Report of the Chairperson of the Central Election Commission
of the Russian Federation
V.E. Churov
"Prevention of political corruption in elections
as a major component of ensuring equality of voting rights"
Ladies and gentlemen!
Dear colleagues!
First of all, I thank the organizers of the seminar for the renewal of the tradition of holding such meetings to discuss the most topical electoral issues.
Taking advantage of the right of one of the leading speakers, I would like to offer to discuss a very topical issue in ensuring equality of voting rights during the discussion at the workshop, in particular, prevention of political corruption and observation of financial transparency in the elections.
The importance of this topic is obvious, the richer society, the stronger possibility of use of shadow money and occurrence of political corruption. If large commercial organizations and wealthy private individuals will be able to buy more political influence by unlimited financing of certain candidates and the political parties, citizens may lose confidence or even begin to ignore the legitimate political process, and political parties and their candidates in whose interest in the elections spent more and more of financial resources, can lose their "independence" in favor of sponsors.
Financing of election campaigns and political parties, playing an important role in the functioning of democracy in the face of unregulated finance in an election when there is no transparency and oversight, is the so-called "hidden financing of the elections", which gives the opportunity to a small circle of people (including organized crime) to get influence on elected officials by shadow finance of their election campaigns.
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Colleagues!
Weak regulation by States of the financing of political parties and their candidates and, particularly, during the elections, can disavow political equality, provide individual parties the opportunity to buy government influence and undermine the faith of society in election procedure.
At the same time, we are well aware that the democratic process of the formation of public authorities requires significant financial costs to both the election organizers, who receive funding for an appropriate budget and by the direct participants in the elections, who attract third parties to finance their election campaigns.
I am confident that our common aim to create the conditions that prevent financial political corruption and prevent the erosion of the principle of universal, equal electoral law under paragraph 7.3 of the Document of the Copenhagen meeting of the Conference on the human dimension of the CSCE (1990).
By the way, in order to prevent negative impact on institutions of direct democracy and participation of people in the management of government affairs, the United Nations Convention against corruption (paragraph 3, article 7 of the "Public sector") contains provisions according to which each government considers the possibility to take appropriate legislative and administrative measures, consistent with the objectives of the Convention and in accordance with fundamental principles of its domestic law, in order to enhance transparency in the financing of candidates for elected public office and where applicable, in the financing of political parties.
Further, in the statement of recommended regulations, adopted by the Venice Commission during the 52-nd session, emphasized that an important factor in determining the correctness of the election process, is the regulation of the issues related to the financing of political parties and their electoral campaigns.
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Now, let me tell you about how things are going with prevention of political corruption and compliance with financial transparency in the elections in the Russian Federation, bearing in mind that the main objectives of the monitoring of funding sources and expenditures of political parties is pursuance of the requirements of Russian legislation on equality of opportunity and independence in their activities, avoiding financial pressure during election campaigns.
At the same time, with its parties, I would propose to consider this work through the prism of national legislation estimates of experts of the Group of States against corruption GRECO (a very reputable organization of the Council of Europe, aimed at, in particular, monitoring the implementation by States of the commitments and recommendations of the Council of Europe to ensure financial transparency in the activities of political parties, with regard to elections and electoral campaigns, to which the Russian Federation had joined in 2007).
Reference is made to this organization because, in our view, GRECO has developed the most comprehensive and meaningful financial monitoring methodology of political parties, which includes:
- control over the financing of political parties in the period between elections;
- controlling the election funds of parties and candidates during election campaigns;
- financial control of activities of non-governmental organizations, that participate in the electoral process;
- implementation of financial monitoring by an independent body;
- necessity in cooperation with relevant State bodies and structures.
In 2011-2012, GRECO expert group held the third round of assessment of the legislation of the Russian Federation on "transparency of party funding", on which grounds was formulated a number of recommendations, some of which relate specifically to the financing of political parties, I would like to highlight, because the Central Election Commission of the Russian Federation is a key performer in the work to implement these recommendations.
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(I). Monitoring of political parties funding in the period between elections
Control system for political parties financing in Russia as a whole meets the European standards, and in some aspects even exceeds them.
A few words about the sources of financing of political parties. The establishment and activities of political parties in Russia, regional offices and other of their registered structural units are carried out in accordance with the Federal law "on political parties". Under this federal law, money of political parties can be formed through multiple sources:
As it was already mentioned, GRECO experts have been proposed for implementation in the Russian Federation the following recommendations to improve the transparency of financial flows to political parties.
1. Recommendation IV offers:
"To take appropriate measures to ensure that membership fees are not used to bypass the transparency rules applicable to donations (contributions).
According to the current legislation of the Russian Federation, political party has the right to establish for its members the duty of paying membership fees and entrance fees, as well as their dimensions. GRECO experts have assumed that such an arrangement might be used to circumvent of restrictions on the size of donations, set up for donations.
In June, 2014, changes in the Federal law "on political parties" had established new rules for disclosure of information about payers entrance or membership dues. So, if within a calendar year, member of a political party made entry and/or membership fees in excess of the maximum possible annual size of donations from individual (4 330 thousand million rubles or approximately 71 thousand euro), the financial statements of a political party or its regional offices should disclose the following information about this member of a political party: surname, name, patronymic, the name of a constituent entity of the Russian Federation where is his place of residence, the aggregate amount of contributions by the Member of a political party. In pursuance of this rule, a new application, designed to disclose specified information, was introduced in the composition of the consolidated financial statements of a political party.
In accordance with article 35 of the Federal law "on political parties" presented by political parties, consolidated financial statements are posted on a special website of the CEC of Russia on the Internet. Since the annexes to the consolidated financial report of a political party are an integral part of it, then they are also posted on-line. Thus, information on members of political parties, during the calendar year, who made entrance/membership dues totaling more than 4 million 330 thousand of rubles (around 71 thousand of euro), is available to a wide range of individuals, which increases the level of transparency of party finances.
2. Recommendation (V) requires: "elaborate practical recommendations on the evaluation of political parties donations in kind".
Voluntary donations of citizens and legal entities is the essence of own funds or transfer of personal property without compensation and objectives of the political party.
Donations can be made in cash and in the form of other assets according to the legislation of the Russian Federation. Under "other assets" in this case refers to anything that is not money, type of services and that is transferred to the party by right of ownership. Other property should have the value, i.e. should be evaluated in terms of money and decided to integrate in a political party. Management of estimates of the property value is the responsibility of the political party, that received the property.
Even though, issues of property assessment are resolved in general by the legislation of the Russian Federation, in pursuance of recommendation V, CEC of Russia, in cooperation with other agencies, prepared and dispatched an informational letter to help political parties, which highlights the situation of Russian legislation on methods for estimating property received as a donation.
For reference: on the basis of the consolidated financial statements for 2012-2014, for 74 political parties, it can be concluded that the overall percentage of donations in the form of a property for a specified period was three-tenths of a percent of the total donations over the same period (0.34%), and only seven (7) parties received such donations . Political parties were not reported in the CEC of Russia about problems in this area, despite repeated requests by the Commission.
3. Recommendation VI concerns borrowed funds, attracted by the political parties: "ensure that provided loans to political parties have not been used to bypass the rules of party funding, in particular, when the conditions of obtaining them differ from normal market conditions and when they are fully or partially withdrawn”.
Until the middle of 2014, borrowing of the political parties did not have a specific regulation and parties enjoyed the same rights and bear the same obligations as ordinary commercial firms. Political parties were able to reach an agreement with creditors to write off debt, consequently, having received funds bypassing the limitations set out for donations.
In the middle of 2014, federal legislator had established new borrowing requirements. In particular, declared right of a political party and its regional offices (unless other case stated in the Charter of political parties) to enter into loan agreements with individuals and legal entities, credit contracts with legal bodies, moreover it was established that the borrowed funds, which weren’t returned in fixed period, should be considered by controlling authority as donations, using such income effects as verification of statutory limits on the source and size of donations which was not done previously. There was introduced previously absent limits on the size of the funds, such as, during one calendar year, the total amount by which political party and its regional offices can make loan agreements with one person or with a legal entity, shall not exceed five times of the amount of donations received from one individual in a calendar year (21 million 650 thousand rubles-about 355 thousand euro).
In order to implement control on the part of the electoral commissions, new forms to reflect the income of borrowing and fulfillment of obligations under their return were introduced in the content of financial statements of political parties. Thus, the party obligation to return earlier borrowed loans was underscored, the mechanism of control over the implementation of this obligation was set. As for the rest, the procedure and conditions for borrowing correspond to market conditions, reflected in the Civil Code of the Russian Federation.
4. In order to ensure the credibility of the political parties financial statements, GRECO experts shaped recommendation X: "(i) to ensure that political parties were subject to an independent audit on the accounts of political parties or election campaigns conducted by accredited auditors in accordance with federal law and (ii) ensure that such audits will be in accordance with international standards".
In June, 2014, changes in the legislation of the Russian Federation on political parties came into force. According to these changes, the legislative recognition of responsibility to conduct audit by independent audit organizations of financial and accounting records of political parties and their regional offices was performed.
So the financial statements is subject to mandatory audit of a political party, in case:
a) during the reporting period, the political party received public funding;
b) during the reporting period, the total amount of donations to a political party in consolidated financial report of a political party, amounted to sixty or more million of rubles (more than 983 thousand of euro);
b) during the reporting period, the total amount of donations to a political party, in consolidated financial report of a political party, amounted to sixty million of rubles (more than 983 thousand of euro);
Upon completion of the audit, the audit opinion instance hosts by the CEC at its official website.
In addition, the reporting period to reflect the financial activities of political parties has been reduced from three years to one year. It was made for more frequent informing society about the financial results of activity of the parties.
6. The responsibility for violations of rules on financing, which deals with recommendation XII, hasn't been forgotten by experts of GRECO: “(i) Identify infringements of rules of common funding of political parties;
(ii) to ensure that any representatives of parties are held personal liability for infringement of the rules on party and election campaign funding;
(iii) review existing sanctions related to violations of the rules for financing of political goals in order to ensure their effectiveness, proportionality and deterrent effect.
The Russian Federation has made a lot of work in order to implement this recommendation. As a result, in December, 2014, new compositions of administrative offences related to infringements of legislation on political parties in part of funding were legislatively defined, expanded the circle of people, who are subjects to administrative responsibility in the area of administrative fines, have been increased tenfold of the Code of Administrative Offences under existing articles for violations of the election legislation.
II. Monitoring of the electoral campaigns financing
In accordance with the applicable electoral legislation of the Russian Federation, political parties and candidates should independently finance their election campaigns from the funds of the so-called "electoral fund". Election fund is the amount of money generated through donations and own funds of the parties of election campaigns with purposive character in spending and strictly controlled by the election commissions.
Financial control over the means of election funds implies control over the sources of donations, control over the purposeful spending electoral funds and information sharing with voters.
Elaboration of the current Russian Federation legislation in part of financial control during election campaigns, in our view, is very high. Nevertheless, GRECO experts moved few recommendations concerning financial flows directly in the period of election campaigns. For example:
1. For the purposes of raising the level of transparency of the election campaigns financing and voter education, GRECO recommendation No. VII offered: “to consider the possibility of reducing the current thresholds for disclosure of donors in the amount of 10000 EUR(on donations from legal bodies to political parties) and 1000 euro (donations from individuals in the election fund of the candidate to the presidential elections) to an acceptable level”.
In accordance with federal law, during election campaigns mandatory publication to the public is the subject to the operation of funds flow to the election funds, as well as operations on electoral funds outflow, that exceed a certain threshold.
The Russian Parliament found it possible for election of deputies of the State Duma and President of the Russian Federation to reduce the thresholds, specified in the recommendations of GRECO, and, thus, at the regular elections of the deputies of the State Duma in 2016 publication of financial data will be collected in accordance with the new rules.
In addition, taking into account the increasing role of the Internet, for other, lower levels of election in the Russian Federation, was legislated responsibility for placement on sites of election commissions on cash flow information of candidates electoral funds and electoral associations with very low thresholds of expense operations (approximately from 400 euro (from 25 thousand of rubles).
As I said earlier, for violation of electoral legislation, fines on all articles of the Administrative Offences Code, related to violation of the election legislation, increased in ten times. We believe that such measure would enhance the preventive impact of the sanctions and will prevent unscrupulous parties of the electoral process from committing of misdeeds.
III. Financial control of activities of non-governmental organizations, participating in the electoral process
The Russian Federation Law on political parties, as well as electoral legislation set a number of conditions for the participation of non-commercial organizations in the financing both the current activities of political parties and election campaigns of parties and candidates.
So, it is prohibited for non-profit organizations, acting as a foreign agent, to perform voluntary donations. Non-commercial organization, which a year before donations received funds from special sources (for example, from foreign Governments and organizations, from Russian organizations with great foreign participation and others) and did not return these funds back, also could not make donations to political parties.
IV. An independent body for monitoring the financing of
political parties
1. GRECO experts has been formulated the following recommendation XI: “(i) Determine independent parent body for effective control of the implementation of the current financing of political parties and give it the relevant powers (including the ability to impose sanctions) and resources”.
Nowadays, the monitoring of political parties financing in the Russian Federation performs the Central Election Commission of the Russian Federation and the electoral commissions of subjects of the Russian Federation, the mechanism of which involves a high level of independence. For example, federal law established that the Electoral Commission of the Russian Federation are formed on the basis of proposals by political parties which have put forward lists of candidates admitted to the distribution of seats in the State Duma, and the legislative (representative) body of State authorities of the constituent entities of the Russian Federation.
The tasks of monitoring of the political parties funding in the Russian Federation are:
Monitoring mechanism
When identifying improper donations, exceeding the statutory limits of the corresponding Election Commission donations income send to political party or its regional office demand about restitution of donations or its part.
In part of monitoring the sources of funds and property, received by the parties as a result of the transactions, it should be explained that the Federal law "on political parties" found that for parties, their regional offices and other registered structural subdivisions, it is not allowed concluding deals with a number of individuals, such as foreign Governments, legal bodies and citizens, with international organizations, with people without citizenship and others. Accordingly, the functions of the electoral commissions includes information about contractors of political parties, if deal with them imply the transfer of party money or property.
At the end of 2014, amendments to the code of the Russian Federation on Administrative Offences came into force, which gave the electoral commissions leverage on political parties which violate the provisions of the law on the financing of the period between elections. The code was supplemented with five articles that define the new structures of administrative violations, such as, illegal financing of political parties, violation of the terms of a return of illegal donations, non-fulfillment of responsibilities for the conduct of audits and other. The right of administrative proceedings commencement of these violations is given only to electoral commissions. Also, significant dimensions of administrative fines were established according to the offences, they are about 8 thousand of euro (up to 500 thousand of rubles) for a single offence. It is a great amount of money for most political parties in the Russian Federation.
V. The promotion of relevant government authorities and the Central Bank of the Russian Federation of the CEC of Russia in implementing the financial controls
An independent body, monitoring the financial activities of political parties are fundamentally cannot work without interacting with various departments of the State registration, fiscal, financial authorities. This position is established by the financial resources, which the party receives at its disposal, does not emerge from the void. Someone allocates their own money, someone allocates part of his property.
Russian legislator establishes a series of characteristics of people, from whom donations are not allowed. In its financial statements, a political party is obliged to provide information about all donors of funds and property, who made donations to the party favor. Electoral Commission verifies information about donors, and if detected, that donator belongs to "prohibited", his donation to the Electoral Commission recognized as illegitimate and must be returned either to the contributor or transferred to the federal budget, if it is impossible to return a donation for some reasons. To verify information about donors of funds and assets of political parties, in addition to using of own tools, electoral commissions can address to:
the Federal Migration Service in order to verify the information about donors-individuals,
the Federal Revenue Service in order to verify the information about donors-legal bodies,
and to the Ministry of Justice of the Russian Federation in order to verify the information about donors-non-profit organizations.
In addition, during election campaigns, in order to verify information about the assets and income of candidates for elective offices, election commissions may apply also to the Ministry of Internal Affairs of Russia, the Central Bank of the Russian Federation and other departments.
As you can see, the thesis of necessity for interaction of the body, that regulates authority's finances with other government establishments, is confirmed by the practice.
It should be noted that the CEC will further continue activities aimed at enhancing the transparency of financing political parties and election campaigns of candidates and electoral associations. At the present time, it is actively considered to place information on the financing of political parties and candidates on the Internet in machine-readable format. Such a measure would improve the availability of relevant data for the interested individuals.
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Colleagues!
Big money in politics, today is perhaps the biggest threat to democracy all over the world. Evidence suggests that a large part of the electorate worldwide has the feeling that politicians are more concerned about money than the representation of the citizens interests.
So, according to American organizers of the presidential elections in the United States in 2016, the total budget of the candidates in this election campaign should again exceed historical maximum and reach 10 billion of United States dollars and it is against the background of 4 billion of United States dollars in similar elections in 2012. We are talking about the financing of the election campaign in favor of candidates for so-called Super political action Committees-Super Packs (Super PAC Political Action Committee-Super), that transformated presidential elections in the United States in 2012. At the same time, according to reports of the American newspaper "the Washington Post" (from the 6th of July, 2015) political parties creates obstacles to the public authorities, in particular the United States, internal revenue service and the Federal Election Commission, in investigating and considering allegations of irregularities in the financing of election campaigns of Super Packs and nonprofit organizations, that use tax benefits.
If we talk about inequalities of voting rights with respect to the recent general elections in Germany, which took place on the 22-nd of September, 2013, legislation on election financing by election campaigning participants were not almost regulated. In particular, the size limit of expenditure of financial resources was not formalized in legislation for conducting by participants the election campaign; there are no restrictions on the sources of donations.
In 2011, the Group of States against corruption (GRECO) has recommended that GERMANY should devise and implement a system for public financial reporting by parties during the parliamentary elections, so that it will be available to the public immediately after the elections. The GRECO recommendation meant that Germany should not be confined to the requirement of submission of parties annual financial reporting (meaning the obligation for political parties to submit annual reports to Parliament, the President of the Bundestag, in accordance with article 21.1 of the Basic Law of the FRG and 23 of the law on political parties), and must develop and implement separate financial reporting system with the parliamentary elections, to develop and implement the mechanism of real parties responsibility for its failure.
Unfortunately, this recommendation has not been implemented by the election of deputies of the Bundestag, which was set on the 22-nd of September, 2013 . In these circumstances, the OSCE/ODIHR was forced to recommend Germany to regulate legislatively issues of financing the participation of political parties in elections in the final report on the results of observation of the parliamentary elections in Germany on the 22nd of September, 2013. And, of course, issues of financial transparency and participation of candidates in the parliamentary elections should be settled.
By the way, the OSCE/ODIHR final report on the results of the presidential elections in the United States in 2012, also contained similar recommendations (I am reading the paragraph 5 of the recommendations of the OSCE/ODIHR - “Consideration could be given to increase the transparency of campaign financing of 501 (c) organizations, including a clearer definition of what constitutes a ' primary activity. ' Donor disclosure rules should apply to all persons, groups and entities engaged in electoral campaign activities regardless of their form and whether or not they are registered with the FEC”).
I hope that the Russian experience will be useful to our foreign colleagues in prevention of political corruption and observation of financial transparency in the elections.
Thank you for your attention!