In order to contribute further to the anti-corruption debate and suggest ways to improve the regulation of funding of political parties in Greece, this section reviews the existing legal framework, especially in relation to the provisions of private funding, information disclosure, oversight and law enforcement. The overall legal and regulatory framework for political finance in Greece is relatively sound. Following recent legal amendments, additional provisions such as tighter requirements for bank loans and publication of political finance data has strengthened the legislative framework. However, challenges remain in effectively implementing part of the law on political parties, and additional capacities are needed for a monitoring authority to ensure adequate compliance with existing rules and regulations. Recommendations for Greece include further development of a public database; investment by the Audit Committee in online technologies to facilitate effective reviewing and auditing of the political financial reports; and additional outreach to support political parties’ internal capacity building and awareness-raising activities across government and society.
Integrity in Political Finance in Greece
Chapter 5. Political finance in Greece
Abstract
Political party funding in Greece has come under scrutiny following corruption allegations concerning the misuse of political funding by senior politicians and political parties (Repousis, 2014; Svarrer, 2017). In order to improve the regulation of political finance, Greece has made various efforts in recent years by adapting its legal framework.
While the recent reform significantly improved the legislative framework, efforts to increase integrity in political financing must be tied to a holistic implementation effort to strengthen the transparency of donors and contributions, compliance and oversight of political party campaigning and spending, and sanctioning of violations.
5.1. Current legal framework for political financing in Greece
The Greek government is prioritising the fight against corruption and bribery and, with the assistance of the European institutions, is committed to taking immediate action. Under the responsibility of the General Secretariat Against Corruption, Greece’s National Anti-Corruption Action Plan (NACAP) identifies key areas of reform, including political financing.
Recent reform measures mainly reflect the recommendations of the Group of State against Corruption (GRECO). GRECO evaluated the level of transparency of party funding in Greece in 2013, 2014 and 2015 with a number of recommendations. Subsequently, the Law 4304/2014 for the “Audit of financial and political parties and elected members in the Hellenic and the European Parliaments and other provisions” was adopted in 2014 and entered into force on 1 January in 2015, partially amending Law 3023/2002 on “Funding of political parties of the state income, expenses, promotion, publicity and audit of the finance of political parties and parliamentary candidates”. The revised law addressed many potential areas for policy capture, for example, by setting limits on the amount of donation from a single source and tightening the regulation relating to bank loans to political parties.
Furthermore, additional amendments were introduced in 2017 with the Law 4472/2017 on “Combatting corruption, reinforcing transparency and audit of the finances of the political parties and the elected members of Hellenic and European Parliament”. Additional measures such as tightening regulations for bank loans are now in place to reduce the corruption risks in political financing. Law 4475/2017 introduced the obligation of auditees to notify the Audit Committee about the bank account used for their income and expenditures. Until recently, this obligation lay with the bank and credit institutes where the account was held. Moreover, the new law amended the provision about bank loans to prohibit the use of future public funding as a guarantee to take bank loans.
In the current setting, two institutions are mainly charged with managing and overseeing political financing, political parties and candidates: the Ministry of Interior and the Audit Committee. The Ministry of Interior is responsible for the allocation of public funding to political parties while the Audit Committee acts as the main oversight body of political financing.
5.2. Promoting a level playing field through balancing public and private funding
Allocation of public funding and the rules for private funding require special attention to ensure a level playing field for all stakeholders. While private donation is a channel of political participation, if the financing of political parties and election campaigns are not adequately regulated, fair political competition could be hindered.
5.2.1. Public funding is a major financial source for Greek political parties and provisions for public funding are relatively comprehensive in the law
Public funding helps to sustain the institutionalisation of political parties in democracies as they benefit from necessary financial support to conduct their daily activities. It also reduces their dependence on private funding, while there is a variation in such dependence across countries (Table 5.1). Such public support strengthens the capacity of political parties to level the electoral playing field.
Table 5.1. The balance between public and private funding to political parties in selected OECD countries
Source: Adapted from GRECO (n.d.), “Third Evaluation Round (launched in 2007 continuing to 2017): Evaluation and Compliance Reports”, Council of Europe, www.coe.int/en/web/greco/evaluations/round-3 (accessed on 29 January 2018).
In Greece, provisions for public funding are comprehensive. Regular public funding, amounting to 0.5% of the state income of the previous financial year, is provided by the Ministry of Interior to political parties and coalitions represented in Parliament or the European Parliament, as well as those that do not have elected representatives, but secured at least 1.5% of all valid votes at the last elections. Direct public funding is meant to cover the parties’ or coalitions’ operational costs. In the Article 3 of the Law 3023/2002 as amended by Law 4304/2014 and Law 4472/2017, it is stated that 1) 80% is provided among the parties and coalitions represented in the Parliament in proportion to the number of votes they obtained, by means of a calculation based on proportionality; 2) 10% is provided to parties and coalitions with the Parliament and European Parliament representation; and 3) 10% is given to parties and coalitions that have filed complete lists of candidates in at least 70% of the constituencies and received at least 1.5% of valid votes at national level.
In addition to the regular funding, several forms of indirect public funding also exist in Greece in relation to election campaigns, including free broadcasting time on public and private radio and television channels for political parties.
The law gives a central role to public funding in the financing of the main political parties and of their campaigns. Distribution criteria and mechanisms for public funding are well advanced in Greece. With relatively high dependence of political parties on public funding, ensuring transparency and effective oversight of the use of public funding would be crucial to maintaining integrity in Greek political financing (the level of transparency and oversight will be examined in later sections of this report).
5.2.2. Greece bans a number of sources for private funding and sets the maximum ceiling for donations
Private funding allows for support from society at large for a political party or candidate and is widely recognised as a fundamental right of citizens. Yet, if private funding is not adequately regulated, it can be easily exploited by special private interests. Therefore, OECD countries increasingly regulate private funding to ensure a level playing field among parties and candidates.
Regulating private funding underlies a concept of banning or limiting sources or amounts of financing. Sources considered inappropriate and therefore banned include foreign financing, financing from state organisations, such as state-owned enterprises, from corporate donations or from trade unions (Figure 5.1).
Figure 5.1. Types of banned private contributions in OECD countries
Source: Adapted from IDEA (n.d.), Political Finance Database, www.idea.int/data-tools/data/political-finance-database.
In Greece, political parties may receive private funding. While dependence of the main parties on public funding may appear to limit the impact of other sources of income, Greece also has a number of restrictions for the private funding, in line with many OECD countries. Article 7 of Law 3023/2002 as amended by Laws 4304/2014, 4472/2017 and 4475/2017 states that the following sources of funding are not allowed: foreign persons, legal persons governed by public or private law, local authorities at any level, and media owners and publishers. In other words, private donations can only be made by natural persons, and corporate donation is banned in Greece.
Many countries also set the maximum ceiling for donations from natural and legal persons to political parties. Such a ceiling plays an important role in understanding the room for manoeuvre for potential policy capture, but it is difficult to strike the right balance (Table 5.2). In Greece, contributions from any individual donor to a political party may not exceed EUR 20 000 in a given year while candidates may not receive more than EUR 5 000 according to Law 3023/2002 as amended by Law 4304/2014. Such ceilings help to frame private funding in Greece.
Table 5.2. Maximum donation ceilings for individuals in selected OECD countries
Source: For Chile, Korea: OECD (2016), Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture, OECD Publishing, Paris, http://dx.doi.org/10.1787/ 9789264249455-en. For Austria, Belgium, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Spain, Sweden and the United Kingdom: GRECO (n.d.), “Third Evaluation Reports on the Transparency of Party Funding”, Council of Europe, www.coe.int/en/web/greco/ evaluations/round-3 (accessed on 29 January 2018) and IDEA Political Finance Database (n.d.), www.idea.int/data-tools/data/political-finance-database (accessed on 12 September 2017).
5.2.3. While efforts are made to regulate anonymous donations, the use of anonymous coupons may require close oversight in Greece
One of the major sources of concern is anonymous donations. Some 16 OECD countries ban all anonymous donations to parties, and 15 countries ban anonymous donations to parties above certain thresholds (Figure 5.2). For example, in Estonia, political parties are not allowed to accept concealed or anonymous donations, nor donations from legal persons. If possible, political parties are to return anonymous donations or donations from legal persons to the donor; otherwise, they have to transfer the donations to the state budget within ten days for the addition of the funds to be allocated to political parties in the following budgetary year.
In Greece, private funding must be provided through a bank transfer or other methods that enable identification of natural donors. In addition, Law 4472/2017 also repealed the provision in the Law 3023/2002 as amended by Law 4304/2014 that allowed political parties to organise campaigns for fundraising purposes as long as such funds did not exceed EUR 150 000 per annum. This provision was loosely defined and could allow political parties to circumvent the regulation of anonymous donations and requirements, such as the use of bank transfer, the identification of donors and donation ceilings. This latest amendment would facilitate closing this legal loophole and banned an exception for fundraising activities by political parties.
While efforts are made to regulate the risks of anonymous donation, coupons are commonly used to provide donations to political parties in Greece. Under the previous provisions, all the coupons were numbered and stamped by the Audit Committee in order to prevent uncontrolled flows of donations to parties. Besides, purchasing these coupons required the name and tax identification number or identity card number of the donor.
However, the Greek authorities considered that coupons are traditionally one of the most common methods for Greek citizens to provide financial support to political parties, and allowing small anonymous donations would promote spontaneous support by citizens to the political parties, and strengthen the psychological ties between them. To this end, Law 4509/2017 amended the provision and enabled anonymous donations through coupons up to EUR 15. Purchasing coupons below EUR 15 do not require the identification of the donor. The law also states that the maximum amount of coupons valued of EUR 15 or lower, which are numbered and certified by the Audit Committee, shall not exceed an amount equal to 4% of the annual amount of the regular state funding per year received by each political party for the previous year. The exact amount of the coupons for each political party shall be defined by a Declaratory Act issued by the President of the Audit Committee within the first ten days of each year. Allowing anonymous donations below certain thresholds is not uncommon, and a similar system exists in countries such as Ireland and the United Kingdom (Figure 5.2 and Table 5.3). However, it is important to ensure that the Audit Committee keeps track of the coupons that are stamped but not sold and has them returned to the committee in order to prevent uncontrolled flows of anonymous donations to parties. It is also important to disclose how much donations political parties collect through the sales of anonymous coupons in order to measure its proportion of total private funding. Such data could also facilitate the assessment of the added value of the recent reform introduced by Law 4509/2017 and the future debate on the issue of anonymous coupons in Greece.
Figure 5.2. Ban on anonymous donations to political parties in OECD countries
Note: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Source: Adapted from IDEA (n.d.), Political Finance Database, www.idea.int/data-tools/data/political-finance-database.
Table 5.3. Thresholds for anonymous donations
5.2.4. Introduction of strict conditions for bank loans is a major step forward
Other risk areas are the loans granted to parties/candidates. This may be considered hidden private funding. Countries have defined their own models for regulating this source of funding. In Spain, for instance, the high indebtedness of parties was recognised by the Third Evaluation Round of GRECO, as a challenge to the independence of parties’ vis-à-vis credit institutions. The Spanish Court of Audit - also a main institution responsible for the control of party funding, but with non-binding recommendations - had already highlighted this risk to parties in particular as it observed many irregularities in the management of the loans granted to parties. Turkey, on the other hand, has simply forbidden parties from borrowing money or taking loans. In Italy, while taking loans is not forbidden, all candidates to the national parliament and regional councils are required to include the debts incurred for campaigning in the accounting report and elections statement that they provide to the Board of Comptrollers. Similarly, the Estonian Party Funding Supervision Committee examines the financial reports of political parties and publicises a written analysis of parties’ financial health, drawing attention to those parties that have considerable debt and may be financially weak.
In Greece, bank loans have been the main source of income for many major political parties. Before 2012, the Greek political landscape was relatively stable and was occupied by two major political parties. According to the report by a civil society organisation, under such stable conditions, an average of 70-80% of the total public funding was constantly allocated to these parties. This facilitated the political parties taking bank loans with the future public funding as a guarantee. For example, Greek political parties borrowed EUR 54 million in 2011 and EUR 48 million in 2010 (Svarrer, 2017). However, with the major shift of political power in 2012, these political parties lost the majority of votes and suffered from a major cut in public funding. Consequently, some political parties were unable to pay back their loans and were left heavily in debt.
In order to address this problem and regulate the political parties taking excessive bank loans with public funding as a guarantee, Greece amended the law in 2014 and prohibits political parties from taking bank loans with a guarantee of public funding beyond the current financial year. Furthermore, Law 4475/2017 placed further requirements on taking bank loans. For the beneficiaries of state funding, the assignment or the pledge of the state funding that aims to grant new bank loans shall be prohibited if it refers to an amount bigger than 50% of the current fiscal year. With the new amendment, political parties are required to inform the Audit Committee and the Bank of Greece in writing of each new loan agreement or any amendment to an existing agreement, at the latest within ten days of the agreement being signed. Failure to meet this requirement is subject to the penalty of partial or total loss of public funding. The Audit Committee shall also publish the written notification received from the party on its website within 15 days.
In addition to these provisions, Law 4472/2017 also tightens the transferability of public funding and reduces the incentives for political parties to use future public funding as a guarantee. While 40% of the total public funding received by each party was exempt from seizure and non-transferable in the previous provision, the amendment under the Law 4472/2017 reduces the ratio to 10% so that in theory 90% of public funding received by a party could be transferred to pay off the debts.
These recent amendments could strengthen the monitoring of the bank loans taken by political parties. The Audit Committee is expected to ensure its proper implementation in practice. While these new provisions are robust and intended to regulate the overdependence of parties on bank loans, how they are put into practice matters most.
In order to assist political parties in complying with the regulations relating to bank loans, the UK Electoral Commission, for example, published a detailed manual entitled “Overview of Loans to Political Parties”.1 The manual explains different types of loans available to parties, information on lenders and reporting procedures when taking loans, and provides links to other related documents and forms. The Audit Committee could also develop similar guidelines to promote effective compliance of the political parties with the recently amended provisions relating to the bank loans.
5.2.5. Greece could consider introducing regulation of third-party campaigns
An emerging challenge to spending limits is to apply restrictions on third-party spending effectively. If not, the limits will be evaded by re-channelling election spending through supposedly independent committees and interest groups. Third-party campaigners are sometimes referred to as non-party campaigners and may include charities, faith groups, individuals or private firms that campaign in the run-up to elections but do not stand as political parties or candidates. Where spending on certain campaigning activities can be seen as reasonably intended to influence voters to vote for or against a political party or a category of candidates, there should be rules that apply.
Greece has currently no legal provision for regulating third-party funding. Given the emerging concern for third-party campaigning across Europe, Greece may consider developing a mechanism to regulate third-party spending as well. The United Kingdom provides an example of regulating third-party spending. The UK Electoral Commission requires individuals or organisations that spend or plan to spend more than GBP 20 000 in England or GBP 10 000 (each) in Scotland, Wales or Northern Ireland on regulated campaign activities during a regulated period to register as non-party campaigners. If they register with the Electoral Commission, they will have a higher spending limit. The spending limits will depend on which election they are campaigning in, and once they are registered, there are rules they must follow on donations, spending and reporting. For the 2015 general elections, the spending limit for a particular constituency is set at GBP 9 750. A register of non-party campaigners is made public on the UK Electoral Commission website. For example, as of 1 April 2017, there were 54 registered non-party campaigners.2
5.3. Ensuring transparency and accountability
A cornerstone of ensuring transparency and accountability in political finance is the requirement for political parties and candidates to disclose information about how they raise and spend money. Such information can facilitate better-informed voter decisions as well as effective oversight of political finance. Comprehensive disclosure of financial information can also serve as a deterrent measure to minimise the impact of undue influence.
5.3.1. A public database on political financing is an effective tool to increase transparency and accountability
Law 3023/2002 as amended by Laws 4304/2014, 4472/2017, 4475/2017 and 4509/2017 provides a comprehensive list of information to be disclosed on the website of the Audit Committee. Such information includes the identity of natural persons whose support exceeds: 1) of EUR 3 000 in a year to candidates or elected members of the Hellenic or the European Parliament; and 2) of EUR 5 000 in a year to political parties or coalitions of parties as well as a list showing all loans received from all banks, by each political party and/or coalition of parties. In addition, the most recent amendment under Law 4472/2017 requires the Audit Committee to publish this information on its website within 90 days of receipt or following the completion of the audit as well as keep posting such data on the website for a duration of ten years. In the case a political party does not submit the data stipulated in the law, the Audit Committee shall publish such an omission on its website.
The Audit Committee launched its website in spring 2017 (Box 5.1). It contains information such as the allocation of public funding to political parties; however, most of the data regarding private donations and bank loans are not uploaded yet.
Box 5.1. Web portal of the Greek Audit Committee
In late spring 2017, the website of the Audit Committee, provisioned in the Law 4304/2014, became operational. Its main objective is to guarantee public access to the data disclosed by political parties and candidates. To that end, the website is the main portal where information is frequently uploaded and made available to the public.
The launching of the website marks an important step taken by the Greek authorities fulfilling legal obligations to create a transparent environment surrounding political funding. The webpage provides access to four main sections covering support material, financial data, announcements and information regarding the committee. It also contains news pages, useful links and a search function.
More specifically, on the webpage, the user can access all the laws related to political funding as well as decisions by the Ministry of Interior containing elaborate tables with data on the amounts of public funding allocated to political parties and coalitions. These Ministerial Decisions date back to the 2015 elections. There is also information on the balance sheets and budgets of political parties in 2017. In addition, the website provides templates for candidates and political parties on how to declare revenues and bank accounts.
Despite the progress, the sections where information related to loans, non-state funding, the budget and the balance sheets, and the electoral campaigns’ financial data are not available on line. Information concerning funding by natural persons for candidates is also absent.
Greece could consider further developing and enriching the content of its database as soon as possible in order to increase transparency and accountability. One of the good examples of comprehensive information disclosure of party finance is found in Estonia, where both the campaign expense reports, as well as quarterly finance reports submitted by political parties, are relatively detailed (Table 5.4). Political parties are required to submit one month after an election a report to the Estonian Party Funding Supervision Committee (EPFSC) that details all campaign expenses incurred by candidates running on a party list or as an independent candidate. In addition, each party must disclose at the end of each quarter a list of all expenses still unpaid as well as the balance sheet of its accounts. Quarterly finance reports must be submitted to the EPFSC by the 10th of the month following the end of a quarter.
Table 5.4. Categories of information to be provided within party finance reports, Estonia
Source: Political Parties Act (RT I, 12.07.2014, 39), Sections §121(8) and (9), §128(9) and (10), §121(2), §128(8), respectively.
In addition to comprehensive information disclosure, Greece could also consider more carefully how to publish such information on a website in a user-friendly way. Transparency is not synonymous with vast amounts of information. Large amounts of information or information not adequately presented may have a contrary effect on citizens. In order to allow comprehensive, proactive disclosure, data should be timely, reliable, accessible and intelligible (Pfeiffer and Speck, 2008). In particular, even when data is disclosed, the information might not be in a readable format. This is currently the case of the website of the Greek Audit Committee. A hard copy of a financial report in PDF format is different from a database with all financial records available for download. Data are not information. For disclosure of information to make sense and inform citizens, they need be organised in an intelligible and user-friendly way. Ideally, all reports should be submitted and published in a standardised, machine-readable format so as to ensure their comparability, clarity and digestibility.
Table 5.5). For example, the Estonian Party Financing Supervision Committee (EPFSC) makes comprehensive political financial information available on its website (www.erjk.ee/et). The entire system is streamlined in such way as to make the reports speedily accessible to the public. Generally within a few days of each deadline, the information is already available on the EPFSC’s website. The database is searchable according to any number of categories, beginning with individual parties and successive elections (including individual municipal elections), but also including the names of donors, the names of expense recipients, the types of expenses and the types of income sources. Such a structured database allows greater media monitoring of party finance and CSO scrutiny. Another example of comprehensive online information disclosure is the UK Electoral Commission (Box 5.2), where information regarding political parties’ income and expenditure can be searchable and downloadable. The Audit Committee could consider further developing its website in a similar format in order to improve the accessibility and transparency of political finance data.
Box 5.2. The United Kingdom’s online disclosure system
The United Kingdom’s Electoral Commission webpage provides an accessible format where information can be easily searched by a category and downloaded in an Excel format.
Table 5.5. Examples of online availability of political finance information in selected OECD countries
Notes:
1. Electoral Commission (n.d. a), “PEF online user guide”, www.electoralcommission.org.uk/__data/assets/electoral_ commission_pdf_file/0008/154682/PEF-Online-user-guide-creating-and-submitting-your-statement-of-accounts.pdf.
2. Electoral Commission (n.d. b), “Registers search site”, http://search.electoralcommission.org.uk/?currentPage=0&rows= 10&sort=AcceptedDate&order=desc&tab=1&et=pp&et=ppm&et=tp&et=perpar&et=rd&prePoll=false&postPoll=true.
3. FEC (n.d. a), “Electronic filing”, www.fec.gov/elecfil/electron.shtml.
4. FEC (n.d. b), “Disclosure data search”, http://classic.fec.gov/finance/disclosure/disclosure_data_search.shtml.
Source: OECD (2016), Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264249455-en.
5.3.2. Improving the new website of the Audit Committee could contribute to fostering more enabling environments, where CSOs and media can be effective watchdogs
While Greece has a number of active CSOs and journalists interested in the issue of political financing, CSOs can only be effective watchdogs if substantive political finance information is publicly available for their analysis. By improving the content of the new website of the Audit Committee and ensuring regular and timely update of information, it can facilitate their effective participation, promoting a whole-of-society approach to the regulation of political financing. Where campaign finance information is made public, scrutiny from the media and civil society is a valuable complement to state oversight, proving instrumental in advancing transparency and anti-corruption efforts in the field of campaign finance. For example, transparency of political donations has led to a third form of soft regulation in many countries: disclosing the names of large donors and of the recipients of funding. In countries such as the United States, where reporting requirements allow for individual donors to be identified, CSOs and the media have exposed large donations, to public criticism. This can be an alternative to bans and limitations (Box 5.3).
Box 5.3. The monitoring role of CSOs in political finance in the Slovak Republic and the United States
Slovak Republic: Database for tracing public money
The Slovak Republic reformed its access to information laws in 2000 and created a system that has grown exemplary over the last 15 years. Freedom of access to information has allowed CSOs and think tanks to devise innovative solutions to flag risks and to build an information network, allowing for the detection of conflicts of interest and improper influence on decision making. The CSO Fair Play Alliance (http://datanest.fair-play.sk/en/pages/index) created a database that anyone can access via their website. The database focuses on public money paid to private entities (state subsidies, privatisation, tax and custom remissions, grants, European funds, debts to the public sector) and on public representatives (managers of state institutions, governments, elected positions, the judiciary, self-governing bodies, Parliament, advisers to political leaders). It provides media and CSOs with tools for monitoring and makes public administration aware of the fact that their decisions can be easily monitored. This database is also helpful for investigative journalism; for example, the media were able to draw attention to concrete allegations of illicit practices regarding political party finance including fake donors and non-transparent party loans. The network has been emulated by CSOs abroad, and the software is used in the Czech Republic, Hungary and Georgia.
United States: Center for Responsive Politics
The Center for Responsive Politics is a non-profit, nonpartisan research group based in Washington, DC that tracks the effects of money and lobbying on elections and public policy. The Center was established in 1983 with aims to create a more educated voter, an involved citizenry and a more transparent and responsive government. It maintains a public online database of its information. Its website, OpenSecrets.org, allows users to track federal campaign contributions and lobbying by lobbying firms, individual lobbyists, industry, a federal agency, and bills. Other resources include the personal financial disclosures of all members of the US Congress, the President, and top members of the administration. In 2012, OpenSecrets.org recorded nearly 35 million page views from more than 5 million unique visitors.
Source: European Commission (2014b), “EU Anti-Corruption Report: Slovakia”, http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/ corruption/anti-corruption-report/docs/2014_acr_slovakia_chapter_en.pdf; Center for Responsive Politics (n.d.), www.opensecrets.org/ (accessed on 27 October 2015).
5.4. Fostering a culture of integrity
The regulation of financing of political parties and election campaigns cannot be complete without taking into account the impact of other public sector integrity issues such as codes of conduct, conflict of interest, asset disclosure, lobbying and whistleblower protection. Other components of the Greece-OECD project specifically focus on whistleblower protection, asset disclosure, anti-corruption awareness-raising strategies, and anti-corruption education, proving in-depth assessment and recommendations that are also applicable to the better regulation of political financing. While the main objective of this technical report is to assess the current Greek legal framework of political financing and its level of implementation, this section provides a concise assessment of selected measures to safeguard the integrity of politicians and donors in the context of political financing in order to promote a holistic approach in Greece.
5.4.1. Greece could consider strengthening its efforts to ensure proper implementation of the Code of Conduct for parliamentarians
Codes of conduct are an important part of fostering a culture of integrity as they impose binding, enforceable rules for what is clearly legal and acceptable and what is not for politicians, public officials and other stakeholders. When those in need of political funding are fully aware of what is expected of them, combined with the possibility of sanctions in the case of non-compliance, and the fact that they are monitored, render them more likely to act with integrity.
In Greece, the Code of Conduct for MPs was adopted in April 2016 and aims to promote self-commitment and self-protection of parliamentarians. The law includes 11 articles and covers issues such as conflict of interest, gifts and other benefit policies, use of confidential information, procedures of inquiries and disciplinary sanctions. The enforcement of the code is monitored by the Special Permanent Committee on Parliamentary Ethics. While the adoption of the Code of Conduct for parliamentarians is a major step forward to increase integrity and transparency in the legislative branch, the most important and challenging part is ensuring its proper implementation. The Special Permanent Committee on Parliamentary Ethics could consider regularly conducting awareness-raising activities in the Parliament as well as disclosing information on the ethical conduct of parliamentarians including the numbers of reported cases and sanctions applied to misconduct. In order to facilitate implementation of the code, some countries have also developed a detailed guideline governing legislators’ dealings with private interests. One example is the UK Code of Conduct for Members of the House of Commons, which provides detailed guidance on MPs’ outside employment and earnings, donations and gifts policy, asset disclosure and procedures of inquiries.
5.4.2. Greece could consider encouraging private sector stakeholders, particularly banks, to share the responsibility of strengthening integrity in political financing
Promoting a culture of integrity of parliamentarians, i.e. in those that receive and use political financing is only a part of the equation. A culture of integrity can also be promoted among those that provide the funding. In Greece, close co-operation with the private sector to safeguard integrity in political financing is particularly valuable as many parties traditionally rely on bank loans. Promoting responsible business conduct among private sector stakeholders could also provide complementary effects to ensure proper implementation of the law. For example, Greece could, therefore, consider encouraging the major banks to review and update their internal policies regarding the granting of loans to political parties, reflecting the recent amendment in the law. Effective implementation of self-regulation programmes requires top-level commitment at the level of the board and chief executive officers. Business leaders must make efforts to incorporate ethical conduct into business behaviours without preventing the business itself from flourishing and make them become competitive added value.
For example, in relation to the funding of political parties and election campaigns, many companies adopt a global policy against making improper contributions to political parties, which is often set forth in their code of conduct and internal business practices guidelines. These policies prohibit the use of company resources for contributions to any political party or candidate. This prohibition covers not only direct contributions but also indirect assistance or support through buying tickets to political fundraising events or furnishing goods, services or equipment for political fundraising or other campaign purposes. For example, the World Economic Forum Partnering Against Corruption Initiative (PACI) Principles for Countering Bribery aims to promote private sector initiatives to strengthen integrity and recommends that companies consider controls and procedures to ensure that improper political contributions are not made. Through measures such as public awareness campaigns and civic education, which are covered in other components of Greece-OECD project, Greece could consider encouraging the private sector to share the responsibility of strengthening integrity in political financing.
5.5. Ensuring compliance and review
The regulatory body tasked with the supervision of political finance is a key element of any well-functioning political finance system. In Greece, acknowledging the relatively sound de jure framework and the need to enhance transparency and capacities, one of the major challenges appears to be the lack of compliance with, and enforcement of, the existing framework. The Audit Committee is responsible for the oversight of political financing. This section looks at the ways to strengthen the capacities of the Audit Committee and improve compliance with the existing regulations.
5.5.1. Greece could consider strengthening the capacities of the Audit Committee to improve independent and efficient oversight of political financing
In order to conduct meaningful oversight, the regulatory body needs to have a clear mandate, sufficient resources and equipment. In terms of mandate, the Audit Committee has the power to carry out full checks on any kind of statements, documents and other information, impose administrative sanctions, forward the cases to the public prosecutors, and give expert opinions on the adoption of the regulatory instruments relating to political financing. Granting such investigatory power and sanctioning power to the Audit Committee is a foundation for effective oversight. This is in line with practices in other countries. For example, in Korea, the National Election Commission (NEC) is responsible for overseeing compliance with the election law and has a wide range of specialised units, such as a cyber election unit, together with comprehensive investigatory and sanctioning power (Box 5.4).
Box 5.4. Supervisory, investigatory and sanctioning power of Korea’s National Election Commission
The National Election Commission (NEC) of Korea oversees and controls activities that cause damage to fairness in elections as well as takes preventive actions against election law violations to ensure an equal opportunity for political parties and candidates and to hold elections in a fair way while the election processes are complied with.
Its Election Surveillance Unit consists of election malpractice monitoring groups, volunteers and personnel who report election law violations, and arranges the joint Election Surveillance Units in each metropolitan area or city to ensure the smooth election process. In addition, the NEC operates cyber election units to monitor and control the online activities that violate the election laws.
The NEC has several authorities regarding the investigation of illegal campaign spending:
To request the submission of relevant documents. This is the authority to request information that is necessary for the investigation of election crime.
To request financial institutions to submit details of financial transactions. The NEC can request information on bank accounts, a copy of the bankbook, name/date of birth/contact information of the individual that holds the account involved in transactions, the organisation that first issued the cheques and information of the person that requested their issuance.
To demand to accompany or summon where necessary for questioning and investigation related to election irregularities.
To collect and store evidence used at the scene of the crime.
To request that the communication network provides for the viewing or submission of information necessary to identify the user in order to investigate crimes using information networks or phones.
The NEC issues a suspension, warning, or correction order against election law violations and imposes a fine on violators. If they disobey orders or do not stop their behaviour, the NEC brings a formal charge or requests an investigation against violators.
Source: Republic of Korea National Election Commission (n.d.), “Duties and responsibilities”, www.nec.go.kr/engvote_2013/01_aboutnec/01_03.jsp.
While the institutional capacity of electoral management bodies varies across countries (Table 5.6), the Audit Committee is a relatively small body by comparison. The Audit Committee currently consists of nine members: 1) the President of the Special Permanent Committee for Institutions and Transparency; 2) a member of the Supreme Court; 3) a councillor of the Court of Audit; 4) a councillor of the Council of State; 5) the deputy governor of the Bank of Greece; 6) the President of the Authority for the Fight against Money Laundering Activities and Asset Disclosure; 7) the Ombudsman; 8) an MP from the ruling bloc; and 9) an MP from the opposition bloc. While six members are independent of the Parliament, three members are MPs. The current composition of the committee is more independent and less partisan than that of the previous committee, which was composed of six MPs and three judges. While the independence of the Audit Committee has been relatively strengthened in the recent years, the chairperson is appointed by the Parliament, and uncertainty still remains as to what extent the Audit Committee is able to conduct independent and effective auditing on the political parties and members of Parliament.
Table 5.6. The institutional capacity of electoral management bodies in selected OECD countries
Notes:
1. Elections Canada (n.d. a), “The Role and Structure of Elections Canada”, www.elections.ca/content.aspx?section=abo&dir=role& document=index&lang=e.
2. Elections Canada (n.d. b), “2013–14 Departmental Performance Report”, www.elections.ca/content.aspx?section=res&dir=rep/dpr/dpr2014& document=p1&lang=e.
3. CNCCFP (2014), “CNCCFP - France’s National Commission for Campaign Accounts and Political Financing”, www.cnccfp.fr/presse/kit/cnccfp_en.pdf.
4. Ace Electoral Knowledge (n.d.), “South Korea: An Independent and Neutral Electoral Management Body”, https://aceproject.org/ace-en/topics/em/electoral-management-case-studies/south-korea-an-independent-and-neutral-electoral.
5. Electoral Commission (2014), “Corporate plan 2014-15 to 2018-19”, www.electoralcommission.org.uk/__data/assets/pdf_file/0006/167091/EC-Corporate-Plan-2014-15-to-2018-19.pdf, p. 33.
6. Electoral Commission (2011), “Enforcement policy, December 2010”, www.electoralcommission.org.uk/__data/assets/pdf_file/ 0003/106743/Enforcement-Policy-30March11.pdf.
7. Electoral Commission (2014), “Corporate plan 2014-15 to 2018-19”, www.electoralcommission.org.uk/__data/assets/pdf_file/0006/167091/EC-Corporate-Plan-2014-15-to-2018-19.pdf.
8. GRECO (2011), “Third Evaluation Round: Evaluation Report on the United States of America: Transparency of Party Funding”, Council of Europe, www.coe.int/en/web/greco/evaluations/round-3.
Source: OECD (2016), Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264249455-en
One way of strengthening independent and effective oversight for the Audit Committee is to further invest in its ICT platform. The use of online technologies could facilitate the effective and independent investigations of political finance. For example, the Estonian Party Funding Supervision Committee (EPFSC) oversees the public funding system, financial reporting, investigation, audit and compliance as well as sanctioning of campaign finance violations, with a staff of nine committee members, a legal advisor and an office manager. This is due in part to its high level of integration of technology. The EPFSC requires all financial reports to be completed in an online electronic spreadsheet, allowing the staff to easily organise, access and review financial documents in a consistent form.
Another example is the UK Electoral Commission. It has developed an online system called PEF Online for political parties to submit information regarding their income, expenditure and loans in an online electronic form (Box 5.5). Greece could consider developing a similar online system in which all reports are submitted in a standardised, machine-readable format and are thus comparable, clear and accessible for better oversight.
Box 5.5. Political parties submit statements of accounts on line in the United Kingdom
The United Kingdom’s Electoral Commission has developed a system for political parties to submit via an online portal (PEF Online) their statements of accounts clearly displaying their balance sheets and the composition of their income and expenditure. PEF Online is a secure database where political parties can complete registrations and maintain their registered details. In order to support the political parties, a detailed manual can also be found on line offering useful information and guidelines on how political parties must keep and submit financial records via PEF Online. The manual contains detailed guidelines with regard to the duties of a political party’s treasurer, including keeping financial records and preparing the party’s statement of accounts (SOA).
After creating an online account, political parties can use the electronic templates and create respective documents that then can be uploaded on line for the Electoral Commission. An example of an “Income and expenditure account” submission form can be seen below.
This user-friendly system is an effective solution for an oversight body to organise, access and review financial documents in a consistent form, improving the quality of oversight with limited human resources.
Source: Electoral Commission (n.d.), “PEF online user guide”, www.electoralcommission.org.uk/__data/assets/electoral_commission_pdf_file/0008/154682/PEF-Online-user-guide-creating-and-submitting-your-statement-of-accounts.pdf.
5.5.2. Greece could consider disclosing data on investigations and sanctions to ensure that sanctions are consistently applied to misconduct
Sanctions serve as deterrents for breaches and indirectly promoting compliance with political finance regulations. In OECD countries, sanctions range from financial to criminal and political. In Greece, Law 3023/2002 as amended by Laws 4304/2014, 4472/2017, 4475/2017 and 4509/2017 specifies criminal penalties of a prison sentence up to two years and a fine for offences such as concealing funding and the origins of their revenues unless those offences are more severely punished by another law. However, the Audit Committee does not disclose any data concerning the number of investigation and sanctions applied to the cases. It is difficult to assess whether sanctions are consistently applied to misconduct in Greece. Greece could consider disclosing data on sanctions. While there is a wide variation in the number of investigations and prosecutions across countries, the entire regulation of political financing could be undermined if sanctions are not applied at all.
5.5.3. Greece could consider strengthening technical assistance through tailored training and user-friendly guidebooks for party officials
In order to ensure compliance, providing support to political parties to help them comply with regulations is also crucial. This is an angle that is often neglected, but very much in need from the point of view of political parties.
In Greece, the Ministry of the Interior could help strengthen party capacity by providing regular training sessions to party officials, as well as providing question-and-answer sessions to parties. In addition, step-by-step, user-friendly guidance and explanations of expectations and responsibilities of party officials can support parties in building their own internal capacities. For example, the United Kingdom’s Electoral Commission has developed a series of guidance for party officials in order to support internal capacity development in political parties (Box 5.6).
In addition, there are some international guidelines for political parties to learn and familiarise themselves with international good practices, such as Guidelines on Political Party Regulation issued by the Organisation for Security and Co-operation in Europe (Box 5.7). When planning and developing a training programme for the political parties, the Audit Committee and the Ministry of the Interior could consider taking these international standards into consideration and widely disseminating them among political party officials.
Box 5.6. UK Election Commission guidance for political parties
The UK Electoral Commission provides user-friendly step-by-step guidance to political parties and campaign staff in a series of online handbooks available on line. Each handbook sets out easy to understand instructions on important campaign activity such as:
the responsibilities of a party treasurer
how to properly account for donations to a party
rules for spending
reporting responsibilities and deadlines
In addition, the website provides sample electronic forms for campaigns to use, as well as more detailed factsheets for more complex situations or dilemmas. A majority of the handbooks are 10-15 pages in length, including diagrams and examples. The handbooks can be found on the Commission’s website at www.electoralcommission.org.uk/i-am-a/party-or-campaigner/guidance-for-political-parties.
Source: OECD (2016), Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264249455-en.
Box 5.7. The OSCE’s Guidelines on Political Party Regulation
The Organisation for Security and Co-operation in Europe (OSCE) has produced “Guidelines on Political Party Regulation”. These guidelines have been created as a tool to assist OSCE participating states and Council of Europe member states in formulating legal frameworks that comply with OSCE commitments and other international standards in facilitating the proper establishment, development and functioning of political parties. The guidelines cover issues such as party structure and internal rules, different types of private donation and their regulation, and right to a fair and public hearing by impartial tribunals.
These guidelines offer a series of useful information for political party officials and legislators to use when regulating their finance as well. They offer clear explanations on membership fees, intra-party contributions and income, candidate’s personal resources, and contribution limits, abuse of state resources amongst other issues.
5.5.4. Greece could consider creating a reporting mechanism to allow citizens to register suspected violations of campaign finance regulations
Citizen complaint mechanisms can also contribute to the identification of political finance malpractices and foster a culture of integrity. These citizen watchdogs can provide additional support to the Audit Committee in its oversight role by acting as the eyes and ears on the ground. Greece could consider providing a reporting mechanism by which citizens can alert authorities and potentially provide evidentiary support of these suspected wrongdoings. For example, in India, a 24/7 call centre and a complaint monitoring unit in each district were set up. A toll-free telephone number is now widely publicised for the public to report corrupt electoral practices. For example, between 1 March 2011, around the time the elections of the Tamil Nadu assembly was announced, and 15 May 2011, two days after the vote count, the Election Commission of India received a total of 3 159 calls, with vigilant voters themselves reporting malpractices and demanding action (Quraishi, 2014).
Proposals for action
The overall legal and regulatory framework for political finance in Greece is relatively sound. In particular, following the recent amendments by the Laws 4472/2017, 4475/2017 and 4509/2017, additional provisions such as tighter requirements for bank loans and publication of political finance data strengthened the legal framework. However, challenges remain in effectively implementing some part of the law on political parties, and additional resources and autonomy are needed for a monitoring authority to ensure adequate compliance with existing rules and regulations. Finally, additional outreach to support political parties’ internal capacity building and awareness-raising activities across the government and society would complement the holistic approach to building transparency in the political finance system.
To further strengthen Greece’s political finance system, the OECD, therefore, recommends the following actions:
Promoting a level playing field
Allocation of public funding and the rules for private funding continue to need special attention to ensure a level playing field for all stakeholders. Certain issues are particularly vulnerable to exploitation by powerful special interests. For example, loans, membership fees and third-party funding can be used to circumvent the regulations of private funding.
With the recent amendment by Law 4509/2017 to allow small-scale anonymous donations, Greece needs to closely track the coupons that are stamped but not sold, and have these coupons returned to the Audit Committee in order to prevent uncontrolled flows of anonymous donations to parties.
Greece would need to ensure proper implementation of the recent amendment by Law 4475/2017 and the Audit Committee would need to closely monitor the bank loans by political parties.
Greece could consider introducing regulation of third-party campaigns.
Ensuring transparency and accountability
Comprehensive disclosure of income sources and spending of political parties and candidates contributes to greater transparency, serving as a deterrent measure to limit undue influence. For disclosure of information to make sense and inform the citizen, information needs to be organised in an intelligible and user-friendly way as well. Disclosed information must be reliable and accessible, creating an enabling environment in which civil society organisations (CSOs), media and private citizens can conduct effective public scrutiny.
Greece could consider disclosing more political finance data on a public database managed by the Audit Committee as soon as possible.
Greece could consider disclosing information in a user-friendly way so that it would create more enabling environments, where CSOs and media can be effective watchdogs.
Fostering a culture of integrity
Any consideration of political financing needs to be part of an overall whole-of-government and whole-of-society strategy to assure public integrity and good governance. While other components of the Greece-OECD project provide an in-depth assessment on whistleblower protection, asset disclosure, anti-corruption awareness-raising strategies and other integrity issues, measures to safeguard the integrity of parliamentarians and donors are particularly relevant to the context of political financing.
Greece could consider strengthening other integrity policies, for example in co-operation with the Special Permanent Committee on Parliamentary Ethics to disclose more data on the compliance with the Code of Conduct among parliamentarians.
Greece could consider encouraging private sector stakeholders to share the responsibility of strengthening integrity in political finance, in particular in the implementation of the recent amendments by Laws 4472/2017 and 4475/2017, by emphasising the value of responsible business conduct and due diligence.
Ensuring compliance and review
Regulating income and spending are not sufficient if there is no proper and efficient oversight and enforcement. Institutions responsible for enforcing political finance regulations should have sufficient capacities as well as a clear mandate and legal power to conduct investigations, refer cases for prosecution, and impose sanctions. Development of such powers is critical for the effective enforcement of a transparent and equitable campaign finance regime. Well-staffed and well-funded supervisory bodies that lack the independence and/or legal authority to meaningfully regulate potential violators limit the extent to which existing regulation can be enforced. Besides, sound political finance regulations need sanctions, serving as deterrents for breaches and indirectly promoting compliance.
Greece could consider strengthening capacities of the Audit Committee with online technologies to ensure independent and efficient oversight of political financing.
Greece could consider disclosing data on investigations and sanctions to ensure that sanctions are consistently applied to misconduct by the Audit Committee.
Greece could consider strengthening technical assistance through tailored training and user-friendly guidebooks for party officials.
Greece could consider creating a reporting mechanism to allow citizens to register suspected violations of campaign finance regulations.
Notes
← 1. For more information, see www.electoralcommission.org.uk/__data/assets/pdf_file/0015/102264/to-loans-rp.pdf.