Regulating political finance is part of the solution to corruption

banknotes in various currencies

Regulating political finance is part of the solution to corruption

WFD's expert outlines how stopping opaque money from corrupting politics is key to the fight against corruption and the preservation of democratic values.

On 11 - 15 December, government representatives, anti-corruption experts and civil society campaigners from around the world will gather in Atlanta, USA. They will celebrate the 20th anniversary of the UN Convention against Corruption (UNCAC) and set a common vision for our future anti-corruption work.

As the conference will focus on implementation of the anti-corruption commitments enshrined within the treaty, one of the key issues rising up the agenda is the question how to stop opaque money from corrupting democracy.

A broad coalition of international institutions and civil society, including Westminster Foundation for Democracy (WFD), have launched an appeal to UNCAC conference delegates to address the issue of political finance. Addressing political finance is a key recommendation that has emerged from WFD’s research into the cost of politics (among others).

In many countries there is a lack of legislation to regulate the funding of candidates for elected office and the funding of political parties. Key issues are limits to private donations and restrictions of anonymous and foreign donations, effective disclosure obligations, and oversight and audit mechanisms.

As the joint statement says:

“Political finance is a pivotal issue in the fight against corruption. The integrity of democratic processes is contingent on financial transparency in political finance… When financial contributions to political parties, electoral campaigns, or candidates are opaque and unaccountable, this enables clientelism, fuels corruption, increases the cost of political participation and destroys trust in governments.”

One of the statement’s suggestions is closing loopholes for illicit funds in politics, such as donations routed through shell companies, third parties, or anonymous donors. Another priority is introducing digital reporting and disclosure systems of political contributions, expenditures, and campaign financing.

Accountability mechanisms are vital in curbing corruption. WFD supports initiatives to establish and strengthen independent oversight bodies with adequate powers to monitor, investigate, and enforce compliance with political finance regulations. To make such accountability mechanisms effective, there is need for an informed and engaged citizenry. Hence, the coalition encourages public participation in political finance oversight and protection of whistleblowers who expose corruption within the political finance system. The Panama Papers, Pandora Papers and other investigations have put a spotlight on corruption as a transnational issue. There is need for a stronger coordinated international response, including efforts to recover and repatriate assets stolen through corrupt practices.

As the UNCAC conference gets underway, it is increasingly recognised that improved transparency and better political finance regulation can contribute to reducing incentives for corrupt actors to seek to enter or influence politics. In this way, the fight against corruption and the preservation of democratic values are interlinked.

WFD recognises that this will not happen easily or across the board in all countries in the short term. Efforts to increase transparency and regulation of political finance will directly challenge power distribution within countries and generate resistance, specifically from people benefiting from existing systems.

While conventional anti-corruption initiatives often try to keep things ‘technical’ and ‘apolitical’, many experts in the anti-corruption field increasingly recognise that this is not possible. In attempting to correct ‘the abuse of entrusted power for private gain’ (which is a widely accepted definition of corruption), anti-corruption efforts engage directly in politics.

In WFD’s experience, parliaments and in particular anti-corruption champions among parliamentarians can play a key role in overcoming the resistance to more accountability and transparency. Some of these champions have established their own transnational networks, such as GOPAC and SEAPAC, or have established a national cross-party group, such as the UK House of Common’s All-Party Parliamentary Group (APPG) on Anti-Corruption and Responsible Tax. WFD supports one of its partner parliaments in the new methodology of corruption proofing of legislation.

These and other initiatives will gain credibility in the eyes of the public when political leaders and parliamentarians keep their own house in order and lead by example.