Party financing: a lost opportunity

The last act of Parliament before rising for the summer recess was the unanimous approval of a bill to regulate the financing of political parties.

This marks the culmination of discussions which have been ongoing for almost 10 years, ever since the Galdes commission had proposed capping of electoral expenses in 2005. Since then the issue has been a source of constant controversy, as evidence mounted of unsavoury relationships between political parties and their undisclosed financial contributors.

In fact there was pressure on successive Maltese governments to address the issue. A report by the Council of Europe’s Group of States against Corruption (Greco) has been calling on Malta to introduce a law which would make it mandatory for political parties to declare donations above certain amounts, and also to disclose the identity of donors.

The same recommendations urged the Maltese government to ensure that donations from unknown sources should be banned, and that political parties should keep proper accounting and auditing systems.

However, past efforts to introduce such a law have always been hamstrung by the failure of the two main political parties to ever agree on the finer details. From this perspective, the emergence of cross-party consensus – albeit with reservations on the part of the Opposition – is both welcome and overdue. 

Nonetheless, the law approved by parliament this week leaves a good deal to be desired. 

One major flaw in the draft legislation is the fact that the Electoral Commission has been appointed as regulator: despite the fact that the same commission is entirely composed of representatives of the two parties it will now have to regulate.

This is clearly a case of getting off on the wrong foot. Although it is technically supposed to be an autonomous Constitutional entity in its own right – its members being “appointed by the President acting in accordance with the advice of the Prime Minister, given after he has consulted the Leader of the Opposition” (according to article 60 of the Constitution of Malta) – in practice, it is in fact made up of four members representing the party in Opposition, and five government representatives.

With regard to its other Constitutional duties, this inbuilt conflict of interest has already proven problematic in the past.  

The commission has the power and authority to change electoral boundaries at the whim of the government of the day – something we have seen happen on numerous occasions. Already, then, the set-up guarantees that the two political parties exert complete control over electoral proceedings. But with the new party financing bill, the political parties will also be expected to act as a watchdog on their own finances.

Following declarations by AD and PN that they may institute legal action to challenge the Commission’s appointment, Prime Minister Joseph Muscat has defended the decision to vest the Electoral Commission with the authority to act as a watchdog over party spending: arguing that the Commission itself had been trusted for years to oversee elections in Malta.

The question arises as a matter of course: trusted by whom? By the political parties themselves, who have complete control over its functions? Or by the electorate whom it is supposed to serve?

Going on past experience – such as when the Electoral Commission accidentally deprived thousands of foreign voters of the right to vote in European elections – it is debatable in the extreme whether this commission really does enjoy the nationwide trust that would be required to regulate party financing in a manner that is acceptable to all. 

Ideally, this role should have fallen to an independent body elected by a two-thirds majority, and answerable to parliament instead of only to the prime minister.

But the new law entrusted a politically-appointed body for this task; and having politically-appointed persons acting as a regulator for the parties can only weaken the law and undermine the impartiality of its functions.

In so doing, Muscat clearly squandered the opportunity to send out a clear message that the two major parties’ occupation of all public institutions is unacceptable.

Another flaw is government’s rejection of proposals to cap electoral spending at €2 million. Once again, this was a lost opportunity to guarantee fair elections.

No such guarantee can be in place if there isn’t even a limit on electoral spending to enforce. In practice, this implies that the party with access to the most funds can simply buy its way into power. 

Giving up on regulating electoral spending is tantamount to giving up of fairness in elections. It defeats the entire purpose of the law itself.

This in turn is one of the reasons why the Electoral Commission cannot be trusted to regulate party finances. Had this law been enforced over the years, each and every parliament of the last 30 years would have had to be dissolved. But the Electoral Commission, controlled by the parties in parliament, has always been reluctant and toothless in dealing with such matters.

The new law on party financing has clearly not taken any of these concerns into consideration. The chances that it will serve its main purpose – to guarantee transparency and above all fairness in the political process – are therefore at best highly improbable.