/Pages/MevakerTafkid.aspx

Latvia

Political and campaign financing in Latvia is regulated by the Law on Financing Political Organizations, the Law on Pre-election Campaign, and the Law on Corruption Prevention and Combating Bureau. In 2017, changes were made to the Law on Financing Political Organizations, which introduced an electronic data entry system, simplifying the submission of party and donor reports. In addition, it introduced a limit on donations by political party members or third parties.

The 2020 Amendments to the Party Financing Law specify that political parties that received votes from more than 2% of voters in the last Saeima elections will be allocated budget funding of €4.50 for each vote obtained. Parties will also receive €0.50 for each vote cast in the last local elections, and €0.50 for each vote cast in the last European elections. Previously, the rate was €0.71 per vote. If a party attracts more than 5% of the votes, €100,000 a year will be provided until the next elections. State support for a single party will not exceed €800,000 annually. This change is a welcome step in the right direction, although it has raised some concerns about the limitations it may set on political competition, keeping the new, smaller parties out.

The amendments also set a limit to donations, membership fees and party joining fees for parties receiving budget funding, which now cannot exceed five minimum salaries during a calendar year. If the parties receive state funding, and in the previous elections received more than 2% but less than 5% of the votes, the cap is 12 minimum monthly salaries during a calendar year. Previously, the maximum amount of donations and payments was 50 monthly salaries.

In addition to budget funding, fees and donations, parties can also be financed by income earned through parties’ economic activities in Latvia, according to certain set limits. Legal entities (e.g., corporations), and anonymous and foreign donors are prohibited from financing political parties. Parties are also not allowed to take or issue loans. Candidates are permitted to donate to their own campaign, as long as they observe the limits established for donations from individual persons. All donations must be made through bank transfers, except for cash donations of less than €430.

Financing is transparent, with donations required to be publicly listed 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 an election.

Political party and campaign financing are 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 subsequent election cycles without penalty. Ultimately, however, those parties that have faced stiff penalties have been dissolved or voted out of office.

The ODIHR report on the 2018 parliamentary elections expressed confidence in the party and campaign finance rules, but recommended that electoral contestants open dedicated bank accounts for campaigning transactions to enhance the mechanisms.

Citations:
1. Ministry of Justice (2019) Initial Impact Assessment Report of Amendments to the Law on the Financing of Political Organizations (Parties) (Abstract), Available at:
http://tap.mk.gov.lv/doc/2019_10/TMAnot_081019_PFF[1].1802.docx, Last accessed: 12.01.2022

2. OSCE: Office for Democratic Institutions and Human Rights (2019), Parliamentary Elections 6 October 2018: ODIHR Election Assessment Mission Final Report, Available at:
https://www.osce.org/odihr/elections/latvia/409344?download=true, Last accessed: 12.01.2022.

3. Amendments to the Criminal Law Regarding Illegal Party Financing (2011), Available at (in Latvian):
http://www.likumi.lv/doc.php?id=236272, Last accessed: 12.01.2022.

4. Law on the Financing of Political Organizations (Parties), Available at (in Latvian):
http://www.likumi.lv/doc.php?id=36189, Last accessed: 12.01.2022.

5. KNAB (2015) “Overview of Violations of Campaign Finance Regulations in the 2014 Saeima elections,” KNAB (published in Latvian). Available at:
https://www.knab.gov.lv/upload/free/parskati/12.saeimas_finansu_parbaudes_1.07.2015.pdf,
Last accessed: 12.01.2022.

6. The Corruption Prevention and Combating Bureau (2017), General report 2017, Available at:
https://www.knab.gov.lv/upload/2018/knab_01022018_zinojums_2017rezultati.docx,
Last accessed: 12.01.2022.

7. Amendments to the Party Financing Law ( 2019 and 2020), Available (in Latvian) at: https://likumi.lv/ta/id/36189-politisko-organizaciju-partiju-finansesanas-likums, Last accessed: 12.01.2022.

New Zealand

Party financing and electoral campaign financing are monitored by the Electoral Commission. Registered parties have upper limits regarding election campaign financing (including by-elections). Upper limits for anonymous donations as well as donations from abroad are comparatively low ($1,500). The long-standing public-private mix of party financing continues to draw criticism. Private funding in particular is criticized for being insufficiently transparent and unfair to less well-off parties or smaller parties lacking access to parliamentary sources of personnel and funding.

In December 2019, the government introduced legislation that banned foreign donations of over $50 to politicians and tightened disclosure rules for political advertising. The law was passed amid allegations of Chinese interference in New Zealand politics (i.e., in October 2018, Simon Bridges – leader of the National party – was accused of concealing a $100,000 donation from a Chinese businessman with strong links to Beijing). The new laws also require the names and addresses of those funding election advertisements in all mediums to be published, so as to reduce the “avalanche of fake news social media ads” that have marred elections overseas (Roy 2019)

Citations:
Rashbrooke (2017) Bridges Both Ways: Transforming the Openness of New Zealand Government. Institute for Governance and Policy Studies, Victoria University of Wellington.

Roy (2019) “New Zealand bans foreign political donations amid interference concerns.” The Guardian. https://www.theguardian.com/world/2019/dec/03/new-zealand-bans-foreign-political-donations-amid-interference-concerns

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.

In the spring 2018, the government passed legislation that substantially increased the transparency of party financing in Sweden. Relating to the 2018 election, public demands again surfaced to further sharpen the rules to clearly document the financial sources of electoral campaigns and further increase monetary penalties for violations. The Party Financing Board (Partibidragsnämnden) announced that for the financial year 2020-2021, political parties received a total of just under SEK 168 million. The women’s arms of the political parties received a total of SEK 15 million during the same period (Sveriges Riksdag, 2021).

Citations:
Sveriges Riksdag. (The Parliament of Sweden). 2021. “Verksamhetsredogörelse för Partibidragsnämnden 2020.” https://data.riksdagen.se/fil/A3F2D5FB-BEB6-4C20-B8D2-8D1E9B37D296

Sweden

Citations:
Sveriges Riksdag. (The Parliament of Sweden). 2021. “Verksamhetsredogörelse för Partibidragsnämnden 2020.” https://data.riksdagen.se/fil/A3F2D5FB-BEB6-4C20-B8D2-8D1E9B37D296

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 over the past decade, 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. Additionally, parties are required to keep records of their accounts and publish an annual financial report. This report must include a list of all donations received. Therefore, and for the first time, policymakers have sought to render the flow of private money to parties transparent. The annual reports are subject to oversight by the Austrian Court of Audit and violations of the law can be subject to severe penalties. After major violations of the campaign financing rules in 2017, the ÖVP was again accused of illegal overspending in the 2019 national election campaign.

This regulatory structure contains loopholes, as parties do not need to identify the sources of minor donations. These rules were, however, tightened in 2019. Previously, parties were allowed to accept donations of any amount, with the obligation to publish the names of those having donated more than €3,500. Since 2019, a limit of €7,500 per year per donor has been introduced and no party may accept more than €750,000 per year from all donors combined. Donations from foreigners were banned completely.

The new ÖVP-Green government formed in early 2020 committed itself to reforming the rules and fighting corruption more generally. However, these declarations of intent were not followed by any concrete legislation. Therefore, in October 2021, the president of the Austrian Federal Audit Office presented her own reform ideas to the parties and the wider public. Along with tightening the rules further and increasing the fines for violating these rules, the proposal also sought to abolish the possibility of paying fines from public funds.

Citations:
https://www.diepresse.com/6051153/rechnungshof-strafe-soll-partei-harter-treffen

https://www.diepresse.com/5653730/nationalrat-setzt-heute-doppelten-deckel-auf-parteispenden

Czechia

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 Czechia issued in 2011 and came into force in January 2017. The law introduced financial limits for party financing and electoral campaigns, the mandatory establishment of transparent accounts, and greater revenue regulation of political parties and movements. Compliance with the new rules for publishing financial reports has grown over time. While the Office for the Oversight of the Political Parties and Political Movements (Úřad pro dohled nad hospodařením politických stran a politických hnutí, ÚHHPSH), the independent regulatory authority in charge of monitoring party and campaign finance, recommended suspending the activities of 45 parties for violating some of the rules in 2020 and 2021, almost all relevant parties have largely complied with the new provisions. However, prior to the vote of investiture in December 2021, it turned out that STAN (Mayors and Independents), one of the coalition partners of the new Fiala government, had accepted donations from an anonymous account in Cyprus, leading to the new government’s first scandal.

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. Attempts by the ruling parliamentary majority in 2018 to change state budget allocation rules to secure funding for the newly established Lithuanian Social Democratic and Labor party, part of the ruling parliamentary coalition, failed after the president vetoed the parliament’s effort to borrow additional funds.

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 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. Also, in November 2018, the Central Electoral Commission ruled that the Lithuanian Social Democratic party had seriously violated campaign-finance regulations by exceeding spending limit for political advertising during the 2016 parliamentary elections. As a penalty, regulators imposed a six-month suspension funding suspension on the party.

In 2020, several amendments were made to the regulation of political parties’ financing. These included stricter sanctions in cases illegally attained funds, new limits on cash funding, and stricter controls on political campaign expenditures and advertising.

In its report on the 2020 parliamentary elections, the OSCE noted that Lithuania has taken into account some earlier recommendations (related to sanctions and expenditure reporting before elections), but that other recommendations have not been implemented, in particular those related to third-party campaigning and raising the monetary threshold for donations that must be declared.

Citations:
OSCE/ODIHR Lithuania, Parliamentary Elections, 11 and 25 October 2020: Final Report, see https://www.osce.org/odihr/elections/lithuania/477730
OSCE/ODIHR Election Assessment Mission Final Report on the 2019 presidential election in Lithuania, see https://www.osce.org/odihr/elections/lithuania/433352?download=true
OSCE/ODIHR Election Assessment Mission Report on the 2016 parliamentary elections in Lithuania, see http://www.osce.org/odihr/elections/lithuania/296446.

Portugal

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. For instance, the reports and decisions regarding the party accounts in 2017 were published in August 2020.

As noted in previous SGI 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.

In the last edition of the SGI, we noted that this situation appeared to have worsened during 2018 due in part to changes to the party financing law, which came into effect in that year. These measures increased the ECFP’s responsibilities, without increasing its resources (particularly staff numbers). In its report at the end of its four-year term, the ECFP noted that there were 82 situations that warranted sanction but which it was unable to pursue because the statute of limitations had already expired. In this report, the ECFP noted once again that the legal changes of 2018 had not been accompanied by the addition of sufficient human resources to allow the ECFP to carry out all its assigned tasks.

Citations:
Botelho, L. (2021), “Nova Lei do Tribunal Constitucional fez prescrever 82 processos de multas a partidos,” Público, available online at: https://www.publico.pt/2021/10/22/politica/noticia/nova-lei-tribunal-constitucional-fez-prescrever-82-processos-multas-partidos-1982156

Entidade das Contas e Financiamentos Políticos (2021), “Mandato 2017-2021 – Balanço,” available online at: https://www.tribunalconstitucional.pt/tc/file/Relatório%20mandato%202017-21.pdf?src=1&mid=6615&bid=5282

Financiamento dos Partidos Políticos e das Campanhas Eleitorais – legislation, available online at: http://www.parlamento.pt/legislacao/documents/legislacao_anotada/financiamentopartidospoliticoscampanhaseleitorais_anotado.pdf

Portugal

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. Party financing or donations from abroad are prohibited. 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 (i.e., around €9,360 in September 2021). The legislation puts the annual ceiling for party loans from individuals at ten times the value of the average gross monthly salary (i.e., about €18,720 in September 2021). 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. During local elections, municipalities autonomously set campaign financing for political parties.

Slovenia

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.

External observers, such as GRECO (Group of States against Corruption) have repeatedly argued that there is a lack of transparency in political party financing.

In 2017, the required number of signatures for a vote on a popular initiative for transparency have been collected. It requested 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. In 2021, parliament reacted to this initiative with a law that adopted most of the demands of the initiative. There are three major elements to this reform.

(1) The political parties represented in the Federal Assembly must annually disclose their income as well as donations worth more than CHF 15,000 per donor per year. In addition, they must report contributions received by their elected representatives.

(2) In the case of voting and election campaigns, if more than CHF 50,000 is spent for this purpose by a party, in principle, the amount received by a party exceeding CHF 15,000 per donor and campaign must be disclosed. For the election of members of the Council of States (Ständerat), a special transparency regulation is provided due to the lack of federal competence for elections to the Council of States.

(3) The information and documents submitted are checked and published by a body to be designated by the Federal Council. Control includes checking whether all information and documents have been submitted on time, as well as spot checks on the content. If the authority finds that certain information and documents have not been submitted on time or have not been submitted correctly, it must report violations (after an unsuccessful warning) to the prosecution authority.

In return, the initiative has been withdrawn, since most of its concerns have been met by the new law.

Citations:
https://www.bj.admin.ch/bj/de/home/staat/gesetzgebung/transparenz-politikfinanzierung.html

Switzerland

Citations:
https://www.bj.admin.ch/bj/de/home/staat/gesetzgebung/transparenz-politikfinanzierung.html

Greece

Party financing for national elections is regulated by law 3023/2003, as amended by law 4304/2014. Legislation formally adheres to guidelines established by the Council of Europe, but is not fully implemented.

Legislation constrained the size of budget outlays to parties, increased transparency regarding donations to parties and barred the practice of parties obtaining bank loans against future revenue, which the parties would expect to receive from the state. Every year, the interior minister issues a ministerial ordinance which distributes funds to parties that received at least 1.5% of the total vote in the most recent election.

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 to repay their loans, as successive governments protected over-indebted parties. Even today the largest parties struggle to service the debts they accumulated over the past two decades.

Under pressure from the Council of Europe and other international organizations, Greece improved national legislation on party financing in 2017 (laws 4472/2017 and 4509/2017). However, the legislation has been amended several times in the years that followed in a back-and-forth manner.

There have also been improvements in the way party financing is monitored. The competent authority is a parliamentary committee, the Committee for the Investigation of Declaration of Assets (CIDA). As noted in the European Commission’s latest report on rule of law in Greece (2021), the CIDA regularly receives financial statements from parties which contain information about the amount and sources of political party income and expenses, as well as financial obligations and debts. The committee has performed audits, and – despite long backlogs – has already found financial breaches in 11 cases and imposed appropriate financial sanctions.

Despite improvements, there remains an implementation gap regarding rules for party financing; Greece’s record on this front remains mixed. For the most part, monitoring remains ineffective and the real sources of party financing are not fully known. This inefficiency is attributable to both the governing and opposition parties.

Citations:
Council of Europe (2020), “Second Compliance Report Greece,” GRECO, 16.11.2020, available at https://rm.coe.int/fourth-evaluation-round-corruption-prevention-in-respect-of-members-of/1680a06121

European Commission (2021), “2021 Rule of Law Report – Country Chapter on the rule of law situation in Greece,” available at https://ec.europa.eu/info/sites/default/files/2021_rolr_country_chapter_greece_en.pdf

On the non-implementation of regulations of party financing, Sotiropoulos, Dimitri A. (2020), “Corruption and Anti-corruption in Today’s Greece,” ELIAMEP working paper, December 2020, available at https://www.eliamep.gr/en/publication/%CE%B4%CE%B9%CE%B1%CF%86%CE%B8%CE%BF%CF%81%CE%AC-%CE%BA%CE%B1%CE%B9-%CE%BA%CE%B1%CF%84%CE%B1%CF%80%CE%BF%CE%BB%CE%AD%CE%BC%CE%B7%CF%83%CE%B7-%CF%84%CE%B7%CF%82-%CE%B4%CE%B9%CE%B1%CF%86%CE%B8%CE%BF/

Institute for Democracy and Electoral Assistance (iDEA), Greece (https://www.idea.int/data-tools/country-view/139/55)

Poland

Party and campaign financing regulation as such is clear and regulated by the 2001 Political Parties Act and the 2011 election code. Parties depend heavily on public funding, which is provided only to parties that win at least 3% of the vote or at least one seat in parliament. 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 voters’ electoral committees can be financed from private funds, parties have to rely on party budgets, private donations are limited and anonymous donations are forbidden. There is also a maximum spending limit for campaign purposes of approximately €7 million. In practice, most Polish parties are unwilling to disclose their accounts, and separating party and campaign financing remains challenging (OSCE/ ODIHR 2020: 15–18). 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 detailed transparency in commission reports of electoral committee revenues and finances. The changes to the PKW and its more partisan composition have raised doubts about its independence In addition, there is the broader problem of distinguishing between the money PiS has at its disposal in accordance with party finance rules and the semi-formal support that comes through various forms of financial assistance from state-owned enterprises controlled by PiS.

Citations:
OSCE/ ODIHR (2020): Special Election Assessment Mission Final Report: Republic of Poland, Presidential Election, 28 June and 12 July 2020. Warsaw (https://www.osce.org/odihr/elections/poland/464601).

Romania

Updates to anti-corruption policies in 2015 have strengthened Romania’s party financing framework to promote transparency. While no additional updates to the party financing framework were advanced in 2020 or 2021, a notable development was the prosecution of Iona Basescu, daughter of former President Traian Basescu, and a former minister, Elena Udrea, for their roles in illegally financing the former president’s 2009 presidential campaign, which resulted in his election for a second term. Ms. Basescu was sentenced to five years in prison for incitement to embezzle and money laundering, while Ms. Udrea was sentenced to eight years for instigating bribe taking and money laundering. The high-profile case represents a commitment by the courts to ensure party financing rules are respected.
In 2021, the Permanent Electoral Authority (AEP) reported that it had carried out no less than 3,396 control actions between 2019 and 2020 on election candidates, political parties, and natural or legal persons. This covered the 2020 local elections, as well as the European Parliament elections and a national referendum held in 2019. While all the parties have been sanctioned with fines and confiscation of sums ranging between €600 and €13,000, the PNL received cumulatively the highest sanction, receiving an estimated €90,000 in fines, for expenditure issues pertaining to the election campaign.

On September 7, the government allocated RON 90 million (approx. €18.2 million) in party subsidies from the state budget, despite previously promising to cut the subsidy granted to parties. Since parties had spent only half of the subsidies they received in the first six months of the year, this sudden increase in subsidies was probably meant to boost Cîțu’s chances of winning the PNL leadership. Moreover, the PNL and PSD were the biggest beneficiaries of this subsidy.

Citations:
AEP: Aproape 3.400 de acţiuni de control la competitorii electorali realizate în 2019 şi 2020” [AEP: Nearly 3,400 control actions on electoral contestants carried out in 2019 and 2020], Agerpres, 2 August 2021 https://wwwb.agerpres.ro/politica/2021/08/02/aep-aproape-3-400-de-actiuni-de-control-la-competitorii-electorali-realizate-in-2019-si-2020–757268

Mihai Roman, “Premierul Cîțu a mai dat 90 de milioane de lei partidelor politice în plină criză, deși promisese că le taie subvențiile” [Prime Minister Cîțu gave another 90 million lei to political parties in the midst of the crisis, even though he promised to cut their subsidies], G4Media, 7 September 2021,
https://www.g4media.ro/premierul-citu-a-mai-dat-90-de-milioane-de-lei-la-partidele-politice-in-plina-criza-desi-promisese-ca-le-taie-subventiile.html

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. In October 2018, further amendments to the Act on Political Parties were passed. Financial gifts to political parties from a single donor can no longer exceed €300,000 a year. Other amendments have obliged parties to publish detailed information on loans accepted on their website and to open a central account at the State Treasury to which all financial contributions from the state will be transferred. In the 2020 general elections, parties were not allowed to spend more than €3 million, including VAT, on their campaigns. This sum also includes money spent on promotional materials more than 180 days before the announcement of the election day.

In July 2019, just eight months before the 2020 elections, the ruling coalition with the help of the far-right, extremist party ĽSNS and populist Sme-Rodina hastily passed a further amendment on party financing. It set relatively low limits for the private financing of parties through membership fees, donations and loans and introduced party liquidation as a sanction for exceeding the party income limit. The amendment has complicated the financing of new parties and was widely perceived as being directed against Andrej Kiska, the former president, who founded the new party For the People (Za ľudí) at the end of September 2019. The OSCE has criticized the threat of party liquidation as not conforming with international standards and good practices (OSCE/ODIHR 2020: 10-13).

Citations:
OSCE/ODIHR (2020): Election Assessment Mission Final Report: Slovak Republic, Parliamentary Elections 29 February 2020. Warsaw (https://www.osce.org/files/f/documents/8/3/452377.pdf).

Slovakia

Citations:
OSCE/ODIHR (2020): Election Assessment Mission Final Report: Slovak Republic, Parliamentary Elections 29 February 2020. Warsaw (https://www.osce.org/files/f/documents/8/3/452377.pdf).

Spain

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 in the form of largely insignificant membership fees) and corporations. The law was reformulated in 2015 as part of an anti-corruption plan aimed at increasing transparency and imposing sanctions following the emergence of a significant number of scandals in previous years. It imposes spending thresholds in electoral campaigns, and 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). According to the OSCE Office for Democratic Institutions and Human Rights recommended a review of the balance between public and private funding, and ensuring that the system of public funding of both statutory and campaign-related activities of parties does not disproportionally favor larger, established parties. However, so far, no legislative amendments have been adopted.

The Audit Office (Tribunal de Cuentas) is the body charged with auditing the party accounts, and is empowered to undertake investigations on its own initiative and upon complaint, but does not have the capacity to control the investigations effectively. Although there have been certain improvements, the office suffers from a lack of political independence, since its members are appointed by the parties themselves. It also lacks staff resources, with the publication of audit reports often delayed. Moreover, there is no oversight during the campaign or before the submission and review of campaign reports. In 2021, the Audit Office launched a website for the general public providing information on the economic and financial activities of political parties and related entities (https://www.cuentaspartidospoliticos.es/es/index.html).

Citations:
GRECO (2019), Evaluation Report, Spain, Adopted by GRECO at its 83rd Plenary Meeting (Strasbourg, 17-21 June 2019) https://rm.coe.int/fifth-evaluation -round-preventing-corruption-and-pr omoting-integrity-i/168098c691

OSCE/ODHIR (2017): Opinion on Laws Regulation the Funding of Political Parties in Spain. Report available at: https://www.osce.org/odihr/356416

Spain

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 amount of Short money received by a party is linked to the party’s representation in the House of Commons, which means that parties that lose seats in a general election will face a funding squeeze during the next parliament. The 2010 – 2015 coalition government pledged to reform party financing, but made no substantial progress on the issue. The Conservative government elected in 2015 passed the Trade Union Act, which includes new restrictions on trade union financing for political parties. This will reduce the Labour Party’s income.

The Election Bill currently before parliament will include provisions that will limit the Electoral Commission’s independence by letting the government set the commission’s strategy. This could also affect party finance regulations.

Citations:
https://researchbriefings.files.parliament.uk/documents/CBP-9304/CBP-9304.pdf

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.

Italy

State financing was regulated until February 2014 by a 1993 law (Legge del 10 December 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 levy penalties for infringements.

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 number slightly rose to 1.3 million in 2020, a sign that Italians’ sympathy for political parties has not significantly increased. A total of approximately €15 million was disbursed to parties from this source (Open Polis 2022). The volume of private donations is also very low despite tax advantages, consisting mostly of contributions of their parliamentary salaries by members of parliament. An important source of party funding are the resources distributed by the two chambers to parliamentary groups, totaling approximately €50,000 for each member of parliament. A portion of these funds are transferred to the party organizations.

Existing rules governing the public and private financing of parties, as well as the current system of enforcement, do not produce a fully transparent system. The degree of transparency given to private contributions is largely left to the parties, and in many cases is minimal. In recent years, cases of individual or institutional abuse, or even fraud associated with the public party funding, have emerged in almost all of the political parties.

Citations:
https://www1.finanze.gov.it/finanze3/2xmille/index.php?tree=2018AADUEXM0101
Open Polis report: https://www.openpolis.it/come-sta-andando-il-2x1000-ai-partiti/ (accessed 11 January 2022)

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. Under the electoral system that existed until 1993, most candidates 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.

It is very disappointing that no action has been taken to revise existing laws despite the recurrence of problems. In 2020/2021, LDP lawmaker Tsukasa Akimoto was arrested and later given a 4-year prison sentence for bribery involving a casino project, and Komeito lawmaker Kiyohiko Toyama was arrested for illegal loan brokering.

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/

Vice health minister resigns, denies seeking illicit payments, The Asahi Shimbun, 29 August 2019, http://www.asahi.com/ajw/articles/AJ201908290052.html

Lawmaker Tsukasa Akimoto to serve four years in prison over casino bribes, Japan Times, 7 September 2021, https://www.japantimes.co.jp/news/2021/09/07/national/crime-legal/akimoto-prison-sentence-corruption/

Former Komeito lawmaker charged with illegal loan brokering, Japan Times, 29 December 2021, https://www.japantimes.co.jp/news/2021/12/29/national/crime-legal/komeito-toyama-indicted/

South Korea

Since its enactment 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. By law, lawmakers lose their National Assembly membership and are not allowed to run for public office for five years if they receive a fine of KRW 1 million or greater due to violations of the election law. Even though breaking the election law carries little stigma, monitoring systems and sanctions are becoming more effective.

An interesting development is the use of cryptocurrency for fundraising by two Democratic Party (DP) candidates, including presidential hopeful Lee Jae-myung. As of the time of writing, Lee planned to issue non-fungible tokens (NFTs) to campaign donors. The DP stated that the National Election Commission confirmed that the use of NFTs for fundraising purposes did not violate the Political Funds Act or the Public Official Election Act.

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
Park, Jae-hyuk. “Ruling Party to Issue Nfts for Fundraising in Presidential Election.” The Korea Times, January 3, 2022. https://www.koreatimes.co.kr/www/biz/2022/01/488_321539.html.

USA

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 regulated and transparent system to monitor contributions to candidate campaigns and political parties. However, so-called independent expenditures have been subject to fewer and diminishing constraints. 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 expenditures on behalf of parties or candidates – without being allowed to coordinate with candidates’ campaigns – and to receive unlimited contributions from individuals, corporations, unions or other entities.

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 avoid publicity regarding their source.

Toward the beginning of the Biden administration, campaign finance remained a major source of concern, especially the enduring financial role of corporations withing the political system, which has only increased since the 2010 Supreme Court ruling Citizens United v. Federal Election Commission.

USA

Netherlands

The Dutch government spends less money than its counterparts in most other European countries on financing political parties, at €1 per voter (compared to €9.70 for Iceland). Based on GRECO estimates, Dutch political parties are also less reliant on government money (receiving between 35% and 50% of their funding from this source) than are most other European political parties, with the exception of those in Germany.

Until about a decade ago, political-party finances were not a contested issue in Dutch politics. Party funds come largely through membership contributions (40% – 50%), a “party tax” applied to elected members’ salaries, event revenues and donations, and government subsidies. However, relatively new parties like the Pim Fortuyn List (Lijst Pim Fortuyn, LPF) and the Party for Freedom (Partij voor de Vrijheid, PVV), as well as Forum for Democracy, have received substantial gifts from businesses and/or foreign sources, while the Socialist Party (Socialistische Partij, SP) has 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, which was signed into law in 2013. GRECO has also addressed the procedure for monitoring party finances (particularly when the rules are improved), noting that this task should rest not with a minister or political figure, but with an independent body.

The 2013 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. 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.

In 2018, an ad hoc advisory commission evaluated the 2013 law. It argued that anonymous donations (especially from foreign donors) should be prohibited, and that the threshold and conditions for non-disclosure should be changed in favor of greater transparency. It additionally recommended that state subsidization should in the future be based on the number of party members rather than the number of parliamentary seats, with the aim of strengthening political parties’ societal roots. Furthermore, it said that provincial and local political parties should be brought within the scope of the law. The government only partially followed the commission’s advice. Foreign donations were limited to within-EU donations, but the idea of privileging membership numbers more than the number of seats held was put on hold. Recently, an alleged corruption case involving aldermen in the municipal government of The Hague has placed the issue back on the political agenda, particularly given concerns about growing criminal influences within local governments.

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

I. van Biezen, 2017. De financiering van politieke partijen – een internationale vergelijking (kennisopenbaarbestuur.nl, accessed 3 November 2019)

NRC Handelsblad, 26 January 2019. Kabinet: verbod op partijfinanciering van buiten de EU.

Nieuwsuur, 2 October, 2019. ‘Nederland is het Wilde Westen van de partijfinanciering’

Follow The Money (FTM), Dossier De financiering van onze politieke partijen

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 (SEB) 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. The SEB has not published the accounts of Turkey’s main parties since 2015. Therefore, it is unknown how much money political parties spent on campaigning over the last two presidential elections. Excluding Erdoğan, presidential candidates collected TRY 32 million in donations from eligible people.

Turkish parties excessively rely on external resources, especially state subsidies, to survive. Generally speaking, more than 90% of parties’ income comes from state subsidies. The current law allows for public financing if a party has won at least 3% of the votes in the last election or has representatives in the parliament.

The cap on donations to political parties from private individuals is reviewed each year. In 2018, the limit was approximately TRY 72,900. However, donations are rarely properly and systematically recorded. For example, cash donations, in-kind contributions and expenditures on behalf of parties or candidates during elections are not recorded. The funds collected and expenditures made by elected representatives and party candidates (e.g., during election campaigning) are not included in party accounts. There is no legal ceiling on campaign spending. The finances of candidates in local and parliamentary elections are not regulated by law. Given these factors, the OSCE has noted that party and campaign finances are not well regulated in Turkey.

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. Pursuant to Article 69 of the constitution, Article 74 of Law 2820 stipulates that the Constitutional Court, with the assistance of the Court of Accounts, examines the accuracy of the information contained in a party’s final accounts and the legality of recorded revenues and expenditures based on the information at hand and documents provided. Only three out of approximately 800 auditors of the Court of Accounts are tasked with auditing party and campaign finances.

Citations:
OSCE – ODIHR, Early Presidential and Parliamentary Elections Republic of Turkey 24 June 2018, ODIHR Election Observation Mission Final Report, https://www.osce.org/odihr/elections/turkey/397046?download=true

Arslantaş, D., & Arslantaş, Ş. (2021). The evolution of the party model in Turkey: from cadre to cartel parties?. British Journal of Middle Eastern Studies, 1-18.

OSCE – ODIHR, Early Presidential and Parliamentary Elections Republic of Turkey 24 June 2018, ODIHR Election Observation Mission Final Report, https://www.osce.org/odihr/elections/turkey/397046?download=true.

Ö. Faruk Gençkaya. 2018. “Financing of Political Parties and Electoral Campaigns in Turkey,” S. Sayarı, P. Ayan-Musil and Ö. Demirkol, Party Politics in Turkey: A Comparative Perspective (pp. 61-79), Routledge: London.

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 large number of candidates in the 2014 and 2018 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. In June 2020, the government used the COVID-19 pandemic as a pretext for imposing massive cuts on the public funding of political parties. By government decree, 50% of the funds reserved in the central budget for party financing were transferred to the COVID-19 Emergency Fund. Whereas the opposition parties have struggled to raise money from private donors, as the time of tycoons with leftist leanings has passed, Fidesz has been able to circumvent the restrictions on campaign spending by involving formally independent civic associations and by blurring the boundaries between itself and government campaigns.

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.

---