Unbroken, but Dangerous: The UK's Political Finance Regime and the Rationale for Reform

Introduction, Arthur B. Gunlicks. Part 1 Political finance in North America - campaign finance in Americal federal elections, Paul S. Herrnson campaign and party finance in the American states, Ruth Jones financing federal politics in Canada, W.T. Stanbury. Part 2 Political finance in Western Europe: Great Britain - 20th-century parties operating under 19th-century regulations, R.J. Johnston campaign and party finance in Germany, Hans Herbert von Arnim campaign and party finance in France, Thomas Drysch campaign and party finance in small European democracies - Austria and Sweden, Gudrun Klee some thoughts on political finance reform in the United States and Germany, Peter Loesche political finance on the research agenda in comparative politics - comparing party and campaign finance in western democracies, Karl-Heinz Nassmacher.

Private sponsorship used to be the normal way of funding political activity in western democracies. Nowadays, however, public subsidies to political parties have become a necessity, for there is no other way to bridge the permanent gap between voluntary giving for political purposes and established functions of political parties. Experience with political corruption and unequal opportunities has contributed toward the proliferation of public subsidies. Although public subsidies to political parties have already become a traditional feature of quite a few western democracies, important changes of regulation by law or agreement have been implemented recently. This chapter presents a comparison of party and campaign finance (including public subsidies, their legal framework and their impact) in four European countries. Resulting from comparative research in Austria, Italy, Sweden1 and West Germany it tries to evaluate: different techniques of subsidizing political parties with public funds; effects of these subsidies on the internal structure of parties and on party competition; controls of party income and expenditure by legal restriction or disclosure and reporting to the public; procedures applied to keep public subsidies at pace with inflation. PERSPECTIVES OF COMPARATIVE RESEARCH Since Arnold Heidenheimer and Alexander Heard started cross-national research on political finance, elaborate studies on campaign and party finance (both national and comparative) have focused their attention on a particular set of countries. With respect to political finance in the four countries covered by this chapter, there is more information available today than there was two decades ago; scientific studies have provided a lot of useful information and governmental regulations require periodic reporting on political money.

There are widespread perceptions and countless documented cases of tight-knit networks of politicians and businessmen colluding for allocating public procurement contracts in return for political party donations. In the absence of systematic evidence, neither the magnitude of the problem nor the effectiveness of policies curbing such corruption is well-understood. In order to advance our understanding of these phenomena, this paper tests whether political financing regulations can contribute to controlling corruption in public procurement. We utilize aggregated official micro-level data on almost 3 million contracts awarded across 29 European countries in 2009-2014 to measure the risk of high-level institutionalised corruption using novel proxy indicators. Legislation regulating political finances are directly measured by coding national laws in 2009-2014. In cross-country panel regression and difference-in-difference models, we find that introducing additional political financing restrictions does not have a measurable negative impact on public procurement corruption risks. In fact, the observed effect is positive in most models. The observed relationship remains the same for most constitutive components of political financing regulations. Several challenges remain for a conclusive judgement of political party financing regulations’ effectiveness to curb corruption such as measuring implementation rather than legislation, allowing for longer lead-time for regulatory impact, or considering institutional inter-dependencies.

The linkage between money and polities is a powerful one with implications for democracy, especially in new democracies. Political finance has been identified as a source of political corruption in several countries. Political finance laws and regulations, through which political parties and candidates for office declare their funding sources, are among the main instruments. The relationships between party financing and corruption are so significant that to ignore party funding is simply to open wide the donor for corruption. Looking into Nigerian and Kenyan political history one realizes that there is much that need to be done in this regard. This is why the financing of political life is both a necessity and a problem. The frequency with which new laws concerning campaign and party finance are enacted is testimony to the failure of many existing legal frameworks and legislations. For instance, the Electoral Acts of 2002, 2006 and 2010, the Election Campaign Financing Bill 2012, the Public Collections Act 1960 review the current status of campaign and political finance regulations in Nigeria and Kenya. The cover among other issues: the regulation, management, expenditure and accountability of election campaign funds during election and referendum campaigns. This is because hardly a month goes by without a new scandal involving political money breaking out in some in this part of the globe. Political parties constitute one of the core groups of institutions in Kenya and Nigeria’s democratic systems. The parties that emerged in Nigeria for instance, since Nigeria’s Fourth Republic, however, are characterized by undemocratic practices and exhibited gross misconducts against transparency and accountability. At their best, political parties should nurture and articulate the expression of socio-political interest and opinion. Under current Nigerian conditions, however, most political parties lack ideologies, not issue oriented, but are merely zero-issue alliances of notables who are able to control and, often enough, manipulate party structures, candidacies and even the general electoral process itself. Most parties are vehicles in the hands of few “political entrepreneurs” who invest huge amount of money and expect concurrent rewards on such investment (in the form of public works and procurement contracts, prebendal appointments of cronies to public offices and other forms of prebendal activity). The fallout has led to mass electoral/political violence and political destabilization and disempowerment of the generality of the Nigerian electors, the exclusion of alternative parties seeking to participate in electoral politics and the absence of an effective system to regulate political finance. This paper seeks to explore the concept of political finance. It will equally attempt to concisely analyze the extant legal framework regulating political finance in Kenya and Nigeria, highlight their inadequacies with a view of reforming these inadequacies for a better political finance management and best practices and proffer suggestions on the ways forward drawing freely from the instructive practices of other emerging and advanced democracies.

The Federal Election Commission (FEC) is the regulating authority over the monies that U.S. citizens are allowed to give to political candidates and parties. However, preexisting loopholes in FEC regulation allow for contributions to be made in situations that do not require donors to disclose their identity, a term coined as “dark money”. The increase of dark money in campaign financing and the ability of political spending to influence voter perspectives and decisions puts the credibility of the political finance system at stake. Additionally, with the introduction of blockchain, decentralized autonomous organizations (DAOs) and smart contracts to political financing these technologies collectively can serve as a new vehicle for bad actors to use. In this paper, the effects of blockchain and smart contracts on political finance are examined through four use cases to demonstrate how these technologies can extend anonymous, foreign interference in political campaign financing and further cripple public trust in it.

The decline of political efficacy and trust in the United States is often linked to the rise of money in politics. Both the courts and reform advocates justify restrictions on campaign donations and spending as necessary for the improvement of links between the government and the governed. We conduct the first test of whether campaign finance laws actually influence how citizens view their government by exploiting the variation in campaign finance regulations both across and within states during the last half of the 20th century. Our analysis reveals no large positive effects of campaign finance laws on political efficacy. Public disclosure laws and limits on contributions from organizations are in some cases associated with modest increases in efficacy, but public financing is associated with a similarly modest decrease in efficacy. ∗Previous versions of this paper were presented at the 2003 Annual Meeting of the American Political Science Association and 2003 Annual Meeting of the Midwest Political Science Association. We thank Barry Burden, Dick Niemi, the editors, and anonymous reviewers for helpful comments. Thanks also to Matt Jacobsmeier and Matt Stiffler for research assistance. †Department of Political Science, University of Rochester, Harkness Hall, Rochester, NY 146270146; 585-273-4779; david.primo@rochester.edu; Fax: 585-271-1616 ‡Department of Economics and Truman School of Public Affairs, University of Missouri, 118 Professional Building, Columbia, MO 65211; 573-882-5572; milyoj@missouri.edu; Fax: 573-882-2697

Private electoral finance and democratic theory

Democratic elections and democratic governance involve a mixture of high ideals and, all too often, dubious or even sordid practices. Election campaigns, political party organizations, pressure groups, and advertising all cost money. This must be found from somewhere. The financing of political life is a necessity—and a problem. The frequency with which new laws concerning campaign and party finance are enacted is testimony to the failure of many existing systems of regulations and subsidies. Hardly a month goes by without a new scandal involving political money breaking out in some part of the globe. In Belgium in 1995, Willi Claes was obliged to resign as secretary-general of NATO amid a lurid affair which had begun four years earlier when a fellow leader of the Belgian Socialists, Andre Cools, was shot to death outside his home because of his involvement in a scheme in which French and Italian arms manufacturers made political contributions to the Belgian Socialists in return for military contracts. In Ukraine in the fall of 2000, online journalist Georgi Gongadze lost his life in part because he had been looking into allegations that business oligarchs were involved in corrupt dealings related to political financing. Despite a stream of stories like these from around the world, and despite an increasing flow of academic studies, political financing and the abuses thereof remain shrouded in mystery. Many commonly heard notions surrounding them are unproven or wrong. This is partly because Michael Pinto-Duschinsky, senior research fellow in politics at Brunel University in West London, chairs the International Political Science Association’s Research Committee on Political Finance and Political Corruption. He serves on the steering committee of the World Movement for Democracy and on the board of the International Foundation for Election Systems (IFES), and he advises the Electoral Commission in London, the European Union, and the U.S. Agency for International Development on issues surrounding campaign and party finance.

After nearly a quarter century of procrastination, Malawi passed a Political Parties Act in 2018 to govern the regulation of political parties. The old Political Parties (Registration and Regulation) Act of 1993 was passed on the understanding that a more substantive legislation would follow, but the new Act dragged on. As a result, Malawi’s political parties did not have any restrictions on party and campaign financing for 23 years, a fact that has been facilitating and aiding widespread political corruption in the country. Adopting a comparative analysis of the two pieces of legislation and weighing them against the available evidence on political corruption, this chapter addresses the two questions of how, and to what extent, the absence of an effective regulatory framework governing political parties between 1993 and 2018 contributed to political corruption in Malawi, and what provisions were included in the 2018 Political Parties Act aimed at curbing political corruption. The analysis of the effects of the new law is very preliminary, but somewhat negative.

There are widespread perceptions and countless documented cases of tight-knit networks of politicians and businessmen colluding for allocating public procurement contracts in return for political party donations. In the absence of systematic evidence, neither the magnitude of the problem nor the effectiveness of policies curbing such corruption is well-understood. In order to advance our understanding of these phenomena, this paper tests whether political financing regulations can contribute to controlling corruption in public procurement. We utilize aggregated official micro-level data on almost 3 million contracts awarded across 29 European countries in 2009-2014 to measure the risk of high-level institutionalised corruption using novel proxy indicators. Legislation regulating political finances are directly measured by coding national laws in 2009-2014. In cross-country panel regression and difference-in-difference models, we find that introducing additional political financing restrictions does not have a measurable negative impact on public procurement corruption risks. In fact, the observed effect is positive in most models. The observed relationship remains the same for most constitutive components of political financing regulations. Several challenges remain for a conclusive judgement of political party financing regulations’ effectiveness to curb corruption such as measuring implementation rather than legislation, allowing for longer lead-time for regulatory impact, or considering institutional inter-dependencies.

Everywhere you look, campaign finance disclosure laws are under attack. Disclosure has been opposed by the National Organization for Marriage, Senate and House Republicans (including Senator McConnell, who used to call for no limits and full disclosure), Republican members of the Federal Election Commission, and the U.S. Chamber of Commerce. But attacks on disclosure have come not only from the right. Members of the academy, including Bill McGeveran, Richard Briffault, Lloyd Mayer, and Bruce Cain. have criticized disclosure laws. In this short Essay, I offer a qualified defense of government-mandated disclosure, one which recognizes the concerns of these prominent academics but also sees much of the anti-disclosure rhetoric of the Chamber and others as overblown and unsupported - offered disingenuously with the intention to create a fully deregulated campaign finance system in which large amounts of secret money flow in an attempt to curry favor with politicians but avoid public scrutiny. To the contrary, disclosure laws remain one of the few remaining constitutional levers to further the public interest through campaign finance law.Even in the Internet age, in which the costs of obtaining campaign finance data about small-scale contributions by individual donors often have fallen to near zero, there is virtually no record of harassment of donors outside the context of the most hot button social issue of gay marriage - and even there, much of the evidence is weak. In the face of evidence of a real threat of serious harassment, courts should freely grant exemptions from campaign finance laws. Even absent proof of harassment, Congress and state legislatures should modify their disclosure laws to protect the informational privacy of those individuals who use modest means to express symbolic support for candidates or ballot measures. But major players in the electoral process generally should not be able to shield their identities under a pretextual appeal to the prevention of “harassment” because of the important government interests in preventing corruption and providing valuable information to voters which are furthered by mandated disclosure. It is no surprise that the Internet has been primarily responsible for the loss of informational privacy in the campaign finance disclosure context. Perhaps more surprisingly, the Internet is at least indirectly responsible for strengthening the two primary government interests supporting mandatory disclosure. The rise of the Internet was a prime force in the unraveling of the older campaign finance regime, and the subsequent emergence of new campaign finance organizations such as “Super PACs” which raise the danger of the corruption of elected officials dramatically. Disclosure laws may not be the best tool to police the potential for corruption from these new or supercharged campaign finance vehicles. Nonetheless, disclosure laws are much better than nothing in ferreting out when an elected official might act to benefit her supporters rather than act in the public interest.As for the information interest, campaign finance data, especially when included on the face of campaign advertising, provides an important heuristic cue helping busy voters decide how to vote. Such data assist voters who face Internet-driven information overload and a variety of potentially misleading campaign ads seeking to mask the identity of those behind campaigns and campaign advertising.

Political corruption in Japan is a very important issue. According to the Global Corrup­tion Barometer 2009 survey Japanese perceived political parties, public officials and ci­vil servants to be the institutions which are the most affected by corruption. In addition, governmental measures against corruption are regarded to be ineffective and inadequ­ate to the real situation. Japanese have keen concern toward Japanese political parties, intransparent activity of politicians and preventive measures taken by government. The purpose of this research is to examine political corruption phenomena in contemporary Japanese politics. Research questions are what are the structure, scale, and causes of political corruption in Japan during 2001–2009. For answering to these research questions first of all it is discussed the concept and definition of political corruption itself. Article overviews previous political corruption studies in Japan from the time of Second World War to the recent times, including the report of the Transparency International National Integrity System. In third chapter of article the scale, the varieties and the main practitioners of political corruption in Japan are to be analyzed. It reveals the biggest political corruption scandals in Japanese poli­tics in given time-period. Last chapter focuses on the explanation of political corruption mechanism in Japan and in particular relationship with clientelism practises. Combination of primary and secondary sources led me to make the following conclusions on the main political corruption tendencies in Japan during 2001–2009. First, the Asahi Shimbun front page content analysis indicates that 2002 and 2007 are special years in the context of corruption studies because in those years published the largest number of political corruption articles and the biggest number of the new the­mes on the political corruption issue revealed. Second, the common point of the three most significant political corruption scandals during 2001–2009 is that all of them have the relationship with political finance issue and in particular a suspicion on the violation of the PFRL. This finding reaffirms the NIS statement that political finance is one of the top priority issues in Japanese corruption scheme. Third, illegal political donation and influence peddling are the most frequent types of corruption in Japan during the period of 2001–2009. Fourth, main practitioners of political corruption in Japan were the LDP members from the House of Representatives. In addition, in as many as nine cases the Diet member secretaries were involved in political corruption scandals. The Diet member secretaries play an important role in political corruption scheme because they are often responsible for the political fund management. Fifth, the most vulnerable institution to political corruption seems to be Ministry of Agri­culture, Forestry and Fisheries and Ministry of Construction. Finally, article conclu­des that political corruption in Japan, to some extent, could be explained through the analysis of political clientelism.

Election Law Journal: Rules, Politics, and PolicyVol. 1, No. 4 Recent Election Law DocumentsBates v. Director of the Office of Campaign and Political Finance, 763 N.E.2d 6 (Mass. 2002)Published Online:6 Jul 2004https://doi.org/10.1089/153312902760403969AboutSectionsPDF/EPUB Permissions & CitationsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail FiguresReferencesRelatedDetails Volume 1Issue 4Dec 2002 To cite this article:Bates v. Director of the Office of Campaign and Political Finance, 763 N.E.2d 6 (Mass. 2002).Election Law Journal: Rules, Politics, and Policy.Dec 2002.627-637.http://doi.org/10.1089/153312902760403969Published in Volume: 1 Issue 4: July 6, 2004PDF download

Laws regulating the financing of electoral politics in Nigeria, including on political party and campaign finance, are guided by the 1999 Constitution, the 2022 Electoral Act, and the Independent National Electoral Commission’s (INEC) 2022 Regulations and Guidelines for Political Parties. Despite the existing control and regulatory frameworks, political finance laws, guidelines and regulations are violated with impunity in Nigeria. This Case Study examines the regulatory environment in Nigeria in relation to political finance. It also documents some of Nigeria’s recent experiences with the deployment of digital media campaigns and assesses the performance of the country’s political finance oversight agencies in relation to their use. Finally, it examines the future of digital campaigns, the use of financial technology (fintech) in financial transactions during elections, and strategies for regulating the adoption of digital technologies.

Transparency in politics—in particular with regard to political finance—lies at the core of every democracy. The availability of accessible, detailed information about the funding of political parties and candidates enables scrutiny by civil society organizations and the wider public, and ensures that all political actors can be held accountable. In Albania, transparency in political finance is enshrined in the fundamental principles of the Constitution. Despite the modest progress on party and campaign finance regulation achieved in recent years, however, lack of trust in politics and the risk of political corruption continue to be high. The digitalization of political finance has been one of the priorities of the Central Election Commission in Albania and can build on previous initiatives to digitalize the electoral process, such as digital voter identification, and electronic voting and counting. This report examines the existing disclosure systems in Europe, highlights best practices and identifies the main challenges for the development and implementation of such a system in Albania, taking account of the specific political and institutional context of the country.