Wanted: an impartial regulator for political party financing

Financing of Political Parties Act

Earlier this week, Parliament’s Standing Committee for the Consideration of Bills concluded its detailed discussion on the Bill regarding the financing of political parties. I was invited by the Committee to participate in the discussion in representation of Alternattiva Demokratika.

The Bill was improved as a result of the discussion. Around 34 clauses of the Bill were, in fact, amended, most amendments receiving unanimous consent.

However Alternattiva Demokratika’s major objection to the Bill was not addressed. When the White Paper on the regulation of the financing of political parties was published with government’s initial proposals, AD was already making the point that the choice of the Electoral Commission as the regulator was not a suitable option.

This lack of suitability clearly results from the very composition of the Electoral Commission. It is composed of nine people, four of whom are nominated by the Prime Minister, a further four are nominated by the Leader of the Opposition and the ninth person is the chairman of the Commission, who occupies that post in virtue of his having been appointed by the Prime Minister as head of The Electoral Office.

How can nominees of the parliamentary political parties regulate impartially the very parties nominating them as well as other political parties? Over the years, the Electoral Commission had the responsibility of receiving and vetting the returns submitted by candidates for elections (local, national and European) in which returns the candidates should have listed the donations they have received as well as their electoral expenditure. A cursory look at the newspapers published during past election campaigns would immediately provide ample proof that a number of such returns were – without any doubt – false declarations. Over-spending and undeclared financing was rampant, yet the Electoral Commission never took any action. Had it done so, I think that quite a number of our Members of Parliament in past legislatures or MEPs would have been unseated.

Yet the Hon. Minister Owen Bonnici keeps defending the government’s political choice of selecting the Electoral Commission as the regulator. In the government’s defence, he stated that the Electoral Commission is a constitutional body entrusted with the conduct of elections which, he said, it has carried out to the satisfaction of everyone.

Minister Owen Bonnici is incorrect. The Electoral Commission, in conducting elections, does not have any elbow room. Its discretion is substantially limited by electoral legislation which is very tight and precise. And whenever the Electoral Commission had any practical room for manoeuvre it made a mess of it.  In simple words, the Electoral Commission is constructed on partisan foundations. There are historical reasons for this but it is a basic truth which cannot be camouflaged.

While the Electoral Commission’s hands are generally tied up where electoral legislation is concerned, it is a different kettle of fish when dealing with the regulation of political parties and their financing. There will be issues and submissions that require interpretation and an eventual decision.

Already, way back in February 2014, Alternattiva Demokratika had proposed an alternative regulatory authority in the person of the Commissioner for Standards in Public Life, a post resulting from a Bill which was proposed by a Parliamentary Select Committee led by Mr Speaker Anġlu Farrugia. This Select Committee concluded its work and presented its final report on 24 March 2014, almost 16 months ago. For those who seek to act in good faith there was ample time for considering the proposals made. Yet the proposed Bill is still pending on the Parliamentary agenda.

In the Bill [Standards in Public Life Bill] the Select Committee proposed that the Commissioner for Standards in Public Life should be appointed, subject to obtaining the support of two-thirds of Members of Parliament. The election of the Commissioner would thus be on a par with that of the Ombudsman: the requirement that the support of two-thirds of Parliament has to be achieved would ensure that the selected person would, irrespective of his/her views be acceptable to a very wide-cross section of society.

This is the way forward initially proposed by Alternattiva Demokratika, but supported at a later stage by the PN.

The government never spoke against the AD proposal but only stated that it preferred the Electoral Commission as the regulatory authority as it was in a hurry. Minister Owen Bonnici said many a time that the GRECO (Council of Europe – Group of States Against Corruption) was breathing down his neck and as a result he had no time to spare for institution building!

This law will most probably be applied with effect from 1st January 2016. It is generally designed on the basis of a one-size-fits-all template that does not distinguish between political parties having a turnover measured in millions of euros and others which handle just a few thousands of euros per annum.

Political parties will be required to present annual audited accounts to the regulator, which will be published. They will also be required to submit a report on donations received over a calendar year. In addition, they will be required to publish the names of those donating in excess of €7,000 in a calendar year up to the permissible maximum of €25,000.

Alternattiva Demokratika will be examining the law in detail and taking legal advice before deciding whether to initiate legal action contesting the selection of the Electoral Commission as the regulator. The proposed law is generally a step in the right direction but, unfortunately, is tainted by the lack of identification of an appropriate regulator. It is indeed a pity that, when taking such a bold step forward, the government preferred the partisan path. In so doing it has diluted the efforts of all those who have worked hard in previous years to achieve this goal.

published in The Malta Independent on Sunday – 19 July 2015

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Trying to squeeze out the small political parties?

Financing of Political Parties ActStandards in Public Life Bill

 

Legislation regulating the financing of political parties in Malta is long overdue. Alternattiva Demokratika has been harping on about this subject since its foundation in 1989 and has referred  to it in all the general election campaigns since.

Former MP Franco Debono has been a driving force over the last few years in ensuring that the financing of political parties has been an item retained on the national agenda.

The Parliamentary Committee for the consideration of Bills is currently examining the Financing of Political Parties Bill in detail. On behalf of Alternattiva Demokratika, I had the opportunity to be present at a number of sittings and also participated in the ensuing discussion after being invited to do so by the Parliamentary Committee.

While the general thrust of the Bill is reasonable, it contains three basic mistakes which, if unchecked, will impact the whole regulatory process. The first is over-regulation. The second is the retention of absolute control directly in the hands of representatives of the Parliamentary political parties which, in turn, leads to the third fault- this being a one-size-fits-all template.

I will take each in turn.

The over-regulating aspect of the Bill has been watered down, as  Minister Owen Bonnici was very flexible when faced with this criticism. He accepted various amendments to the Bill, scaling down  various  provisions relating to the proposed regulation of political parties.

The government is proposing that the regulating authority on party political financing should be the Electoral Commission. It attempts to justify its stance by pointing out  that the General Elections Act already assigns responsibility to the Electoral Commission to receive, and where necessary vet, the expenses made and donations received by candidates in general, local and European elections in Malta. However, Minister Owen Bonnici, who is piloting the Bill,  was not in a position to explain why the Electoral Commission had never taken any action when faced with a blatant disregard for the rules by candidates in past elections.

The alternative proposal, initially piloted by Alternattiva Demokratika but subsequently also taken up by the PN Opposition, would see the regulatory authority on political party financing vested in the Commissioner for Standards in Public Life. This Commissioner would be a  Parliamentary Official, to be elected subject to the support of two-thirds of Members of Parliament when the Standards in Public Life Bill, currently pending on Parliament’s agenda, is approved. Enjoying the support of two-thirds of MPs would signify that the person selected would enjoy widespread support and consequently his or her moral authority would be substantial and effective.

During the discussion Minister Owen Bonnici declared that the Council of Europe’s GRECO (Group of States Against Corruption) was  breathing down his neck  and consequently the government could not afford to await alternative institution building.

A major stumbling block is the composition of the Electoral Commission itself. This is determined in the Constitution, with four of its members being nominated by the Prime Minister and  another four members  being nominated by the Leader of the Opposition. The chairman of the Electoral Commission is always a civil servant nominated by the Prime Minister. This signifies that the parliamentary political parties, through their absolute control of the Electoral Commission, end up regulating themselves through their nominees. But what is even worse is the fact that they also control the regulatory process for all other political parties which may consider registering.

It seems that this rigid control of the regulatory process by the parliamentary political parties is not enough.  To be sure of tightening even further the resulting control, the Financing of Political Parties Bill also adopts a one-size fits-all template. It does this by ignoring reality and makes no distinction between the political parties having seven-digit turnover and the rest. Nor does it distinguish between the political parties run by full-time professionals paid for their services, at least in part through funds arising from donations, and political parties run by volunteers with an annual turnover averaging €10,000. The one-size-fits-all approach is, however, not extended to state financing. For the past 20 years, both the Nationalist Party and the Labour Party parliamentary groups have been receiving €100,000 in public funds annually.

The proposed  rigid reporting and auditing requirements that may be reasonable for political parties with seven-digit budgets are certainly quite unreasonable for a political party such as Alternattiva Demokratika, run by volunteers on a shoestring budget which averages €10,000 annually.

The limited administrative capacity of small parties is not factored in the Bill under consideration.

The end result may well be that there will be considerable administrative difficulties for political parties not presently in parliament to register as political parties once the Bill under discussion becomes law. (It has to be borne in mind that only political parties registered in terms of an eventual   Financing of Political Parties Act will be able to present candidates in all elections in Malta. All other candidates will be considered as independent candidates and grouped together at the lower part of the ballot paper.)

Mixed messages have come through during the debate on this Bill. Unfortunately, however, the message at these final stages is that there is also a clear but undeclared objective of the Financing of Political Parties Bill– to squeeze out the small political parties.

In the coming months we will see whether this undeclared objective can be overcome.

published in The Malta Independent on Sunday, 5 July 2015