Integrity in Political Finance in Greece

Chapter 3. Developing a solid legislative framework

Abstract

There are several guiding factors to consider when designing a solid legislative framework for political finance. As this section explains, first, there must be clarity about what the legislation is designed to achieve. Second, any legislative proposal should be assessed for enforceability during the drafting phase. Third, it is important to highlight that political parties and candidates primarily exist to engage in the political and electoral process, and thus the regulatory regime should impose the least amount of burden on them whilst still achieving the defined regulatory goals.

Very often an upcoming election contest or a major political scandal is the catalyst for enacting political finance reform. Neither is an inherently negative impetus, but both can easily overshadow and dislodge a more methodical approach to creating/modifying a political finance system. However, a methodical approach is exactly what is needed in order to produce a robust and workable regulatory regime. This is particularly true in political finance regulation arena because, unlike social programmes or other forms of economic regulation, party and campaign finance law sets the rules for gaining access to power. There are several guiding factors to consider when drafting legislation.

3.1. Clarity of purpose

There must be clarity about what the law is designed to achieve. If the goal is to ensure that political parties are well resourced, it might be appropriate, for example, to allow donors to make large donations and to set a high threshold for public disclosure of donations - the theory being that donors are more likely to contribute if their identities are shielded from public scrutiny. On the other hand, if the goal is to increase the level of transparency, a higher disclosure threshold would not deliver that objective. In short, clarity of purpose helps lawmakers choose between conflicting objectives. It also provides guidance to those who ultimately will have to construe and apply the law, be it political parties, the oversight body or the judiciary.

3.2. Enforceability

Any legislative proposal should be assessed for enforceability during the drafting phase. There are several aspects of enforceability to consider. The first is whether there are any legal loopholes that will make it easy to circumvent the legislation and/or undermine its purpose. Let’s assume, for example, the legislative goal is to limit the influence associated with large donations. To achieve this goal, it would be insufficient simply to impose a cap on donations to political parties without also imposing a cap on donations to candidates. A donor otherwise could make unlimited donations lawfully to the party’s candidates and defeat the purpose of the law. Another potential loophole with contribution limits arises when the law fails to include a broad definition of what constitutes a contribution. For example, if the law failed to include loans in the definition, nothing would prohibit donors from making large, unreportable loans to their preferred party. Finally, a donor who has contributed the statutory maximum may seek to give money to friends and relatives with the understanding that they, in turn, will make the donation to the desired recipient. To avoid this loophole, the law should explicitly prohibit the making of donations in the name of another person.

The second enforceability consideration is whether the legislative framework provides the necessary means to detect breaches of the law. For example, if there are limits on donations or expenditures, then donors and suppliers should be readily identifiable. The law should prescribe the information that must be recorded and reported. The level of detail required must be sufficient to allow the oversight body to confirm the identity and amounts involved in the transactions. For suppliers, it would make sense to know the identity, address, nature and quantity of goods supplied and their costs. For donations, the law could require, as it does in the United States, that the occupation and employer of donors be reported. This publication of such information has proven to be a fruitful evidential basis for detecting circumvention schemes.

A third enforceability consideration is whether the oversight body has adequate statutory powers to detect/investigate allegations of non-compliance properly. In countries where the oversight body is vested with the responsibility for detecting and/or investigating failures to comply with the law, it must be empowered to seek information from those with knowledge of what transpired. The law must also provide a remedy for the oversight body to use when responses to requests for information are not forthcoming. In some countries, the refusal to comply with informational requests are treated as criminal offences and handled by the state’s prosecutor. An alternative and perhaps more effective route is to authorise the oversight body, itself, to seek enforcement through a judicial process.

3.3. Level of burden imposed by legislation

Political parties and candidates primarily exist to engage in the political and electoral process, and thus the regulatory regime should impose the least amount of burden on them whilst still achieving the defined regulatory goals. Regulations should be simple and understandable, so that they could provide incentives for parties to follow them, for example designing digital and standardised platforms for reporting political finance as UK case (see Box ‎5.5).

The level of detail to be reported for donations is a good example. In some countries, every donation of any size must be recorded in the party’s books and then reported to the oversight body. In other countries, small donations are exempt from such requirements. This means that the identities of people giving small donations are not disclosed, which may incentivise some people to donate. In addition, the administrative burden on parties is reduced, as they don’t have to keep an itemised record of the small donations. Similarly, some countries exempt parties with minimal financial transactions from having to submit annual accounts or from having their accounts independently audited.

The issue of burden also manifests itself in filing deadlines. Some campaign finance groups argue that parties should disclose their finances throughout the election campaign period. Others argue that such a requirement would not be meaningful, as invoices for services may not be rendered until after the election and because partial reporting during this peak period would be disproportionately burdensome.