Practical Experiences on Political Finance
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1 Practical Experiences on Political Finance (Afghan and Canadian Examples) Prepared by: Phea SAT Program Coordinator (Election/Political Finance Law) Edited by: Robert A. Patterson Chief of Party/Country Director International Foundation for Electoral Systems (IFES) 1
2 Political Finance in Afghanistan Governed by the Regulation on Political Campaign Finance Disclosure, passed on March 25, 2009, by the Independent Electoral Commission (IEC); To regulate the oversight of the Presidential Candidates campaign finances; The candidates income, expenditures, and disclosure requirements have been set out in the Regulation. 2
3 Income Companies, corporations and organizations are banned from political contributions; Contribution limits are restricted to natural persons registered to vote in the election; Income also includes the provision of goods and services for free or at a reduced rate, and loans; All candidates are required to issue receipts to all who contribute more than 5,000 Afghanis ($100) and to note smaller contributions in the candidates contribution logbook. 3
4 Income (Con t) Though there is a contribution limit for individuals, the candidates are still allowed to receive funds from their political parties; this opens a significant loophole where by wealthy benefactors can channel their contributions through political parties and de facto avoid disclosure. 4
5 Expenditure Expenditure is defined as any payment made for any goods, property, assets, services or facilities to be used in an electoral campaign; No bans or limits on expenditures, but the candidates are required to retain a receipt for expenses above 5,000 Afghanis ($100) and to note smaller expenses in an expenses logbook. 5
6 Disclosure Candidates are required to disclose their assets, with the value exceeding $2,000, before the elections and their campaign contributions and spending afterwards to the Independent Election Commission (IEC). Asset reports will be kept confidential by the Commission. During the campaign period, candidates are required to report the income and expense biweekly; 6
7 Disclosure (Con t) After an election, all income and expenses are required to be reported with the attachment of receipts for larger contributions/expenses (over $100) and logbooks for smaller contributions/expenses ($100 and below); All information submitted by the candidates will be made public after the elections, except for the identity of anyone who in total contributed less than $1,000 to an election campaign, in order to avoid the possibility of retribution or harassment. 7
8 How has the political finance regulation been enforced in Afghan politics? 8
9 Preparations for the Campaign Finance oversight in the 2009 Presidential Elections Establishment of a political finance unit; Creation of candidate manual and reporting forms; Additional reporting requirements decided by the Independent Electoral Commission (IEC); Interaction between the IEC and candidates and financial agents; Outreach (the role of media political campaign finance) 9
10 Compliance with Disclosure Requirements In the 2009 Presidential election, the candidates had to submit reports at seven separate occasions, based on items/types to be reported; Items/types to be reported include: Candidates financial agents, Campaign bank account, Assets and liabilities of candidates, Bi-weekly income and expense reports during the campaign, and Post-election report (income, expenditure, and surplus/deficit of campaign account). 10
11 Level of Compliance by the Candidates for the 2009 Presidential Election Report Submitted on Time Submitted Financial agent 90% 100% Campaign bank account 90% 100% Assets and liabilities 90% 100% 1 st report (June 16-28) 34% 85% 2 nd report (June 29-July 27) 80% 93% 3 rd report (July 18-Agust 01) 73% 80% 4 th report (August 02-17) 83% 83% Final report 56% 56% Average compliance 75% 88% 11
12 Sanctions against Non-Compliance Sanctions against non-compliant candidates can be applied through the IEC Regulation on Political Campaign Finance Disclosure or through the Electoral Act; The penalties can be ranged from a warning to a fine not exceeding $2,000 to the removal of a candidate from the list of candidates, or to ban their candidatures under any subsequent election; The body in charge of applying non-compliance sanctions is the Electoral Complaint Commission (ECC). 12
13 Some ECC Sanctions against Non-submission of Reports for the 2009 Presidential Election Candidate Report missing Reason Fine (AFG) Complied subsequently Abdul Gafur Zuri Abdul Majid Samim Gul Ahmad Yama Ghulam Mohammed Regei Nasrullah Baryalay Arsalai 2 nd Too busy campaigning 2 nd Financial Advisor sick 2 nd Close relative killed in suicide attack 5,000 ($100) Yes 5,000 ($100) Yes 20,000 ($400) Withdrew 2 nd No reason 5,000 ($100) Yes (later withdrew) 2 nd Did not have time to report 20,000 ($400) Withdrew 13
14 ECC Response to Financial Mismanagement in Electoral Campaign Not all abuses during the electoral campaign were prevented or penalized; however, a number of sanctions were issued by the ECC for a number of cases, especially those related to abuses of state resources; The most spectacularly, the ECC fined Mohammed Kariri, Vice-presidential candidate on the ticket of incumbent President Hamid Karzai, for using three Defense ministry helicopters for campaigning purposes. 14
15 ECC Response to Financial Mismanagement (Con t) The Karzai campaign and the Ministry of Education in Badakhshan were each warned and fined 30,000 Afghanis ($600) for using tents donated by UNICEF for the campaigning purposes; The Baghlan President of Radio and TV in Afghanistan (RTA), the government radio and TV station, was sanctioned for placing a picture of President Karzai in an RTA vehicle. 15
16 Flaws/Weaknesses in Afghan Political Finance The campaign finance disclosure was regulated through an IEC regulation rather than electoral legislation; No spending limits on electoral candidates; No contribution limits on political parties for their provision to their candidates; Lack of public funding on electoral campaigns; this opens to abuse of state resources and illegal contributions. 16
17 Political Finance in Canada 17
18 Federal Campaign Finance Law in Canada Controlled by the 2000 Canada Elections Act, amended in 2003; the Income Tax Act; and the 2006 Federal Accountability Act; To institute more robust financial disclosure requirements for registered political parties, and candidates and third parties; To limit political contributions, eliminate contributions from labor unions and corporations to political parties and candidates, and to implement new public funding provisions to political parties. 18
19 Contribution Limits to Election Participants Only Canadian citizens and permanent residents may make political contributions; Individual contributions to political participants are limited to $1,100 annually, but can be adjusted for inflation; Individual may also make contributions not exceeding $1,100 (adjusted for inflation) in total per contest to leadership contestants of a registered political party; 19
20 Contribution Limits (Con t) Corporations, trade unions, and other unincorporated associations are prohibited from making contributions to registered parties, leadership and nomination contestants of registered parties, and all candidates. 20
21 Public Funding of Election Participants Federal campaign finance laws provide for public financial support of election candidates and political parties in two different forms: 1) tax credits for private contributions, and 2) direct financial transfers to election participants; Individuals are permitted to claim a portion of their contributions to political parties and candidates as a credit on their annual income taxes (75% of the first $400, 50% of the next $350, and 33% of an amount over $750, and the maximum tax credit is $500); 21
22 Public Funding (Con t) Political parties are entitled to reimburse 50% of election expenses if they received at least 2% of valid votes cast in an election or 5% of valid votes cast in constituencies in which the party endorsed a candidate; Individual candidates may receive 60% reimbursement of their election expenses if they received at least 10% of votes in their electoral district; Registered political parties are also entitled to an annual allowance of $1.75 for every vote received by the party in the previous election if the criteria are met. The allowance is provided quarterly and adjusted for inflation. 22
23 Public Support as Portion of Total Funding by Political Party 2007 Party Public Monies Portion Bloc Quebecois 86% Green Party of Canada 65% Liberal Party of Canada 63% New Democratic Party of Canada 57% Conservative Party of Canada 37% 23
24 Expense Limits for Election Participants Canadian law places election spending limits on political parties, candidates, and nomination contestants; The limits are based on the number of electors and the population density of constituencies in which they are running; Determined by multiplying $0.70 (adjusted for inflation) by the number of names on the registered list of electors for constituencies in which the party has endorsed a candidate; On average, across Canada, candidates expense limits were between $85,000 and $90,
25 Spending Limits by Party in Canada s 2008 Federal Election Party Expenses Limit Conservative Party of Canada $19,999, Green Party of Canada $19,751, Liberal Party of Canada $20,014, New Democratic Party $20,063, Bloc Quebecois $5,066, Marxist-Leninist Party of Canada $4,109, Christian Heritage Party of Canada $3,789, Canadian Action Party $1,312, Animal Alliance Environment Voters Party $272, People s Political Power Party of Canada $91,
26 Regulation of Third Party Election Advertising The Canada Elections Act defines third parties as any individual or group not directly contesting an election, such as concerned citizens and interest groups; Third parties are limited to spending no more than $150,000 in total, or not over $3,000 per electoral district on election advertising to promote or oppose the election of one or more candidates in a given electoral district; No restrictions on who may contribute to a third party in support of its election advertising, or how much may be donated; however, third parties are required to disclose all contributions received for election advertising purposes during an election. 26
27 Public Disclosure for Election Participants Candidates must submit an audited electoral campaign return to the Chief Electoral Officer (CEO) within 4 months of election day; Required to show in the return are all electoral campaign expenses incurred; the amounts of all contributions; and the names, addresses and dates of contributions for all contributions exceeding $200; Registered political parties are required to submit an audited return of their election expenses to the CEO within 6 months of election day; 27
28 Disclosure (Con t) Required to be submitted are the amount and sources from all contributions, the names and addresses of those who aggregate contributions exceeded $200, and the dates upon which the contributions were provided; The public disclosure requirements also target contestants for the leadership of a registered political party, and political party s nominations; Summaries of campaign returns for election candidates and registered political parties are published by the CEO, and copies of candidate returns are kept by Elections Canada and available for public inspection. 28
29 Who oversees and enforces campaign finance law in Canada? The primary body for the administration of federal campaign finance laws is Elections Canada; Elections Canada is headed by the Chief Electoral Officer (CEO) and reports directly to Parliament regarding the federal electoral system s operation; Elections Canada appoints an independent election officer called the Commissioner of Canada Elections (CCE) who is mandated to ensure the provisions of the Canada Elections Act are complied with and enforced, and who has the authority to order an investigation on alleged violations of campaign finance laws and to apply to courts for remedies. 29
30 How are violations of campaign finance laws dealt with? The CCE has the authority to negotiate compliance agreements with an alleged offender on a voluntary basis to terms and conditions necessary to ensure compliance with federal law; The CCE may decide to approach legal prosecution by referring the matter to the Director of Public Prosecutions who has the exclusive authority to decide whether to initiate a prosecution; Offence provisions and legal thresholds regarding violations of campaign finance rules are set out in the Canada Elections Act. 30
31 Penalties/Sanctions If anyone is convicted by a court for violating campaign finance laws, he/she may receive a fine or a period of imprisonment; The courts, under the Canada Elections Act, may impose additional penalties, including: Compensating for damages A fine of up to five times the election advertising expense limit exceeded by a third party The deregistration of a political party, or the liquidation of its assets. 31
32 About IFES The International Foundation for Electoral Systems (IFES) is an independent, non-governmental organization providing professional support to electoral democracy by promoting citizen participation, transparency and accountability in political life and civil society. Our mission in Cambodia is to generate women s progressive leadership in election management and administration and to support election systems through electoral and political finance reform. 32
33 About This Presentation This presentation is made possible by the generous support of the American people through the United States Agency for International Development under Award No. AID-442-A The opinions expressed herein are those of the authors and do not necessary reflect the views of USAID or the United States Government. 33
34 34
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