On 17 April 2008 the Corruption Prevention and Combating Bureau (KNAB) submitted to the State Secretaries’ Meeting for its announcement a draft concept on financing of political parties. The concept was drafted by a working group led by KNAB. The draft concept suggests three different approaches for further strengthening of political parties’ financing system.
In the process of evaluation of the existing political parties’ financing system in Latvia, the working group identified several significant problems related to financing of political parties and to imposing sanctions for violations of regulations on political parties’ financing and on pre-election campaigns. The concept stresses: in order to improve the system of political financing, it is necessary to consider a possibility to allocate partial public funding to political parties, at the same time ensuring effective control over its legal use.
The concept proposes three approaches. The first approach foresees prevention of existing problems in the political parties financing system without introducing public financing. The other two approaches suggest introducing public financing to political parties whether partially (in the amount of 60%) covering costs of broadcasting time necessary for pre-election campaigns or additionally allocating annual state subsidy for covering specific administrative expenses of political parties (proportionally to the number of voters – 0,5 lats for each vote gained at the last parliamentarian elections).
All three proposed approaches foresee to substantially strengthen the existing regulation or to develop regulation in those areas where it is lacking, for example:
- to reduce possibilities for indirect use of resources of state and municipal capital share companies in financing of political parties;
- to define the so-called “third persons” in pre-elections campaigning, as well as to determine their rights and responsibilities;
- to define what is hidden pre-election campaigning;
- to ensure equal possibilities of pre-election campaigns’ placement for all political parties;
- to apply transparency principles and restrictions of financing set out in law also to political parties’ membership fees;
- to determine unified donations’ thresholds for financing of both political party and its association of political parties;
- to apply tax rebates to persons who donate to political parties;
- to set shorter time period for checks of political parties’ declarations and for informing the society on their results;
- to define rights and responsibilities of the KNAB and the National Broadcasting Council within their competence thus allowing them in due time to react to respective violations.
After analysing current development of parties financing system in Latvia and taking into consideration experience of other countries, as well as recommendations of various experts, the working group suggests in its second approach to partially cover expenses of pre-election campaigning. It would allow simultaneously to support political parties and to reduce political parties’ necessity for expenses, as well as to control the use of state’s financial support thus preventing fraud risks.
Each political party would have rights to make its pre-election campaigning before elections to the Parliament (Saeima) or to the European Parliament not more than two hours long in total of its broadcasting time on television and one hour long in total of its radio broadcasting time. At the same time there would be a three days time period before elections when pre-election campaigning would not be allowed on TV and radio.
The rights to receive the public funding for payment of broadcasting time in amount of 60% before respective elections would have those political parties which are represented whether in Saeima or in European Parliament or they have received more than 2% of votes during the last elections and have submitted a candidates list for respective elections, as well as have submitted a candidates list for Riga City Council elections or at least for elections at five republic’s cities councils or for more than half of regions’ elections.
Political parties claiming public funding for pre-election campaigns on radio or television would be refused if they had been previously punished for violations of regulations on political parties financing or a political party has not paid back respective fines to the state budget.
The reduction of donators’ influence is not the only reason why in so many countries political parties are financed from the state budget. That’s why in its second approach the working group is proposing in addition to the above stated to allocate public funding for specific administrative expenses of political parties. This approach would allow political parties to more successfully perform their functions between elections expected in a democratic country, for example, to improve programmes, to educate their electorate, to work in municipalities, to follow activities of political parties represented in Saeima and in the Cabinet of Minsters.
Starting from November 2010 the rights to annually receive disbursement (proportionally to the number of voters – 0,5 lats for each vote received) would have political parties in favour of which 2% of voters had voted in the Saeima elections and which have not been punished for substantial violations of political parties financing, pre-election campaigning or election’s regulations.
After analysing foreign experience, the working group has concluded that despite the fact that political parties financing models in Europe differ, almost every country has introduced at least partial public funding to political parties which allows them to be more independent from influence of private donators. Furthermore, in several countries this public funding forms a considerable part of political parties’ finances. Currently we may consider Latvia as a country where actually public funding to political parties does not exist or it has not considerable impact. At this moment Latvia together with Malta and Cyprus are the only European Union member states where political parties are not financed from the state budget. After evaluating possibilities to finance political parties from the state budget, the working group has concluded that there are not many persons in Latvia donating financial resources or property to political parties. Mostly those are persons related to respective political party. But those persons who donate financial resources or property at large amount are even less. In fact, in most cases political parties financing depends only on few persons (according to KNAB’s data bases only 5 300 persons had at least once donated to a political party from 2002 until 2008). Thus, the isolation of public from political parties may contribute to the influence of several donators’ interests on a political party, which are not always the same as interests of majority of the society. This could lead to the situation when interests of majority of the society are ignored, as it is said in the summary of the draft concept.
The working group which drafted the political parties’ financing concept was formed based on the Prime Minister’s decision and consisted of representatives of the Public Administration and Local Government Committee of the Saeima, Ministry of Finances, Ministry of Justice, State Chancellery, KNAB, Center for Public Policy “Providus” and Transparency International Latvia’s branch “Delna”. The draft concept was one of the tasks included in the National Programme on Corruption Prevention and Combating.