Parties and Candidates

Topic IndexBans Against Certain Kinds of Contributions

Examples

1. Contributions from business enterprises:

In a number of countries, including Sweden and the United States, business corporations are not permitted to make donations to political parties or election campaigns.

2. Contributions from trade unions:

In Britain, political donations by trade unions are regulated - but not banned.

3. Foreign contributions.

4. Contributions from government contractors or from others with a direct financial interest in the government.

5. Anonymous contributions.

Objectives of Bans and Limitations

The rationale for restrictions on political giving by companies, trade unions, and foreigners is that democracy requires the action of individual citizens of the country in which the election is being held. The power of corporations and trade unions may be so great as to drown the influence of individuals. Moreover, the internal decision-making procedures within many corporate bodies are defective. In practice, union leaders may not faithfully represent their members, and the interests and political opinions of company directors may not be identical to those of their shareholders or of their employees. An additional argument for banning political contributions by corporations and by labour unions is that they give an unfair advantage to the political parties that benefit from this funding.

Similarly, the argument that political funding should be provided by citizens is sometimes used to justify a prohibition of contributions from foreign donors or from overseas corporations.
Bans on donations from government contractors or from others with financial interests in the government are based on the need to avoid conflicts of interest.

Practical Considerations

There are arguments of democratic theory both for and against these categories of donation. These will not be discussed. The following comments deal only with the practicalities.

Measures designed to control particular types of contribution are especially liable to evasion. A ban against corporate contributions to parties and to campaigns, however justified in theory, may lead to new practices that are even less desirable than those which the laws have been intended to control. This is illustrated by several examples:

U.S. corporations and unions are not permitted to make direct political contributions. The ban has encouraged the development of special organisations attached to particular corporations or unions; they do not collect money from the corporation or from the union directly, but from its members. They are called 'political action committees' (PACs). These committees, which developed as a response to laws introduced in the 1970s, have been criticised for activities at least as serious and potentially damaging as those that existed before they were created.

In Britain, the limitation on permitted campaign expenses of parliamentary candidates has made it unnecessary for them to look to corporations for contributions to election expenses. But politicians try to enhance their incomes. Corporations pay politicians in other ways. Many members of the House of Commons accept direct personal payments - distinct from payments to their party organisations - from corporations. Such payments, which are given in exchange for advice and consultancy, are potentially even more corrupting than contributions to party funds. In 1994, the prime minister established the Nolan Committee, chaired by a leading judge, to investigate the problem.

The United States has gone several steps further in regulating the personal finances of legislators. They are required to disclose their personal assets and are subject to restrictions about earnings apart from their official salaries. Even these severe rules have proved inadequate. One of the few forms of outside earning permitted to a Congressman has been royalties from the authorship of books. A Speaker of the U.S. House of Representatives was forced to resign following revelations that he had received a large payment in the form of a book royalty but which was considered to constitute a disguised contribution.

Bans against foreign contributions to elections are easily evaded. In some cases, parties wishing to receive foreign contributions have established 'independent' 'non party' foundations to receive the money. In other cases, payments have been made through domestic subsidiaries of foreign companies.

Political payments have been disguised as business transactions. Payments at rates above those valid commercially for advertising in party publications is a device that has already been mentioned. A further device - used in Germany - is the creation of a party enterprise that offers 'economic consultancy' services to corporations. One of the most blatant schemes was reportedly used by the Soviet authorities to channel money to Communist parties in Western Europe. When some Italian corporations received contracts to export goods to the Soviet Union, part of the deal was that they should pay an agreed proportion of the profit to the local Italian Communist party. In this way, the party received aid from abroad but no money crossed the frontier.

Draft Only

Personal tools

ELECTORAL FRAMEWORK

ELECTORAL PARTICIPATION

ELECTORAL MANAGEMENT

ELECTORAL INTEGRITY

ELECTORAL OPERATIONS

Parties and Candidates