The cost of financing democracy

We have a law limiting the expenses that election candidates are allowed to spend in their quest for a parliamentary seat – a law that is more honoured in the breach than in the observance, especially as the limit is ludicrous considering the purchasing power of the euro today.

Both parties keep on literally begging for donations surreptitiously while somehow surviving in a practically bankrupt situation- Michael Falzon

On the other hand we have no law that regulates donations to political parties and the debate on this gap in Maltese legislation has been going on intermittently for quite some time.

The multi-party system is a cornerstone of our parliamentary democracy and the country’s democratic credentials can hardly last without it. Political parties cannot manage to survive without adequate finances and the controversy whether this financing is to be provided by state funding or through private donors is a very intriguing one.

Private donors are not all just genuine believers in some cause and many are people with commercial interests who see the opportunity to give donations to political parties as an ‘investment’ of sorts.

That is why Maltese businessmen tend to give undeclared donations to the two main political parties. One thing that the law regulating donations should do is to establish a limit of the sum that can be donated without having to be officially declared.

Even so, such a system is full of pitfalls as experience in the UK has shown. David Cameron is currently facing demands for an independent inquiry into serious claims that access to the British Prime Minister could be secured by making large donations to the Conservative Party.

Cameron found himself in this row over party funding after the party treasurer, Peter Cruddas, urged reporters posing as wealth fund executives to give more than £250,000 (through a bank account in Liechtenstein) in return for meetings with senior ministers. Cruddas has resigned but this has not absolved his party from the devastating effects of his actions.

The Labour Party now in opposition in Britain had faced a somewhat similar indignity when in government: the infamous ‘Cash for Honours’ scandal in the UK in 2006/07 uncovered an uncanny connection between political donations and the award of life peerages.

A loophole in UK electoral law meant that although anyone donating even small sums of money to a political party has to declare this as a matter of public record, those loaning money at commercial rates of interestdid not have to make a public declaration.

Of course, these were loans that were never intended to generate interest or to be eventually repaid – donations disguised as loans. Following suspicions that some peerages were a quid pro quo for such loans and after complaints made by the Scottish National Party, the matter was investigated by the Metropolitan Police. Eventually, the Labour party had to repay the loans.

In spite of these experiences, public opinion in the UK seems to be against state funding of political parties. Many argue that adherents of a political party should not pay money in taxes that then goes to other parties.

Although that system apparently avoids abuses resulting from parties enticing donations, it could raise other problems.

Last Monday, the Greek parliament approved the funding of political parties by dishing out €29 million to them – a decision that has raised eyebrows in Brussels and Athens, considering that Greece is currently slashingpublic sector wages and jobs in line with austerity measures demanded by the EU and the IMF.

The money is to go to the five parties which are represented today in parliament and is to be used for the campaign of the next election scheduled for May, as well as for unpaid wages and other debts, such as to the state social security fund.

According to the EU Observer, the Greek home minister explained that the two main parties are so deep in debt that they can no longer borrow money from banks – a situation that, incidentally is not entirely dissimilar to the one prevalent in Malta.

This news came just a few days after Umberto Bossi, the founder and leader of Italy’s Northern League, resigned from the party leadership following allegations by prosecutors that taxpayers’ money earmarked for his party had been spent on improvements to his house and favours for members of his family, including the rental of a Porsche for his eldest son.

Undoubtedly, the use of state funds going to political parties should be monitored by an independent authority to ensure these monies are spent for the purposes they are given.

In Malta both the PN and the PL give me the impression that party financing is an issue they prefer to avoid facing, more so currently: the nearer the election date, the more difficult it is for agreeing on a common position.

Meanwhile, both parties keep on literally begging for donations surreptitiously – in cash or in kind – while somehow surviving in a practically bankrupt situation… at the same time keeping a brave face and boasting about their proficiency at running the finances of the country!

micfal@maltanet.net