Striving for Equity, Accountability and Transparency
By Felix Ulloa
Magistrate of the Supreme Electoral Tribunal of El Salvador (1994-99)
INTRODUCTION
As the intensity of domestic and international debates over the financing of political parties increases, policymakers around the world consider a variety of proposals to make campaign and political party financing more equitable, accountable and transparent. Some countries have sought to eliminate corruption from their political and electoral systems by using public funds to finance political parties. Elsewhere, public funding arrangements have been discontinued in favour of private financing with stringent accounting and public reporting requirements
CAMPAIGN FINANCING AS A FIRST STEP.
As the sophistication and complexity of communications and other technologies needed to effectively compete for votes increases, so do parties' needs for vast resources to finance their electoral campaigns. This headlong pursuit of funding sources, fueled by campaign imperatives, has led many candidates and parties into a tailspin, as rules of conduct no longer respond to party principles or beliefs, but rather are increasingly defined by expedience and urgency (CastaÒeda Jorge. "Three Challenges to US Democracy" Kettering Review [Summer 1997]:9-10)
In some instances, laws have been passed to limit campaign spending. As early as 1905, US President Theodore Roosevelt understood the need to regulate this kind of spending. He urged the US Congress to pass legislation prohibiting donations from private businesses for political purposes. According to the Federal Election Commission (FEC), the campaign finance laws drafted between 1907 and 1966 were meant to "limit the disproportionate influence of the wealthy and of special interest groups on the outcomes of federal elections. They also sought to limit disbursements to the campaigns of candidates for federal office and require public financial reporting of campaign funding in order to avoid abuses." It was only in the wake of Watergate, however, that a breakthrough was reached in campaign regulation, with an eye toward realigning the influence of big contributors,
PERMANENT FINANCIAL SUPPORT
From my perspective, political parties should receive ongoing public funding that will enable them to carry out their regular activities. As permanent institutions in all representative democracies, they should receive government funding that is likewise permanent. Diane Schefold has observed, for example that
[h]istorically, in its original basic model, the party is conceived of as a form of free association without State intervention. This party model does not allow for funding regulations or controls [O]n the other hand, if the legal framework or the constitution, in particular, institutionalizes parties, then funding regulations arise as a natural consequence. In assigning certain functions to the parties, the state takes responsibility for seeing that they fulfill their tasks. (Schefold, Dian. "Financiamento de los partidos Politicos: An·lisis comparado de los sistemas europeos". In Partidos Politicos en la democracia, edited by Josef Thesing and Wilhem Hofmeister, p. 398, Buenos Aires, Argentina: CIEDLA, 1995.
PRIVATE OR PUBLIC SOURCES
It is worth noting recent court decisions in Germany, where political parties are characterized as groups that are freely established and deeply rooted in social and political conditions that presuppose independence from the state. In a widely read decision handed down in April 1992, the Constitutional Court of Germany recognized the constitutional authority of the State to fund political parties. The Court also established strict and precise limits on this funding in an effort to ensure that it would not undermine efforts to receive financial support from party members and sympathetic citizens. The Courts encouraged tax incentives for donations and party dues, while setting limits on these resources, particularly corporate funding.
Another approach to campaign financing is the rise of self-funded candidates who use their personal fortunes to take their agenda to a broad-based public. In the landmark decision Buckley v. Valeo (No. 75-436 and 75-437), the US Supreme Court ruled in favor of Senator James Buckley when it found that limits could not be imposed on independent spending by persons or groups acting without the consent of candidates or their campaign committees. The Court also found that no limits on contributions to their own campaigns could be imposed on candidates or their families, except in the cases of presidential campaigns that accept public funding.
I concur with jurist RamÛn Cotarelo that modern societies organize themselves as democracies of the masses, whereby representation, which takes the place of the popular participation found in direct democracies, has led to a broad consensus that there is "consubstantiation between political parties and democracy itself" (Cotarelo, RamÛn, "Partidos Politicos y Democracia", in Aspectos Juridicos del Financiamiento de los Partidos PolÌticos, P.46, Mexico D.F. II, UNAM, 1993) Thus, as political parties come to be viewed as indispensable in democratic systems, it is only natural that they receive public funding.
FUNDING LIMITS.
Political parties represent a means of channeling the interests demands and hopes of individual citizens, groups, and social sectors in multiparty democracies. Thus, concern for financing has spread from the confines of academia and the purview of election officials to become a major policy consideration. One need only take note of the recent Meeting of Government Representatives on Contributions to Electoral Campaigns, held by the Organization of American States, in Caracas, Venezuela. The agenda for the meeting focused on three thorny aspects of political contributions: their volume, their origin, and equity in the electoral process.
Financial regulation of political parties was introduced in Mexico in 1993. Controls were placed on party revenues and spending, and penalties were set for those who violated the provisions. The system, generally geared toward public funding, regulates private donations from individuals an non-profit organizations, while barring funding from foreign citizens, religious officials, and private businesses.
According to Agustin Ricoy SaldaÒa, the law provides for several kinds of support: campaign financing, the provision of funding to support the activities of representatives and senators from political parties, and funds for specific activities. According to Ricoy SaldaÒa, "It is thought that political parties promote political culture and better train the party officials and supporters who make up their organizations. The Federal Electoral Institute reimburses them for fifty percent of all the document expenses generated by these specific activities." Finally, under the heading of Political Party Development, support "is granted to those political parties that fail to receive five percent of the votes in an election" (SaldaÒa, Ricoy. Enforcing Laws on Federal Elections Finance Law, in Proceedings of the Third Annual Trilateral Conference on Electoral Systems, May 8-10, 1996, p. 144 Washington, DC: IFES, 1996).
CONTROL MECHANISMS: PUBLIC REPORTING AND ACCOUNTABILITY.
In 1993, requirements for limits on campaign funding, for annual reports of party revenues and spending, and for reports on every campaign in which a party competes were also established in Mexico. These reports must list funding sources and spending levels in order to demonstrate whether or not limits have been exceeded. When these rules went into effect in 1994, fines were levied on five of the six competing parties. Sanctions are graduated and include economic penalties and fines, suspension of public funding, or revocation of the party's legal registration.
Jacques Girard, former Director of Legal Affairs for elections Canada, describes the electoral system in Canada as being loosely regulated and allowing broad scope for funding. He asserts, "I mean that there are no limits on the amount of money that can be donated to candidates, nor are there any constraints on the source of these funds. It is forbidden to accept contributions form citizens of other countries, but other than that, any individual, trade union, or company may contribute to a party or candidate" (Girard, Jacques, "Enforcing Laws on Federal Elections Finance Law" in Proceedings of the Third Annual Trilateral Conference on Electoral Systems. May 8-10, 1996, p. 141 Washington, DC. IFES, 1996).
Nevertheless, under Canadian accountability requirements, a candidate must open a separate bank account exclusively designated for campaign expenses and, when the candidacy is declared, make a deposit, half of which is refunded when the campaign expense report is delivered. These accountability requirements enable electoral authorities to examine funding sources and compliance with campaign spending limits Failure to turn in a report in a timely fashion will land the candidate in court. Violators risk being barred from running for office in the future.
Funding is largely private in the US, but strict regulation at the federal and state levels provides for ongoing control over the financial structure of the parties. At the federal level, campaign committees and their financial backers, including the parties and Political Actions Committees (PACs), must present to the Federal Election Commission quarterly reports on funds raised and spent. This information is then made available to the public. While the Mexican system depends more on public funding, the US and Canada lean more heavily toward private funding. Both approaches, however emphasize the need to ensure transparency with regard to the sources of funding and public reporting of accounts by candidates, political, committees and parties.
