For effective oversight, there is no one-size-fits-all model when it comes to the implementation of a political finance regulatory framework. However there are good regulatory practices that apply or can be adapted to suit most country contexts. These include, for example, an independent oversight body with clear objectives and well-designed operational procedures, a set of dissuasive and enforceable sanctions, a constant appraisal of the system, and the provision of support to help political parties comply with the regulations and better understand political finance.
Integrity in Political Finance in Greece
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OECD Public Governance Reviews
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Chapter 4. Effective oversight: Implementing political finance regulation
Abstract
The challenges in implementing political finance legislation are many, and their relative importance will depend upon the goals of regulatory option adopted, the country’s electoral and governmental systems and its political context. However, there are good regulatory practices that apply or can be adapted to suit most situations.
4.1. Defining overarching principles and objectives
Enabling legislation generally details the composition and appointment process for the oversight body members, and sets out the body’s remit and powers. Such legislation is usually silent about how the oversight body will approach its work. It can be extremely helpful both internally and for external stakeholders for the oversight body to agree its guiding principles and objectives. Internally, the principles and objectives help guide decision making at all levels. They will help inform internal, administrative decisions such as where to focus the agency’s resources and which activities will take priority. They also provide a frame of reference to support the agency in reaching positions on substantive issues. From an external perspective, an articulated set of principles and objectives helps set expectations and provides a basis for holding the body to account.
Although this sounds like an easy task, in reality, it can be challenging. The UK Electoral Commission was created as the country’s political finance regulator with responsibility for setting standards for election administration (as opposed to actually administering elections). After much discussion, the Commission Board agreed and published the following principles for free elections that support a healthy democracy:
Trust: People should be able to trust the way our elections and our political finance system work.
Participation: It should be straightforward for people to participate in our elections and our political finance system, whether voting or campaigning, and people should be confident that their vote counts.
No undue influence: There should be no undue influence in the way our elections and our political finance system work.1
The Commission Board then defined its objective for its political finance role as “transparency in party and election finance, with high levels of compliance”, and amplified it as follows:
We want people throughout the United Kingdom to be confident that:
There is transparency about party and election finance, so that people know where money comes from and how it is spent.
People who want to stand for election, and people and organisations that want to campaign at elections, can easily find out how to get involved, what the rules are and what they need to do to comply with those rules.
The rules on party and election finance are followed, and those who do not follow them are dealt with appropriately and effectively.2
Political parties, candidates and campaigners can participate in elections without unnecessary barriers.
4.2. Operational policy documents
One tool to help achieve consistency and impartiality is to have developed and published policies that the oversight body will follow in performing its functions. The operational policies might include:
Document retention policy: What documents the regulator will retain and for how long.
Disclosure policy: What information the regulator will disclose, to whom it will make such disclosure and when it will do so.
Enforcement policy: Guidance on how the regulator fulfils its role and uses its powers.
These policies, which should be developed in consultation with stakeholders, help establish the “rules of the game” for both the oversight body and the regulated community. They also provide guidelines that can be used by civil society groups and parliamentary oversight committees in monitoring and holding the regulator to account.
An enforcement policy, for example, should set out the criteria for how the oversight body will handle instances of non-compliance. In Canada, the published policy explains that some cases are better handled through administrative measures. It sets out the guiding principles and criteria for channelling cases in this direction. The factors listed include: no adverse impact on the integrity and fair administration of the political finance regime; public censure not warranted; lack of intentionality by the party committing the violation; and no prior referral pending against by party for other breaches.3
The same principle applies to the sanctioning phase. Again, taking the Canadian approach as an example, referral for prosecution is usually reserved for the more serious cases. According to the published policy, the Commissioner will consider whether the administration of justice is best served by committing the level of resources required to have a prosecution. The decision to prosecute will also depend on the specific factors of the case, including whether:
In view of the seriousness of the alleged offence and/or the conduct of the subject of the investigation, a prosecution would best maintain public confidence in the electoral system.
The person who is the subject of the complaint is relatively sophisticated in respect of electoral matters.
The allegations suggest the existence of a deliberate scheme rather than an isolated event.
The person who is the subject of the complaint has a history of non-compliance with the provisions of the Act.
There is a need for specific or general deterrence.4
Having well-considered operational policies help establish, from the outset, that the oversight body will be exercising discretion but in a structured way. And, where the oversight body takes decisions that are consistent with the articulated policy, it has a defence against allegations of impartial application of the law.
4.3. Work to written procedures
In addition to having broad operational policies as mentioned above, oversight bodies should have detailed procedures that guide staff in how they perform their work. The procedures should spell out what steps are to be taken, by whom, when and how. Adherence to the procedures should be internally audited.
Having such a system in place serves several purposes. First, it provides clarity to all staff as to what is expected. Second, it encourages continuous improvement as it encompasses a means to systematically identify and track proposed changes to current procedures. Third, such a system can increase the confidence of stakeholders that the regulator is operating consistently and impartially.
4.4. Defining work streams and appropriate staffing
There are a variety of activities or work streams that any political finance regulator should undertake in fulfilling its mandate. They include advisory services, publication of party financial information, monitoring or supervision activities, enforcement and policy work. For each relevant workstream, the oversight body will need to consider the type of staffing required, both in terms of number, experience and qualifications.5
4.4.1. Advisory services
Detecting and addressing violations of the law may be considered as the primary function of the political finance regulator. However, the focus arguably should be on ensuring compliance with the law from the outset. This requires helping those who wish to comply with the law to do so and then holding those who fail to comply to account. Targeted and user-friendly guidance, training seminars and hotlines are types of advisory services used to help inform and educate those who are subject to regulation as well as other stakeholders such as the media, NGOs and the general public. The skillsets required include:
the ability to translate legal requirements in layperson’s language (both orally and in writing)
good interpersonal skills to field questions from stakeholders with varying degrees of sophistication
technical expertise in the substantive area of political finance
drafting guidance materials
training experience and ability.
4.4.2. Publication of financial information
With transparency being a central component in virtually every political finance regulatory system, the way the financial data is made available has great importance. Advancements in information technology (IT) have revolutionised options for the reporting and publication of political finance information. Although some countries have e-filing systems in place and/or IT-enabled systems for internal purposes, there is an overall lack of information reported and published electronically in a format that enables the viewer to undertake systematic searches of published information. This undermines the ability of the public, the media and civil society to analyse the operation of the legislation, monitor compliance with it and/or hold the regulator to account.
A well-designed IT system can make the reporting and publication easier for parties, candidates, oversight and enforcement bodies. The development and maintenance of such a system will require:
IT expertise
knowledge of legal framework and requirements
ability to engage in consultation with all users (e.g. parties, media, CSOs and agency staff) to determine/address their needs
ability to draft guidance for those who will use the system
thorough understanding of desired outputs
project management experience.
4.4.3. Monitoring compliance
Monitoring compliance can encompass a variety of activities. It would include reminding political parties when reports are due, checking reports submitted for accuracy and querying problems with parties. It could also entail collecting data during the election campaign. The benefits of “real-time” monitoring range from incentivising good behaviour (the political entities know they are being monitored and thus may be deterred from under-reporting spending), providing an opportunity for the regulator to spot potentially improper behaviour that it can raise with the political entity before a violation actually occurs, and establishing an evidential basis against which to assess submitted reports.
The way real-time monitoring is structured and carried out is important. One approach is to cover all such activity on an equal basis. This requires significant resources, and the costs can outweigh the benefits. Good regulatory practice would be to undertake monitoring activity on the basis of robust risk assessment. This requires the regulator to develop and implement a risk assessment policy whereby it identifies the areas that most warrant attention. These might be substantive areas, (e.g. the potential for under-reporting of a specific type of expenditure or potential types of misuse of state resources) or the policy might be geared to which types of parties warrant more support. For example, certain parties may be rated as warranting greater support and attention because of factors such as size, the significance of their resources or turnover of key staff.
The skills required for monitoring compliance include:
ability to liaise with political parties to address queries about compliance with the rules
ability to check the accuracy of reports and prepare them for publication
financial auditing.
4.4.4. Enforcement
When issues of non-compliance are identified through the oversight body’s monitoring programme and/or alleged complaints filed with the agency, they will need to be assessed and, where appropriate, investigated. In some countries, the oversight body may be authorised to investigate matters fully, whereas in others countries the oversight body will only conduct a preliminary review and then forward matters to another entity (e.g. prosecutor’s office, administrative division or a judicial office). Depending on the legislative framework, the oversight body may also have the authority to sanction those who fail to comply with the law. To perform this function, staff should have:
knowledge of the legislation
understanding of regulatory procedures and practice
investigative skills, including the ability to formulate requests for documents and to conduct interviews
ability to analyse and apply the law to various factual scenarios
writing skills to draft reports and conclusions.
4.4.5. Policy work
Policy work can range from the development of operational policies and internal processes to reviewing the legal framework with a view to making suggestions for improvements. It can also encompass the assessment of statistical data to help define trends in party and election finance. Those working in this area will need skills and experience in:
analysing data
horizon scanning
understanding the politico-socio context
ability to identify, relate to and communicate with stakeholders.
4.5. Stakeholder engagement
We should expect oversight bodies to have the power, capacity and willingness to engage with external stakeholders. These would include political parties, candidates, third parties and campaigning organisations, government officials, voters, the media and civil society organisations. And, the outreach to stakeholders should be meaningful. For example, consultation on disclosure or enforcement policy should start early in the process and have continuity.
Some countries have created working groups for various stakeholder representatives. If well managed (e.g. with agreed Terms of Reference, regularly scheduled meetings and set agendas), these working groups can provide an excellent vehicle for exchanging views and information. A working group consisting of political party representatives, for example, can provide the oversight body with a clearer understanding of the practical impact of the rules and procedures, which might then be tailored to fit the regulated community’s needs whilst still achieving the regulatory objective. Similarly, such meetings are a means for the oversight body to communicate expectations, remind parties of upcoming filing deadlines or address issues that have arisen.
Working groups with representatives from civil society organisations (CSOs) can also be beneficial. Some CSOs have experience in monitoring election activity and may have insights to offer the oversight body.6 The oversight body can also use CSO working groups to convey information about the operation of the law, resourcing issues and seek informal feedback about policies and approach. However, it would be inappropriate to share information about ongoing cases or to involve the CSOs in case-related decision making.
4.6. Oversight body as role model for transparency
The universal core principle underpinning political finance regulation is transparency. Political finance oversight bodies can serve as role models for transparency by having mechanisms in place that provide transparency about how they undertake their role and the decisions the oversight body makes. However, a cursory review of websites shows that this is a lesson yet to be learned by many political finance regulators around the world.
At a minimum, the oversight body should include the following on its website:
information about its role, principles and objectives
written guidance developed to assist those who are subject to the regulation
key policies
a listing of decisions taken including issue, outcome and rationale for decision
information about where to get more information/whom to contact
easily accessible political finance data required to be published.
Notes
← 1. See the Electoral Commission’s Corporate Plan 2016-17 to 2020-21 at www.electoralcommission.org.uk/__data/assets/pdf_file/0011/205688/electoral-commission-corporate-plan-2016-17-to-2020-21.pdf, pp. 5-6.
← 2. Ibid, p. 6.
← 3. See www.elections.ca/content.aspx?section=pol&dir=acp&document=index&lang=e (accessed on 26 August 2017).
← 4. See the Compliance and Enforcement Policy of the Commissioner of Canada Elections, Chapter VII, paragraph 39 at www.cef-cce.gc.ca/content.asp?section=abo&dir=bul&document=p2&lang=e (accessed on 20 August 2017).
← 5. In addition to the specialised skill sets highlighted here, the successful oversight body will need to have developed strong planning and communication strategies.
← 6. CSOs vary in their focus, effectiveness and degree of impartiality and the oversight body will have to make some judgments about which ones are the most reliable.