The Nationalist Party has finally submitted its audited accounts for 2016 to the Electoral Commission. A full two months after the legal deadline and well after the electoral campaign. While we were told that, thanks to drastic reforms, the Nationalist Party now had sound finances, the accounts reveal exactly the opposite.
In 2016, the Nationalist Party’s deficit stood at €1.6 million, more than its annual income of €1.4 million.
This is not the first time the PN has been in this precarious financial situation.
In 2005, the party had a deficit of €2.5 million, at a time when its income was €1.4 million. The audited accounts show that, in recent years, the party eliminated all its accumulated surpluses and now has an accumulated loss of €6.6 million.
As a result, the PN has borrowings amounting to €8.8 million. These are loans directly attributable to the party.
In addition, there are outstanding loans for the party’s subsidiaries, which appear to be in dire financial states.
In 2015, the party had to make good for €3.1 million losses, followed by €1.9 million in 2016. These €5 million impairment losses in just two years are nearly double the €2.8 million income that the PN had in the same period.
This is not the first time the PN has been in this precarious financial situation
Imagine if a family borrowed double its income to meet daily expenses. It would be a completely unsustainable situation.
While this was happening, the party administration told its membership that everything was going well and that finances were now in order.
The obvious question is why was this financial mess kept under wraps?
I believe the audited accounts provide us with some answers.
Firstly, during this time, the PN administration was spending very substantial sums on unspecified consultancies.
Legal and professional fees jumped from €9,143 to €35,675 in 2016. Other administrative expenses rose from €3,015 to €17,866. Travelling and entertainment expenses increased from €5,738 to €8,317.
Altogether the PN’s administrative outlays, during a year when no elections were held, rose by a staggering 71 per cent. To justify this rise in discretionary spending, the administration had to assure its members that party finances were sound.
The other reason why the administration had to talk up the state of its finances was because it went on a spending spree on wages. Spending on wages rose 29 per cent from €253,221 in 2015 to €327,215 in 2016 “to strengthen human resources in anticipation of the general election”.
Strangely, though, the number of employees only increased from 12 to 14. This means that, if we assume each of these employees are paid the same, last year, they all got a 11 per cent rise in salaries, or an increase of €2,300.
Instead of trying to stem financial losses, the PN administration awarded double digit raises in its salaries and nearly doubled its administrative expenses.
To achieve this, the party ended up increasing its debt by €2.9 million, or by 49 per cent, over 2015.
Even though interest rates are falling, the PN’s expenditure on interest payments grew from €209,388 to €369,200. In fact, the party is now spending on interest payments nearly six times the amount it earns every year from membership fees.
By the way, income from membership fees fell by 15 per cent last year, yet another sign of a party in trouble.
Chris Cardona is Minister for the Economy, Investment and Small Business.