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Election funds: Need for transparency

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The transparency of election funds collected by political parties is a critical aspect of democratic governance, ensuring that electoral processes are fair, free from corruption, and reflect the true will of the people. Today I am trying to explore the significance of transparency in political financing, examining examples from around the world to highlight diverse approaches and their impacts on democracy.

Regarding the situation in Sri Lanka, Transparency International reported several issues: the use of election campaigns to launder illegal funds, the purchase of allegiance from certain candidates or parties, the abuse of state resources, media patronage, and favoritism by political party leaders towards wealthier candidates. These practices result in a loss of focus on policy priorities and create an unequal playing field. Consequently, new entrants to politics, the poor, and the underrepresented are invariably the victims of these problems.

Many political parties and leaders visit countries with significant Sri Lankan communities, where it is well known that expatriates make substantial donations to fund their preferred political parties or leaders. However, these parties and leaders never disclose how much they collect or receive and how much they spend. Currently, Anura Kumara Dissanayake is at the forefront. Though they claim that they are a clean party, they have never disclosed the amount they’ve collected, the identities of major donors, or the campaign expenditures.

The Importance of Transparency in Election Funding

Transparency in election funding involves the disclosure of sources and amounts of donations received by political parties and candidates, as well as how these funds are spent. This transparency is vital for several reasons:

Preventing Corruption: Transparency deters corrupt practices by exposing illicit contributions and undue influence from powerful donors.

Enhancing Accountability: It holds political parties and candidates accountable to their constituents, ensuring they serve the public interest rather than private interests.

Promoting Public Trust: Open disclosure of campaign finances fosters trust in the electoral process and in democratic institutions.

Ensuring Level Playing Field: It helps to prevent disparities in political competition caused by unequal financial resources.

Global Approaches to Transparency in Election Funding

Countries around the world have adopted various measures to ensure transparency in election financing, with differing levels of success and challenges.

The common features

The United States, Germany, United Kingdom, Australia and New Zealand have a complex and relatively stringent systems of campaign finance regulations, primarily enforced by several authorities (for example, in USA the Federal Election Commission (FEC). Key aspects include:

Disclosure Requirements: Candidates, parties, and political action committees (PACs) must regularly disclose their financial activities, including contributions and expenditures.

Contribution Limits: There are limits on the amounts individuals and organizations can contribute to campaigns.

Super PACs: While Super PACs can raise and spend unlimited amounts, they are required to report their donors, although loopholes often allow for anonymous donations through intermediary organizations.

Public Funding: Political parties receive substantial public funding, reducing their reliance on private donations and minimizing potential for undue influence.

Electoral Bonds (India): Introduced as a reform measure, these bonds allow donors to contribute anonymously through the banking system, with the intention of reducing cash donations and increasing transparency. However, critics argue that the anonymity undermines transparency.

Despite these measures, challenges remain, particularly concerning “dark money” from non-profit organizations that are not required to disclose their donors. This has led to calls for stricter regulations to enhance transparency. Table 1 shows an example for election funding and spending in New Zealand.

Challenges and Recommendations

Despite various measures, challenges to transparency in election funding persist globally. Common issues include the influence of “dark money,” enforcement gaps, and the complexity of financial flows in politics. To address these, several recommendations can be made:

Strengthening Enforcement: Robust enforcement mechanisms are essential to ensure compliance with transparency regulations.

Closing Loopholes: Laws should be updated to close loopholes that allow anonymous donations and undisclosed financial flows.

Enhancing Public Funding: Increasing public funding for political parties can reduce dependence on private donations and promote fairness.

International Cooperation: Countries can benefit from sharing best practices and cooperating on transnational transparency issues.

Sri Lanka has historically faced significant issues with the transparency of political financing. Key concerns include the lack of comprehensive legal frameworks, limited disclosure requirements, and the pervasive influence of illicit funds in electoral campaigns.

Legal Framework: Sri Lanka’s legal framework governing political finance has been relatively weak. Unlike many established democracies, Sri Lanka has lacked robust laws mandating the disclosure of political donations or expenditures. This gap has allowed substantial unregulated financial flows into the political arena.

Disclosure Requirements: Despite the requirement for political parties and candidates to disclose their funding sources and campaign expenditures, the lack of compliance enforcement has enabled the infiltration of money in politics, frequently from questionable origins.

Influence of Illicit Funds: The opaque nature of political financing in Sri Lanka has created opportunities for corruption and the influence of money from illicit activities, including organized crime and questionable business practices.

Recognizing the detrimental impact of opaque political financing on democratic processes, Sri Lanka has undertaken several reforms aimed at enhancing transparency and accountability.

Challenges and Obstacles

Despite these efforts, several challenges and obstacles remain in achieving full transparency in political financing in Sri Lanka.

Legislative Hurdles: Enacting comprehensive campaign finance laws has proven difficult due to political resistance and competing interests within the legislative body. Politicians who benefit from the current system often oppose reforms that would limit their financial advantages.

Enforcement and Compliance: Even with new laws in place, effective enforcement is a significant challenge. The ECSL and other relevant bodies require adequate resources, authority, and political independence to enforce compliance effectively.

Public Awareness and Participation: Ensuring public awareness and participation in the process of monitoring political finance is crucial. Without active engagement from the electorate and civil society, reforms may not achieve their intended impact.

Comparative Perspective and Recommendations

To draw broader lessons from Sri Lanka’s experience, it is useful to compare with other countries that have successfully enhanced transparency in political financing.

Adopting Robust Legal Frameworks: Countries like Germany and the UK have established stringent legal requirements for political finance disclosure. Sri Lanka can benefit from adopting similar frameworks that mandate detailed and timely reporting of political donations and expenditures.

Empowering Independent Bodies: Effective oversight bodies, such as the Electoral Commission in the UK, play a critical role in ensuring compliance. Strengthening the ECSL’s powers and independence can enhance its ability to monitor and enforce campaign finance laws.

Public Funding and Spending Limits: Introducing public funding for political parties, as seen in Germany, can reduce reliance on private donations and promote a more level playing field. Additionally, setting limits on campaign spending can curb excessive financial influence in elections.

Table 1: This table summarises each registered party’s election and broadcasting allocation expenses.

*$1,388,000 for parties that submitted a party list + $32,600 for each electorate candidate, including GST.

** A component party of Freedoms NZ which in accordance with section 79(3) of the Broadcasting Act 1989 is not entitled to a separate allocation.

Conclusion

Transparency in election funding is crucial for the health of democracies, ensuring that electoral processes are fair and free from undue influence. While different countries adopt varying approaches, common principles such as rigorous disclosure requirements, effective regulatory oversight, and public funding can significantly enhance transparency. By learning from global examples and addressing ongoing challenges, nations can strengthen their democratic institutions and foster greater public trust in their political systems.

The transparency of election funds in Sri Lanka is a complex issue with significant implications for the country’s democratic processes. While recent reforms and efforts mark a positive step towards greater transparency, substantial challenges remain in compliance. By learning from international best practices and continuing to advocate for robust legal and institutional reforms, Sri Lanka can enhance the transparency and integrity of its electoral system. This, in turn, will strengthen its democratic governance and build greater public trust in its political institutions.

(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)

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