Political Financing under Spotlight
30 August, 2012
Political Financing under Spotlight

he State Audit Agency’s selective justice undermines the transparency of political parties’ financing. The state Agency seems eager to resort to immediate disclosure of financing details of oppositionist parties while it remains behind timelines when it deals with revealing the ruling party’s funding records.   The ruling United National Movement party is the major beneficiary of the state financial aid denoted for funding 13 political parties that hold seats in the parliament and therefore receives state financing as a result of

the 2008 parliamentary elections in pursuance with the Georgia party funding regulation. Based on the  report of Transparency International Georgia (TI Georgia) on Financing of Political Parties,  during 2011, The United National Movement received GEL 1 757 240 from the state coffer in 2011 which exceeds other parties’ state aid at least by 10-15 times. The difference frequently translates into hundreds of thousands and exceeds a million in some cases. The runner up beneficiaries are the Christian-Democratic Movement and Labor Party by GEL 573 651 and GEL 391 338, respectively. These three parties led the funding graphs drafted for 2007-2011. The remaining  parties’ funding is less than GEL 100 thousand.

The TI Georgia report analyzed party revenues and expenses within the period 2007-2010 to compare transparency trends with the pre-parliamentary-election year of 2011 full with changes and amendments in party financing side.

Georgian political parties get finances by three different ways: state aid, membership fees and donations.

Sums received from membership fees comprised only a small portion in the parties’ funding averaging 5-10%.

Donations fell under focus by the end of 2011 when the law banned donations made by legal entities and fixed a cap limit for individual donations at GEL 60 thousand. The law was to be enforced since 2012 that fueled gorgeous donations until the year of 2011 was over.

If in 2007-2010, donations from legal entities were received only by the ruling party (several hundreds of donors) and the Christian-Democratic Movement, in 2011 the Republican Party, the Conservative Party, and the People’s Party received GEL 1.1 million  from 11 legal entities each.

Making contributions through another person is a common practice and 2011 was no exception. In particular, during a verification process, several individuals denied donating the sums shown in the financing reports.

The State Audit Office, while publishing the 2011 financing reports, concealed addresses of individuals who made donations, which went against the legal requirement. Contributors were required to indicate their name and legal address until the amendment of May 8, 2012. Funds channeled without identification were considered as anonymous and be immediately transferred to the state budget. The amendment of May 8, 2012 to the new law on election revoked the obligation to specify identity of donors, which sends non-transparency alerts.

“We consider that this amendment will pose an obstacle to ensuring financial transparency and accountability. To achieve greater transparency, full identification of the persons donating to political parties should be made possible since the society might have a reasonable doubt that some contributions might be even fictitious. Several facts of this type have been confirmed in previous years,” TI Georgia report reads.

The non-governmental watchdog put special accent on shortcomings of the Audit Service that practices sort of selective justice. In February of 2012, this controlling body published an announcement casting doubt on donations made by individuals to the ruling party. The Audit Agency does not even disclose the names of the individuals who have organized donations on behalf of a single person. It assured that these acts did not violate the law at the stage when the donations were made.

“In fact, both the present legislation and the one in effect at the time when those donations were made prohibited making donations on behalf of other persons and imposed relevant sanctions (under the old legislation the sanction implied the transfer of the sum into the state budget, while under the present legislation the sanction is transfer into the state budget plus a fivefold fine). We consider such ambiguous and selective use of legal sanctions unacceptable,” TI Georgia experts say. “The State Audit Office should apply the law uniformly and not exercise selective justice. When disclosing a legal violation, it should act adequately.”

Moreover, the primary function of the State Audit Office in monitoring political finances is to ensure transparency. The regulatory body must post declarations submitted by parties on its website within 5 days. The parties are also required to inform the Audit Office on receiving a donation within 5 days from its receipt. The Audit Office immediately disclosed the information on oppositional political unions, while the agency took a month to publicize the information on the ruling party’s financing: the United National Movement announced on May 15 about the release of its declaration to the state audit but the latter published the document only in June.

Meantime, in the financial papers of 2011 of ruling party the addresses of the donors [they were obligatory for 2011] are missing. This lays ground to speculations that either the ruling party violated the law by not providing complete information on the donor (even if elicit) or the State Audit Office has violated the disclosure requirements established by the law.

TI Georgia approves the financial declaration forms [which came as a result of the legislative reform carried out in December 2011] to give a detailed picture of financial spending by political unions. However, the names, ID numbers and other data of the persons making donations were not legible in the party financial declarations posted by the Audit Office.

Besides, the revenue sources should be more detailed and specified.

“Since all types of revenues cannot be covered in a declaration form, when using the “other revenues” category, it should be mandatory to indicate the source of each line of funding,” TI Georgia recommends.

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