Party financing needs a serious reform

The flaws in the Party Financing Act point to possible areas of action

14 March 2017, 7:51am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
Predictably, the recent revelations concerning political party funding have degenerated into an unsightly partisan squabble.

Up to a point, they have also been overshadowed by the equally predictable collapse of Dwejra’s famous Azure Window. But while the latter was arguably unavoidable, the same cannot be said for the former. 

Party financing has been at the forefront of political discourse for well over a decade. When the House unanimously approved a new party financing bill in 2015, it was under pressure from the Council of Europe’s Group of States against Corruption (Greco): which had been calling for a law to 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. Similar concerns had been raised locally by the Galdes Commission, which had (among other points) proposed capping of electoral expenses as long ago as 1995. 

With the advent of a new law enacted last year, one would have thought the matter was now subject to proper regulations, checks and balances. It is therefore distressing to see that the much touted ‘Party Financing Law’ has proved so toothless in its first year of operation.  

But this failure also underscores the sheer extent of the problem. Unfortunately, it goes far beyond how one or both parties actually fund their campaigns and internal operations – including executive salaries. ‘Secret donations by businesses’ represent only the tip of the iceberg. The real issue that has so far been avoided concerns the wider culture that views politics as a means to a financial end.

From this perspective, the actual political fall-out from the DB Group’s revelations is broader than its effect on the Nationalist Party. We are not talking here about an issue over which one party is at fault while the other isn’t. There may be differences regarding the details of the two parties’ modus operandi, but the actual problem concerns their respective dependence on links with powerful business interests. 

While there is broad agreement that political parties need external sources of funding, there is equally broad consensus that this should be transparent and fully accountable. This was the entire purpose of the new law... a law which has manifestly failed, for reasons that were also predictable.

Though commendable in its intentions, the law made two cardinal mistakes. It allowed too much discretion to the parties, almost to the extent of making enrolment with the Party Financing Commission ‘optional’; and two, it placed the Commission under the aegis of the Electoral Commission... which is itself politically appointed.

To date, it is unclear whether the Commission is empowered to investigate alleged breaches of the Party Financing Law. If it does have the powers to do, it could be argued – as, ironically, has been argued in the wake of the Beppe Fenech Adami allegations – that the institution might quail when it comes to investigating its own superiors.

All this illustrates one of the chief obstacles to an effective reform. Political parties cannot be expected to regulate themselves, without building escape routes into the system.

Instead of bickering about whose party is guiltier of such shortcomings, it would behove the Prime Minister and Opposition leader – for the sake of a genuine clean-up, if not for their own partisan interests – to give serious thought to how to solve, once and for all, a problem that is sapping confidence in both parties.

The flaws in the Party Financing Act point to possible areas of action. Party financing rules should be made stricter, including the obligation to disclose individual donors’ names with the exception of smaller donations as well as publishing accounts of companies owned by parties. 

But reforms are needed elsewhere too. It has been suggested that a part-time Parliament leaves our MPs too reliant on additional income, and this creates additional (up to a point unavoidable) conflicts of interest.

Ideally, being an MP should be a full-time occupation; and while the issue will no doubt be controversial, we must also consider a revision of salaries for Cabinet ministers. 

But this must be counterbalanced by an enforceable code of ethics with strict rules on directorships, company ownership, trusts, etc. while the Parliamentary Select Committee for standards, ethics and proper behaviour in public life was a welcome initiative, it remains a case of MPs investigating MPs. Other approaches, including strengthening the autonomy of the Speaker, might be considered.

More urgently, the current declaration of assets must be reformed to become mandatory, and subject to the same perjury/contempt regulations as any other sworn statement. It should also include a strict declaration of individual earnings, gifts, possessions, etc. including spousal earnings.

Likewise, a revolving doors policy for Cabinet ministers is a must: supported by a payment system for ministers who are no longer in the Cabinet, and would have to endure a 12-month ‘cooling-off’ period before entering private employment directly related to their previous job.

But for any of this to happen, the parties must acknowledge that they are part of the problem themselves, and accept to change accordingly.