Transparency Cyprus calls for more Transparency in Political Party Funding

The Attorney General together with Transparency Cyprus at the public discussion organised by the latter in September 2012, both raised concerns that the legislation on Political Party funding had to be revised in line with GRECO’s recommendation. It appears however that the Parliament is now looking to write a new legislation. What will be the response from GRECO and the EU is unknown.

Transparency Cyprus would applaud the following issues to be taken into account:

• Ensure that all forms of income, expenditure, assets and debts are accounted for by the political parties in a comprehensive manner and following a consistent format and that their accounts also include the finances of associated/affiliated organisations (eg youth clubs, elders clubs etc).
• Introduce a general requirement for political parties, elected representatives and election candidates to disclose all individual donations (including non-monetary nature and sponsoring) as well as loans granted or written off over 1000 euros.
• To introduce specific reporting of all income and expenditure relating to election campaigns by political parties and election candidates in respect of all types of elections. Such information should include non-monetary or benefit-in-kind contributions received by the party or the candidate and expenditure incurred on the party’s or candidate’s behalf and that such information should be disclosed to the wider public at appropriate intervals.
• To ensure independent auditing in respect of political parties’ books and accounts, as appropriate, prior to their submission for external monitoring.
• To (i) clarify that the monitoring of political parties’ annual accounts goes beyond the auditing of incomes and expenditures, (ii) ensure that income funding of an election campaign and all expenditure incurred in relation to the election are accounted for in the statement furnished to the Auditor General at election campaigns and to provide for clear rules for the submission of such statements to the Auditor General; and (iii) provide an independent supervisory mechanism in respect of election candidates’ income and expenditure.
• All donations ought to be communicated to the Inland Revenue to ensure that the source of the donation is from legitimate business.
• All transactions ought to be going through a financial institution otherwise the wrong impression is given to citizens that the party is encouraging black money.
• When the annual report of a political party is disclosed (a predetermined date ought to be decided by the Parliament and ought to be provided for in the legislation), the Political party ought to be disclosing also the identity of each sponsorship, loan or donations in money or in kind.
• All sponsorship of events for the benefit of the political party or its associated organisations ought to be forbidden by semi government organisations and foreign entities.
• An electoral commission ought to be formed, which will be responsible for overseeing that the annual reports are disclosed as well as the identity of the sponsor or the person donating or giving a loan. All this ought to be made publicly available on a website. Where there lack of transparency the party can be penalised by the electoral commission by a full or partial withdrawal of the public funding received.
Finally, the Auditor General ought to be authorised to also audit associated or affiliated entities and even have consolidated accounts prepared and audited if needed.

It is worth noting that TC has studied many legislation with regards to the subject and there is no perfect regulation. In the meantime we highlight that last week in Brazil during the international conference of Transparency International, a protocol of cooperation was signed between TI and the Global Organization of Parliamentarians against Corruption (GOPAC) aiming to improve matters with the political parties funding and also combat corruption. TI is carrying out a study on the matter and will be publishing a policy statement next month.

The Cypriot MPs are now facing the challenge of voting in favour of a legislation that would make them proud not be ashamed of in a years’ time. They should grasp the opportunity.

Maria Krambia Kapardis, Associate Professor of Accounting, Cyprus University of Technology. Chairperson of Transparency Cyprus – Organisation Combating Corruption

Published in Cyprus Weekly, 16-22 November 2012 p. 19