Tuesday, 3 January 2012

GRECO - no Greek rules for party financing, please!!

Political party financing is a very crucial aspect for the working of a true democracy.   The EU has set rules to ensure such financing is well regulated and a  Council of Europe Group of States against Corruption, acronym GRECO, supervises national regulations.

It is reported that GRECO has objected to government's suggestions to make a threshold of EUR 10000 above which donations will have to be reported and the donor identified, and that such threshold should not apply to donations from party members.

The PL has said it has not been consulted either on the Government's proposal or about the GRECO report and has stated that the threshold of EUR 10,000 is too high and that it objects to different rules for party members as it is just a way to take the bite out of the regulations.

Franco Debono MP has publicly disassociated himself from the PN's submissions.

I have been writing about this matter for years on end and my thesis is that political party funding should be done by the State under strict controls and that all private donations should abolished.   Any threshold will only serve to defeat the very scope of the regulations.

Here is a typical article I published in 2003:

Regulating Party Finances


13th June 2003

The Malta Independent - Friday Wisdom
Alfred Mifsud

The Treaties of the EU expressly acknowledge the role of the European political parties as important factors for integration. The Treaty of Nice, which entered into force on 1 February 2003, stipulated that the statute and financing of political parties at European level should be regulated. The Treaty changed the decision-making procedure on this issue from unanimity to qualified majority, and gave co-decision - as well as registration - powers to the European Parliament.

Party donors could become
a shadow government

Now that we have decided to adopt EU standards for regulating the most trivial matters of the way we do things, I trust there will be no resistance in adopting EU benchmarks also regarding party finances.

Political parties are the backbone of our democratic system.    Parties spend hundred of thousands liri each year just to keep their operation going.   They made, and in the case of the PN continue to make,  substantial capital investment in immovables and equipment.  Each year they have to run expensive elections at local level and once every five years, at least, they have to meet the exorbitant cost of running  general elections.

Political parties source  their revenues from three main sources.   Membership fees collected annually, fund raising leisure activities,  and donations.  I could have included a fourth in the form of commercial profits earned by subsidiary commercial enterprises.  These are  engaged in exploiting a loyal captive market through provision of services in media and travel.   However, I am under the impression that such commercial activities are more a drain rather than a source to central finances at least on a cash flow basis.

Of the three sources identified donations by far constitute the largest source of income for political parties.   It here that the issue of democratic governance comes in.   Are the interest of democracy prejudiced by allowing political parties, as  the principal mechanism for execution of democracy, to raise their finances by private handouts beyond any democratic control?

Both main parties try to give the impression that such donations are collected in the form of small donations from their followers on a no strings attached basis.   In the absence of any serious regulatory controls doubts remain that this is just a façade to justify a situation which is far less innocent.   Stories about donations demanded or given which run into sizeable thousands abound.   It is here that democratic governance risk serious offence as the larger the size of the donation the more difficult it becomes to justify its no strings attached status.

For as long as political party finances continue in their unregulated state the feeling will continue to prevail that the capital rich sector of the economy can use its resources to invest in giving political power to the party that best protects its interest.   Living in a media dominated society it is a small step to deduce that whoever has the financial resources to dominate influential opinion forming sectors of the media, will gain a substantial electoral advantage over adversaries who do not have access to similar financial resources.

The need for democratic governance through controlling the way political parties finance their activities is loud and clear.   The EU has acknowledged and is addressing this need.   It is time that we acknowledge it too by setting an autonomous Commission to study the situation and submit recommendations. 

To my mind once citizens pay their taxes it is fair to expect that political parties get the finance they need from the state in whose service they exercise their democratic role.   State financing would bring in two disciplines.   Control over the way the money is spent to ensure that it is used for the approved purpose and the abolishment of all forms of donations, large or small, to ensure that citizens are not subjected to indirect taxation or are tempted to make donations in the form of an investment to be traded for political favours.

Alfred Mifsud

1 comment:

  1. But what use regulating political party finances if these have become well and truly commercial oranisations with subsidiaries in media, travel, telecommunications, and what not! If these loopholes are allowed illegal donations could be made through the subsidiaries like buying advertising packages. Political parties must be polical parties period. They must not be in business.