Party funding law 'may scare off donors'

The introduction of party funding legislation may deter a number of donors who might not be keen on their transactions being made public, according to representatives of the business sector.

While generally welcoming the prospect of such legislation, they feel that the potential public exposure given to the donations is likely to scare off some companies which have so far been assured of complete confidentiality.

This view is shared by the president of the Federation of Industry, Martin Galea, and the director-general of the Malta Employers Association, Joe Farrugia.

The Prime Minister, Lawrence Gonzi, earlier this week proposed that the government and opposition re-engage in talks on the regulation of party financing, while the Labour Party's deputy leaders both see the need for such legislation. The last time the parties discussed the issue formally was in 1995, within the Galdes Commission, which had proposed a mixture of state and private funding. The parties had failed to come to an agreement because they had differred on where to cap individual donations and on the amounts that would need to be declared.

Mr Farrugia, however, does not believe parties should be funded by the taxpayer.

While welcoming the principle that party funding should be made transparent, he insisted that the source of the parties' money should remain the private sector and individual donors.

"Why should someone be made to fund a party through his taxes? If people feel they should fund parties let them do it on their own initiative," he said.

Malta Hotels and Restaurant Association president Josef Formosa Gauci was not as categorical about state funding.

"I would definitively not rule out state funding but it is crucial that whatever is done, it is something well thought out.

"How much are we talking about and if parties are state funded, will they still be able to receive private donations? What about the small parties? Will they receive funds exclusively on their electoral performance?"

The crucial point, he said, was transparency. "Private party funding takes place all over the world but here it is more evident because we are a small country. The declaration of donations will alleviate the doubts that are raised every so often on this and that project."

Unlike his counterparts, however, he is not convinced the publicity will have the effect of scaring away potential donors. Many, he pointed out, donated money to both parties and therefore should not really face an uncomfortable situation if their donations were made public.

"Obviously, some may feel uncomfortable but I don't think many will," he said.

The Chamber of Commerce gave a curt "no comment" when asked for its opinion, while the leaders of the Chamber for Small and Medium Enterprises were unavailable for comment.