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Money in Politics: A Study of Party Financing Practices in 22 Countries

Author: S Bryan and D Baer
Date: 2005
Size: 151 pages (2.04 MB)

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Summary

Corruption relating to political party financing represents a serious threat to democracy and economic development. This study, by the National Democratic Institute for International Affairs, analyses the current practice of political party financing in 22 countries worldwide. Legal reform aimed at tackling corruption – if supported by donors - will only be effective if accompanied by adequate enforcement mechanisms and parallel efforts to promote accountability and internal democracy within political parties.

Political parties form the cornerstone of democratic reform in developing countries, representing the interests of citizens and acting as vehicles for political pluralism. At the same time, however, they are also vulnerable to corruption, particularly in the area of party financing. Firstly, according to survey respondents, political candidates are open to pressure from wealthy business people, who may fund political party campaigns in return for lucrative state contracts. Secondly, they may accept illegal contributions due to the high risk of personal bankruptcy and may even abandon their campaigns in return for financial gain.

Most political party funding comes from legitimate sources and is spent on legitimate activities. However, corruption is a serious concern and the absence of accurate information about the financing patterns of political parties hampers anti-corruption efforts. There are few reporting requirements and authorities lack the necessary skills and resources to collect information. Other challenges include:

• Poor party fund management is pervasive arising from weak organisational structures and a lack of transparency within parties.
• Politicians are often under pressure to facilitate the business interests of wealthy supporters, rather than the common good. This undermines citizen participation in the democratic process and the legitimacy of political parties.
• Candidates who are geared towards reform of the system are often squeezed out during the electoral campaign due to the high financial cost of running for office.
• Legal and regulatory reforms to address corruption in political party financing need to be adequately enforced. This includes the enactment of legislation, as well as additional resources to ensure effective compliance.
• Despite international concern, instances of vote-buying are not as pervasive in practice. Vote-buying constitutes the smallest part of party and candidate expenditure.

There needs to be a dual approach to tackle corruption relating to political party financing. This involves understanding both the incentives for engaging in corruption and also developing appropriate mechanisms to deter and punish corrupt behaviour. Donors can assist by:

• Identifying country-specific solutions that take into account the historical evolution of political party systems and the role of money in political life.
• Encouraging political parties to participate in anti-corruption activities. Since laws often contain unintended loopholes, change is more likely if parties voluntarily/willingly commit to reforms.
• Assisting political parties to develop procedures for enhanced internal democratic control, transparent decision-making and financial management accountability. This may take the form of technical assistance or training.
• Support civil society, including the media and watchdog groups, to promote awareness of corruption and to highlight irregularities and abuses.
• Consider the benefits of providing public funding to political parties to ease the financial burden on candidates. This funding should be tied to reform of political parties.

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Source: Bryan, S. and Baer, D. (eds.), 2005, ‘Money in Politics: A Study of Party Financing Practices in 22 Countries’, National Democratic Institute for International Affairs (NDI), USA
Author: National Democratic Institute for International Affairs (NDI), http://www.ndi.org