Likewise, CPN-UML´s aggregate income stands at whopping Rs 230 million as of fiscal year 2010/11. With this turnover, CPN-UML is next to UCPN (Maoist) in terms of income. Similarly, the NC has reported an aggregate income of Rs 78 million until fiscal year 2009/10. Its income has also shot up by 48 percent since 2007/08.
But these reports are not immune to some genuine transparency concerns such as whether or not the incomes are under-reported, and if the reported figures accurately reflect entire gamut of their income and expenses. These accuracy aspects beg a serious legal scrutiny. Advanced democracies have put in place comprehensive laws defining and regulating the functioning and financing of political parties.
To enhance their effectiveness, principles of transparency and accountability underpin these legal frameworks. Such legislations obligate political parties to routinely disclose information on the size of property and assets they own, on actual source of funds they collect, on the identity of their donors, and on transparency in use of available funds.
When it comes to addressing these concerns, our political parties have a very poor track record. They apparently feel no responsibility to be accountable (and transparent) to the people who repeatedly vote them to power. As they often say, levies, membership fees and individual donations finance their colossal operational and election costs. But can levies and membership fees alone be enough to meet millions in annual expenditures? Don´t the parties have any other ‘invisible’ sources of income?
They are likely to. There are three main sources from where Nepali political parties seem to get their funding. First, off-balance sheet cash donations from businessmen seeking quid pro quo from politicians when elected. Second, kickbacks and commissions. Third, wealthy individual donors seeking postdated political favors. There is little doubt that the politics-business nexus has been a prime booster of the health of party finances in Nepal. Nomination of high-profile businessmen as members in the Constituent Assembly (CA) adequately attests to their ´amicable relations´ and the culture of quid pro quo.
Weak laws coupled with lax implementation have all but rendered instruments regulating political financing in the country useless.
Corruption is the second strongest source through which parties and politicians enrich themselves. Commissions from public-private infrastructure projects, big procurement deals, pre-paid bribes from transfer of civil servants to lucrative government agencies, leakages from social sector schemes, and inflated development costs constitute a vast infrastructure of corruption in Nepal. As the examples elsewhere show, it won´t be easy to dismantle this edifice until the flow of black money into politics is regulated through specific legal and electoral reforms.
The existing law doesn´t cover all facets of political finance and political parties have been quick to take advantage of legal loopholes. I believe any political finance law that does not cover the following five parameters at a minimum is incomplete. First, the law must explicitly impose a threshold on the size of donor contribution. This is the easiest way to limit undue influence of any individual or group in an election. In order to control the flow of special interest money into party coffers, many countries have established statutory ceilings on political donations. For instance, the American law limits cash contribution by any one individual to all electoral candidates to US $37,500 for a two-year election cycle.
Second, the law must strictly ban certain contributions from foreign citizens, multinationals and corporate unions. Many countries partially or completely ban such donations. Third, the legislation should put a ceiling on electoral spending by political parties and individual candidates. In UK and Australia, public regulation of political finance has emphasized the need to limit campaign expenses while in the US the emphasis has been on limiting individual contributions. Fourth, strictly limiting campaign time; the assumption being that the shorter the period, the less the money needed. Countries like Japan and Malaysia have electioneering period of as little as two weeks.
Fifth, political parties must receive certain funding from taxpayer money. In most countries, qualifying threshold for public funds is about 5 percent of the votes cast or seats received in previous election. The concept of public funding has emerged as democracy involves pluralism in all things, including the sources of funds for political campaigns. Therefore, it is important to strategize public and private funding policy while framing new laws.
Moreover, enforcing agency like the Election Commission must be given the power to deregister a political party doling out tickets to candidates with criminal and corruption charges. Legally, candidates charged with criminal offences punishable with jail sentence of more than five years should be barred from contesting any polls. In a democracy, people´s will is sovereign and parliament is subordinate to that will. Therefore, presence of alleged and convicted criminals in the parliament poses a grave threat to the whole polity; it undermines people´s will and diminishes sanctity of parliamentary democracy.
The EC must come out of it political cocoon and proactively exercise its mandate. Out of 80 registered political parties, merely three dozen have submitted their audit reports, this too only after considerable pressure was brought on them. Under the Election Commission Act, the EC has the power to even deregister a political outfit that fails to furnish details to the commission for three consecutive years. Our political parties have failed to submit financial details for four straight years, but the EC, instead of taking action against them, just went on extending deadlines to save its face.
If a candidate fails to submit expenses within 35 days after election, the EC, under existing laws, can fine the candidate with a sum equal to the election expenses made by such a person or the ceiling of expenses specified by the commission. Still, more than 1,000 CA election candidates are yet to furnish expenditure details. But none has been fined yet even as the CA teems with hundreds of lawbreakers. The existing law also mandates the commission to disqualify a person from candidacy in all elections for a maximum period of six years in case of certified over-expenditure. But EC´s poor monitoring mechanism has failed to track candidates´ real expenses; if anything, it seems to be given them space to underreport spending.
A robust political finance regime must ensure a system of public financing, full disclosure and an enforcing agency backed by comprehensive laws. Disclosure should require systematic reporting, auditing, public access to records and publicizing them through websites. And enforcement calls for a strong authority endowed with sufficient powers and outreach to supervise, verify, investigate and if necessary, initiate legal actions. Anything less is doomed to failure.
Based on above observations, exigency lies in revisiting flaws in our regulatory process, identifying gaps in implementation and proposing new measures to ensure an effective political finance regime. Thus, the country’s challenge is to urgently institute legal and institutional reforms matching the need for a sustainable and transparent financial base for parties. Only then will the country go some way towards curbing political corruption and avoiding undue influence of money in politics.
The writer is Deputy Director of Good Governance Program at Pro Public
pbhattarai2001@gmail.com
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