A work in progress... | Franco Debono

The recent party financing scandal seems to underscore the fact that the Party Financing Law enacted last year has not to date been effective. Or does it? Law Commissioner and former Nationalist MP Franco Debono, who authored the original bill, argues the clean opposite 

Law Commissioner Franco Debono (Photo: Chris Mangion/MediaToday)
Law Commissioner Franco Debono (Photo: Chris Mangion/MediaToday)

If I were Franco Debono right now, I admit I’d find it hard not to feel vindicated by recent events. Revelations that the PN has been secretly financed by the DB group for a number of years graphically call to mind the ill-fated disputes that characterised the final years of the Gonzi administration. Party financing was one of Debono’s most cherished private grievances against his own government. In 2012 he presented the party with a draft bill he had written on his own initiative... it was ignored, but taken up by the incoming Labour government the following March.

Now it has been in force for a year, and already the Electoral Commission has been called in to investigate a suspected infringement (by the same party that had earlier expelled Debono as a ‘troublemaker’).

Who can really blame him, then, for constantly reminding me, throughout this interview, about whose idea it was all along to regulate this particular sector... and, more pointedly, who had rejected his efforts at the time, and why. 

“I pushed the party financing act for so long, precisely because I was aware of situations that might have existed,” he begins when I ask him if the db Group revelations had already been known to him at the time. “Everyone has enough common sense to understand that political parties are getting money from somewhere. We also understand that they need a lot of money these days: to maintain themselves, to organise electoral campaigns... common sense alone dictates that this money was coming in...”  

Does this mean he was aware of the details that have just emerged? For instance, that the PN’s secretary-general and the CEO of its media organisation draw their salaries directly from the db Group? 

“I haven’t been a member of the PN for the past four years. But when I was a member, I was aware of certain facts that I never spoke about, and don’t think I ever should speak about. I used to hear that ‘this person donates’ and ‘that one doesn’t’.  I’m talking generally now. People give money to the parties, and businessmen are a subset of ‘the people’. So they give too, and have more to give than most...”

They also have more on an interest in donating to political parties: many businesses tender for government contracts, and rely on government for all sorts of other things...

“Yes, and that is what the party financing law is there to uncover. There is nothing wrong with making small donations to a party you believe in. But it has to be accountable. That is why I feel that I was right to be pro-active in matters of legislation. That is the role of a parliamentarian, in my opinion. From the backbench I presented a bill for party financing legislation. Looking back, with hindsight... was it a good bill I presented, or not?”

But was it the same as the law that has just come into force? Debono’s bill was the basis for the Party Financing Act, but it went through plenty of discussion since then. 

“There were very few changes. Mostly fine-tuning. If anything, the final law has fewer requirements and provisos than I had originally proposed. But my bill was so good that... there’s a reason I keep saying this, by the way... that even the Nationalists voted in favour. It was passed unanimously. So this raises the question: if it was so good, then why – when I presented it in January 2012, and there was still a year left of the legislature – was it never brought up for discussion in Parliament? Well, what’s just happened [the party financing scandal] may shed light on the possible reasons. Don’t forget that when I was drafting the bill, we had Joe Cassar accepting donations which would fall under the purview of the new law. This is another circumstance which must be mentioned.  Afterwards, it transpired that Cassar’s donations were, let me say, ‘irregular’...”

But there wasn’t even a party financing law at the time...

“No, but there were other laws. But my point is that this bill was drafted in 2012. Why did it have to wait till 2015 to become law? Bear in mind that, as a backbencher, I was under no obligation to do all this work... I did it on my own initiative. It was actually the obligation of the minister, Carm [Mifsud Bonnici]. And Tonio [Borg] before him. And they had GRECO [the European Council’s governance watchdog] breathing down their necks. Two years ago I had the honour of attending a GRECO meeting, together with Kevin Valletta from the office of the AG, in Strasbourg to assess the new party financing law. It was a positive assessment...”

And yet, for all Debono’s praise for his own handiwork, the party financing law has been in force for a year now... and look what just happened. It transpires that the Labour Party hasn’t even registered as a party with the Party Financing Commission yet; while the PN has been carrying on with the business of accepting undisclosed donations as if nothing had happened at all. So far, the new law doesn’t seem to have been very effective...

“I wouldn’t say so myself. On the contrary, things haven’t carried on as usual. Let me give you an analogy: theft is a crime. We all agree it is a crime. Does this mean that people don’t steal? Unfortunately no, because no law can absolutely prevent a crime. And not everyone who steals gets caught. Put those two together, and...”

No offence, but I see flaw in the analogy. People who do get caught stealing face consequences, including jail-time. So far there have been no consequences in this case...

“Give it time. What happened anyway? There seems to have been an infringement, and the Electoral Commission – which is the body entrusted to enforce this law – has said it will investigate. We have to wait for the investigation to be conducted. And there are sanctions involved: for instance, there’s an administrative penalty of €10,000 for failing to submit party accounts…”

OK, but to stick to his own analogy: a thief would be investigated by the police, not by a specially appointed extra-judicial body. And by extension, a company that falls foul of financial obligations will be investigated by the Economic Crimes Unit. Why do we seem to always make exceptions for political parties?

“In my original bill, the sanctions were to be administered by the police. But in consultation stage, there were different opinions, and it was mitigated...”

I was referring to the law as it stands today, not as he originally wrote it. But even outside that law: what we’ve also seen is that commercial companies owned by political parties are regulated differently from others. The Companies Act, for instance, obliges all companies (regardless of ownership) to submit their accounts to the MFSA. As for donations, in any other company those would be considered a revenue stream and would have to be open to scrutiny. Why do these laws not apply to politically-owned companies?

“If I’m understanding you, there are two questions there: one, whether the companies in which parties have a controlling interest are regulated by the new Party Financing Law; my answer to that is, yes they are. It’s in section two. From the outset, when I sat down to write it, it was evident that apart from regulating the parties themselves, it also had to regulate their TV stations, etc. Two, whether they are regulated by the Companies Act. Again, my answer is yes...”

But his claim doesn’t stand up to the reality that is now visible to everyone. Other companies cannot keep revenue hidden from the authorities. The political ones can...

“Don’t forget where we started from, though. I’ve been saying it for years: until recently, political parties were the most unregulated bodies at Maltese law. So with all due respect, let’s remember how this all began. Where we had advanced in various other areas – it must be said we have reached high standards in many things in this country – when it came to political parties we had remained in the same place for years and years. As of 2015, we started to regulate this sector, too. We have to be careful at this stage. We must be sensitive to the fact that these parties have been administered in a certain way for 100 years...”

Sorry to interrupt, but that situation is not exactly unique to political parties.  In the early 1990s, when VAT was introduced, private businesses found themselves facing the same dilemma: for 100 years and more they operated ‘in a certain way’... suddenly, from one day to the next, they had to have fiscal cash registers and give receipts. Otherwise, prison. Nobody said ‘we had to be sensitive’ to the fact that companies had avoided tax for centuries. Why are we so soft on political parties?

“I don’t think we’re being soft, to be honest. When I met with Cynthia Bauerly in 2011 [chair of the US’s federal election commission] I was struck by something she said. The federal commission vets the returns of the Presidential election expenses. She said that laws like his are always a work in progress. Because political parties will always find ways to circumvent the law. What we needed was for a structure to be put into place. I think it’s a good structure myself. It was unanimously approved by both sides in Parliament. It was a good start. Is it a perfect law? No, of course not. Of course it’s still good to look around us and see how it can be improved. But – and here is where we disagree – now is not the time to change it. Now is the time to enforce the law...”

This takes us back to the Electoral Commission, whose members are appointed by the two parties themselves. Isn’t this a case of the parties investigating themselves?

 “Another issue I campaigned about, as you know, was justice reform, which also implied a reform of the Constitution. One of the things I argued was he Electoral Commission itself needed a reform. I agree, but where do you start? You can’t just go ahead and change everything at once...”

But how can we trust a body that is appointed by the parties, to investigate the parties? Does he himself have faith in the Electoral Commission, as it is today, to conduct this investigation?

“I wouldn’t say I don’t have faith. I do, to be honest. But that doesn’t mean the Electoral Commission doesn’t need to be reformed.  I’ve said this time and again. But then you have to look at the reality: in 25 years under the PN, and before that under Labour we didn’t have a party financing law at all. We had to build from the ground up. So we had to look at where we converged, where we had common ground. Now, we have this law. Are we better off for it? Is it is step in the right direction?”

I agree with the direction; my concern is the pace we’re walking at. It seems a small step to me...

“I don’t see it that way. Even the fact that there have already been apparent breaches... that means that the law is effective. Investigations are being conducted by the competent authority. I remember when drawing up the bill, that there was some scepticism about which entity should be the regulator. But after consultation, it was not just my opinion that the Electoral Commission was the most adequate. It needs a reform, yes; it needs an arm with which to enforce this law.  

Wouldn’t it have made more sense to reform the Electoral Commission first? After all, the Commission is not just there for the benefit of the parties. Why should the parties appoint the board members, anyway? Who represents the ordinary voter?

“I agree with those concerns; but if we went about it that way, we would have remained without a party financing law. That’s the reality. The truth is that the Nationalist Party wasted five years in Parliament: we needed a reform of the Broadcasting Authority; a reform in how the President is appointed; a reform in the electoral system... all along I’ve been saying these things, yet I was condemned and even expelled from the party for saying them.”

Well, much of those five years were spent without a parliamentary majority... Debono himself voted against the party line in a motion of confidence. The reality is also that the PN couldn’t effect any of those reforms anyway, but its position in government wasn’t secure enough...

“But it lost its majority because it failed to implement those reforms. Had Gonzi listened at the time, I don’t think he would have ended up so badly. He ended up condemned by the electorate, precisely because he didn’t undertake those reforms. Like the justice reform. I even wrote it for him myself. But no, he stuck to Carm. What more could I have done? I was there: a backbencher. As you know, there are backbenchers who don’t even go to parliament. But instead of just warming my seat, I decided to do all this work. The justice reform, the party financing act....  even the removal of criminal libel. I had put it on the agenda. When you look at these reforms, many of which are now being implemented under Labour... what are they all about, anyway? They’re about strengthening the country’s institutions in a holistic manner. That is what I feel my contribution was in my five years an MP. I initiated a systematic reform of all three pillars of the State...”

Meanwhile, however, there is another side to the party financing debate... so far we have focused on all the ways parties should NOT be financed. What about widening the debate to include alternative funding? Once it is generally agreed that political parties are a necessary component of democracy, wouldn’t it make sense to talk about funding them directly through the State?

“I sincerely believe that that is the direction we should be moving in. But not before this law is seen to be observed. We cannot consider state financing before that. Let’s be honest: What we’re seeing now is a scandal. How can you turn to the taxpayer and expect him to finance a party that failed to introduce a party financing law in 25 years of government... and that is now seeing how it can circumvent the new law through the Cedoli scheme, or even breaking it outright? Do you think it’s the right moment?  No, the important thing now is to build the structures to introduce a level of discipline: this way, the taxpayer can see for himself where his money is going, and how it is being spent. This law creates that structure. It’s not perfect, but at least it’s there. Now, once it is firmly in place and respected by and large, then we can talk about state financing. But not now. Now is the time to focus on enforcing the law.”