How much money do political parties have in their bank accounts? What is their source of income? Who are their major donors during elections? And where does that hefty money to contest elections come from? Leftist parties such as CPN-UML and United Communist Party Nepal (Maoists) collect levies and membership fees from their cadres. But, will that be enough to meet all their expenses amounting to millions of rupees annually? As these political parties are public institutions, they must disclose everything openly to the public to promote transparency from within.
Very sadly, these fundamental issues are not yet adequately debated even if these concerns are inalienable traits of transparency in any functioning democracy. We have a notorious past of our lawmakers being sold to topple the majority government. Floor-crossing by some Madhesi leaders during the third round of election for the post of prime minister also seems to have involved “financial transactions”. The country has been paying the heavy cost of such filthy practices and the flow of undisclosed money has begun to undermine the democratic values in Nepal.
Business community has been a major source of funding to our political parties which even threatened the government in the past to stop paying donations to them if they continued to attack the industrial sector. Lately, the entry of high-profile businessmen as Constituent Assembly (CA) members serves as the strongest evidence of their “amicable relations” with the political parties strengthened by the flow of “corporate money” in politics. There is a flow of money from other sources as well which needs to be strictly checked and regulated.
As election campaigns are getting more expensive, the need for transparency of money in politics is gaining prominence in all emerging democracies. When election approaches, colossal funds collected through corruption, corporate, special interest groups and criminal sources are used to finance costly election campaigns. It cannot be denied that when the electoral campaign costs skyrockets, additional money is required to meet the soaring election expenses. And seeking additional money to fund growing election costs prepares the fertile grounds for “illicit or corrupt money” to sneak in politics. This will influence politics and destabilize the democratic system eventually.
Political financing has been recorded as the lowest performing category in Global Integrity Report (GIR)-2009. Nepal has earned a very weak rating in political financing category with 17 scores in GIR-2009. In countries like Nepal, the link between money and politics has been collusive in absence of political finance laws. Poor or no regulation over political financing remains a governance challenge around the world, the report mentions. In the CA elections in 2008, including the past parliamentary polls, candidates were reported to have squandered millions of rupees to influence election results by even distributing valuables and “hard cash” among the voters.
Nepal doesn’t have a comprehensive and concrete political party finance law yet, because of which parties’ annual income, expenses and election funding have remained unregulated easing the flow of “corrupt or black money” in politics from different interest-groups and sources. The election code tries to regulate few aspects of expenses during the elections but due to lack of proper monitoring, political parties often flout it. The reality is that until a strong law is enacted, it continues to derail our efforts to strengthen the rule of law, transparency, accountability and institutionalization of our young democratic system. For any comprehensive political party legislation, the components discussed below shall serve as prerequisites to draw a legal borderline between money and politics.
CRUCIAL COMPONENTS
The comprehensive political financing law should at least include six components. First, the law should have a contribution limit with a financial threshold on size of per-donor contributions. This is the easiest way to limit the influence of any individual or a group during the elections. The US law limits 37,500 dollars as cash contribution by one individual to all candidates for a two-year election cycle.
Secondly, the law should ban certain contribution such as donations usually from foreign citizens, multinationals and unions. Many countries partially or completely ban corporate and foreign contributions. Thirdly, the legislation should put a limit on electoral spending by candidates and political parties. The objective is to restrain the cost of political campaigns and establish an “even playing field” limiting the influence of a single party or a candidate during elections.
The fourth component is the campaign-time limit. The assumption is that the shorter the period, the less the money needed. Some countries like Japan and Malaysia limit the legal campaigning period to as little as two weeks. Likewise, the fifth component is public funding of political campaigns and parties through taxpayers’ money. Political parties can receive public funding on the basis of the number of votes or seats won in the last elections. In most countries, the qualifying threshold for public funds is about 5 percent of the votes cast or seats received in the last election. The reason behind public funding is that the government funds will keep the political parties away from illegal and corrupt money.
Similarly, public disclosure is the sixth component for controlling money in politics without which most other approaches will fail. Without a party or candidate disclosing expenses, spending limits can’t be monitored, verified and audited without the names of vendors who were paid by the campaign funds. Such public disclosure should literally answer four fundamental questions: Who gives them money? How much money do they give? To whom does the money go? And for what purposes is the money used?
Effective public disclosure requires two things – candidates and parties report in detail on receipts and expenditures, and disclosure of campaign funding reports to the public periodically. Disclosure laws should mainly demand three types of reporting requirement – disclosure by candidates of income or expenditure accounts, disclosure by political parties of income and expenditure accounts, and disclosure by candidates and political parties of the names of donors.
INTERNATIONAL PRACTICES
Many countries around the world have enacted stricter laws to regulate political financing. Disclosure laws are the most popular in Eastern and Western Europe. Countries in Africa, Asia, Europe and South America have obliged political parties to disclose their campaign and political finances to the public periodically. In the United Kingdom, political parties have to normally publish party donations quarterly, but weekly disclosure is required during the elections. The law obliges central party organizations to disclose all donations above $7,500 cash or anything in value through regular updates in their websites.
The US law demands full disclosure from candidates and political parties as well. With a contribution threshold of $200, both the parties and candidates must report the name and address of contributors, amount, loans, and in-kind contributions mentioning where and how the funds were deposited and spent. The US law also limits hard-money political contributions. Individuals can contribute up to $4,000 per election cycle, with $2000 for the primary election per candidate and $2000 for the general election per candidate. Overall contributions including in-kind donations from a single individual are thus limited to $95,000 over a two-year period.
The US law also bans both cash and in-kind contributions from foreign citizens, corporations and labor unions, national banks, federal contractors and proxy contributions. Countries such as Australia, Brazil, Canada, Denmark, Greece, Japan, Russia, Thailand, Ukraine, the UK, the US and many others have enacted legislations that obliges both the candidates and parties to disclose campaign funding and contributions including the names of donors to limit the impact of illegal money on democratic politics.
No matter how flawless is a country’s electoral system, how active its civil society, how competitive its political parties, and how responsible its local bodies, the role of money in politics undeniably influences the quality of democracy and governance. The higher the monetary influence on politics, the lower the quality of democracy and governance. Thus, controlling and regulating flow of undisclosed and corrupt money in the politics of Nepal is now the foremost need to make the democratic system value-based, competitive, transparent and accountable.
Writer is Deputy Director, Good Governance Project, Pro Public
pbhattarai2001@yahoo.com
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