Political Finance Regulations Research Articles

Innovative but feeble: Civil society and political financing accountability in Uruguay

ABSTRACT This article examines the impact of civic action on enhancing accountability and combating corruption in political financing, focusing on two civil society initiatives in Uruguay. The initiatives aimed to digitize and map information on funding received by political parties and politicians in the 2009 and 2014 elections, presenting their findings through interactive online platforms. The paper engages theoretically with the literature on the dimensions of accountability and contributes to understanding the challenges faced by civil society organizations in promoting political financing accountability even in full democracies, a topic largely understudied. Findings highlight concerns beyond electoral authorities’ well-known resource constraints in detecting illicit political donations and spending in Uruguay. The paper shows that transparency is not enough to reduce corruption. We argue that for political finance accountability to be effective, it must encompass bottom-up, horizontal, and diagonal dimensions. The analysis suggests the need for complementary measures, such as digital solutions for reporting and disclosing political finance information, along with active horizontal and bottom-up oversight mechanisms. The article draws on qualitative analysis based on documentary research and 19 interviews with activists, academics, journalists, developers of the initiatives, and public officials involved in political finance regulation.

The Risks of Using Cryptocurrency in Political Financing And The Methods for its Prevention

Regulating and monitoring political finances is an important factor in ensuring a fair and equitable electoral environment, but there are frequent cases of illegal finances, and in the modern world there is a tendency to use digital currencies, which are slowly entering political parties and making political finances monitoring impossible. The Relevant political finance regulations set standards for access to information, which make it possible to process the required information, to monitor it and achieve the transparency of information. Moreover, the Regulation and transparency of funding political processes are important to limit the means of gaining a power through anonymous and illegal sources. The appropriate measures of prevention and coercion serve this purpose in order to make political finances transparent through effective monitoring. Recently, a number of countries have faced the threat of receiving funding from the closed parties and the use of crypto currencies by political parties, and many have begun to think about introducing certain regulations to protect policies from digital currencies. Keywords: political party, political financing, political corruption, cryptocurrency, bitcoin.

Money in politics: a recipe for corruption in Malaysia

Purpose This paper aims to investigate how money in politics contributes to corruption in Malaysia. Design/methodology/approach This study used in-depth semi-structured interviews to collect primary data. The interviews were conducted with two elite groups comprising seven politicians and seven corporate leaders. Data were then analysed using a thematic analysis approach. Findings The findings indicate how money in politics contributes to corruption in Malaysia. Various types of corruption in the country are identified, namely political donation, bribery and money politics. This study also provides evidence of the underlying factors driving money politics. Practical implications This paper offers valuable insights to policymakers and enforcement agencies for vigorous prosecution or appropriate sanction against the perpetrators. Especially on the weak regulation of political finance in Malaysia, this paper provides insights into how the weakness is used to manufacture corruption. Originality/value This paper provides evidence of how money politics cultivate corrupt activities, which are relatively sensitive and controversial by nature. The rarely obtained views from the elite groups provide a significant value to research.

Why change party finance transparency? Political competition and evidence from the ‘deviant’ case of Norway

AbstractThis article focuses on the development of a key type of regulation ensuring public surveillance of political finance: party finance transparency rules. It makes two contributions to the emerging theory on the evolution of political finance regulation. First, using previous research, it conceptualises the underlying causal mechanisms that explain when and why party finance transparency regulation changes. Second, it presents the first detailed study of party finance transparency reforms in Norway, which is a deviant case for the introduction of such reforms. It is found that, in the absence of major scandals, an intense political discourse on corruption and political competition are sufficient factors to launch transparency reforms. Whether reforms are enacted depends on the interaction of several factors. Parties that predominantly rely on state funding and grassroots support push for and adopt more constraining transparency regulation, while parties that are close to business oppose it. Experience of regulation in similar contexts and intense discourse on corruption – stimulated by domestic or international events – are necessary for the reform to succeed. Norwegian cooperation with the Group of States against Corruption (GRECO) further demonstrates that the success of party finance transparency reforms initiated by a foreign actor is a function of the existing tradition of party regulation, the policy position of a governing party and the international reputational costs of non‐compliance.

Do Political Finance Reforms Reduce Corruption?

AbstractReformers claim that public subsidies and regulation of political finance reduce corruption in politics, while observers worry that they have no impact on corruption, or even increase it. Despite national-level debates and billions of dollars spent, few studies have tested this relationship. The authors argue that political finance reform mitigates corruption by reducing private money's importance in politics and increasing the sanctions for corrupt behavior. Elite interviews from Paraguay's political finance reform illustrate the argument and elaborate the theoretical mechanisms. The study evaluates the argument using an original dataset measuring political subsidies from 175 countries from 1900–2015, as well as disaggregated corruption measures from the Varieties of Democracy project. The findings support the thesis that political finance reform reduces corruption, even in countries where such reforms are unevenly implemented.

Is My Foreign Yours? The Concept of Foreignness in the Regulation of Political Finance

ABSTRACTDebates over ‘foreign’ political influence focus on the regulatory ‘why’ and ‘how’. This masks deeper questions about ‘who’ is foreign. Is foreignness a factor of where money is housed or its owner’s status? What of permanent residents and citizens abroad? This article unearths the debate in two stages. First, it analyses ‘foreignness’ as a general socio-legal concept linked to xenophobic wariness of, or outright aversion to others. Yet in modern liberal legal orders, outright discrimination is not an acceptable method or motivation for regulation. Instead, three distinctive, underlying conceptions of foreignness are identified within liberal legalism: jurisdiction, political community, and material interconnectedness. Application across five anglophone democracies shows that political finance law in each of those countries embodies aspects of every conception. Given they are distinguishable, this suggests not only that regulation in this area is still evolving normatively but, more importantly, that ‘foreignness’ is a rich conception not easily captured in a single definition. Revealingly, although foreignness is logically a nested and symmetric idea, regulation rarely touches influence between federal regions or actions of local corporations abroad.

Political Finance Regulation and Reform in New South Wales: Towards a Fairer System?

In recent years the regulation of political finance in Australia has moved from systems of laissez‐faire to systems of enhanced regulation, which aim to curb the scale and influence of donations. This article examines political finance regulation in New South Wales — the jurisdiction that has seen the most significant transformation of its regulatory setup — to assess whether and how the new regulations have affected donations to political parties in the state. We find, based on analysis of the pattern of donations before and after the reforms, that the regulations have made the financing system fairer and thus improved the quality of democracy in the state.

The Impact of Political Finance Regulation on Party Organisation

Abstract Political finance regulations require political parties to engage with a complex and multi-faceted regulatory environment. This article develops a framework to understand how political finance regulation impacts on party organisation and applies it to a diverse grouping of six parties from the Australian State of New South Wales. We find that all parties seek to capture the benefits of compliance, and minimise their exposure to the risks of non-compliance, by centralising and professionalising their organisation. However, the intensity of these responses is moderated by party characteristics, including levels of institutionalisation, party family type and incumbency status. The research thus highlights the intended and unintended consequences of regulation on party organisation, and illuminates the mechanisms through which change occurs.

Electoral volatility and political finance regulation in Colombia

This article examines the relationship between electoral volatility and political finance regulation in Colombia. The author argues that recent political finance reforms in this country (e.g. chang...

The Integrity of Elections in Asia: Policy Lessons from Expert Evaluations

There is an evolving debate about how to strengthen elections in Asia, amidst widespread concerns about electoral malpractice in the region. While contests in some countries match or surpass international standards of electoral integrity, there are deep‐seated problems of violence and conflict, corruption and clientelism, or vote rigging and fraud in others. This review of policy practice draws on the Perceptions of Electoral Integrity expert survey (PEI Release 6.0) to map the state of electoral integrity in Asia and to draw lessons for public policy. The empirics rely on the assessment of 535 experts who evaluated 47 elections in 27 countries in South, Southeast, Northeast, and Central Asia between July 2012 and December 2017. The review identifies three cross‐cutting challenges for electoral integrity in Asia. Policymakers and other stakeholders should (i) curb incumbent advantage enshrined in electoral laws regulating candidate registration and voting district boundaries; (ii) introduce regulation of political finance in order to reduce the influence of money in elections; and (iii) increase the transparency of the electoral process by encouraging nonpartisan domestic election monitoring and advocacy.

Why make political finance transparent? Explaining the Group of States against Corruption (GRECO)’s success in reforming national political finance regulation

If transparency in political finance is part and parcel of democracy, why do some countries adopt internationally agreed standards to regulate political finance in a more transparent way, while others do not? This paper (a) suggests a theoretical framework to address this question, taking into account international obligations, existing party finance regulation, and demands for greater legitimacy of political institutions; (b) introduces a unique data set of 46 member-countries of the Group of States against Corruption (GRECO) project operated by the Council of Europe; and (c) concludes that unwillingness to pay the high domestic costs of changing national regulation is the prime impediment to compliance with transparency regulation proposed by GRECO. Right-of-centre cabinets are, on average, associated with a poorer level of compliance. Interestingly, compliance with recommendations which reduce the privileges of parliamentary parties does not deviate from the overall pattern.

Breaking the Cycle? How (Not) to Use Political Finance Regulations to Counter Public Procurement Corruption

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.

Breaking the Cycle? How (Not) to Use Political Finance Regulations to Counter Public Procurement Corruption

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.

Party Finance Law in Australia: Innovation and Enervation

Abstract The drivers (and inhibitors) of political finance reform are complex and overlapping. The case of Australia is an intriguing one. By international standards, regulation of political finance at the national level in Australia is laissez-faire and inertial. Since 2010 however, half the states and territories have adopted holistic party finance systems designed to limit the influence of money in electoral politics. These reforms have included caps on expenditure and donations, generous public funding and tighter donation disclosure. This article explores both the emerging constitutional constraints on—and political drivers of—this flourishing of reform. Whilst there is evidence of party machines seeking security in enhanced public funding, there is limited evidence to support the cartel thesis. Overall these developments highlight the potential for experimentation and cross-fertilization in a federal system, suggesting that reform is episodic but infectious, rather than a manifestation of any inexor...

Political Finance Regimes in Southeast Asia: Introduction

ABSTRACTThe three articles in this themed collection investigate the interplay between political finance regimes and the quality of democracy in Southeast Asia. Andreas Ufen's piece on political finance in Malaysia and Singapore argues that the semi-authoritarian regimes in both states have blocked the reform of campaign and party funding regulations in order to keep their opposition in check. The article on Indonesia, authored by Marcus Mietzner, showcases the country's dysfunctional political finance system as a major hurdle toward further democratization. In their contribution on Thailand, Napisa Waitoolkiat and Paul Chambers show that weak political finance regulations have contributed significantly to the shallowness of Thai parties. Overall, the collection demonstrates that without meaningful political finance reforms, Southeast Asia's democratic stagnation is likely to persist for many years to come.

Laissez-faire versus Strict Control of Political Finance: Hegemonic Parties and Developmental States in Malaysia and Singapore

ABSTRACTThis article compares the financing of political parties and candidates in two Southeast Asian countries. In Malaysia, some political finance regulations exist only on paper, and political financing is for the most part not restrained at all. In contrast, the financing of candidates and parties has always been tightly circumscribed in Singapore. These different strategies, “laissez-faire” versus “strict control,” are the consequence of various factors. In Malaysia, the New Economic Policy has effected a close, often economically unproductive linkage between the state, the ruling Barisan Nasional coalition, and business. The rise of businesspeople has resulted in the commercialization of competition within (the United Malays National Organisation. Additionally, increasing competition between the ruling coalition and the opposition has resulted in growing expenditures for electioneering in the form of advertisements and electoral patronage. The laissez-faire style of regulation has been compounded by the difficult-to-control practices in East Malaysia (Sabah and Sarawak), where vote buying, electoral patronage based on the largesse of oligarchs, and obvious nonobservance of the rules have been typical. In contrast to Malaysia as a whole, the costs for parties and candidates are still relatively low in Singapore. As a cadre party, the PAP (People's Action Party) is relatively autonomous from private business interests, and intraparty competition is not commercialized; the developmentalist state is highly productive, and the ties between the state, the PAP, and business are not characterized by cronyism. Moreover, electioneering is not very commercialized because the opposition is still relatively weak.

The Regulation of Political Finance and Corruption

Abstract Using the International Institute for Democracy and Electoral Assistance (IDEA) database on political finance regulations for 82 countries, we found that a contribution limits index increased corruption, after controlling for a standard list of explanatory variables. This result remains consistent employing an array of robustness checks intended to minimize the risk of a bias due to potential reverse causality and endogeneity. In contrast, the level of perceived corruption is lower in countries with higher indices of public funding and transparency requirements but these effects are rarely significant. Interestingly, we show that the mix of more generous public funding and less stringent regulations of private contributions is associated with lower corruption.

Political Financing in Africa: A Comparative Study of Kenya and Nigeria: Proposal for Reform

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.

Knowledge of Campaign Finance Regulation and Attitudes towards Politics

We use an experimental design to measure how campaign (political) finance regulation influences perceptions of political corruption and trust in politicians when citizens are actually exposed to information about regulation. Unlike most of the observational studies in the literature, results of this experimental study suggest that knowledge of campaign finance regulation substantially reduces citizens’ perceptions of corruption but has only limited effect on trust in politicians. Our findings regarding the positive effect of knowledge of campaign finance regulation on perception of political corruption have crucial and urgent implications for public policy, as well as for informing the public about campaign finance regulation. At a time when public cynicism about politics is high, a significant reduction in perceptions of political corruption through successful dissemination of campaign finance regulation would be a boost to the legitimacy of democracies. The findings, however, suggest that the effect of information on regulation could be dependent on the context.

The world upside down: Delegitimising political finance regulation

Political finance regulation is often praised in terms of its ability to introduce equality among political parties, to create more transparent political parties and to lower the influence of affluent donors on the political decision-making process. Little examination exists, however, of the effectiveness of this type of regulation. This article aims to fill this gap by addressing whether and to what extent different types of public funding regulation have improved the legitimacy of political parties by improving their image in terms of corruption. Towards this end, and focusing on both European and Latin American democracies, this article investigates whether a relationship indeed exists between the perceived corruption of political parties and the regulation of political finance. It finds such a relationship does exist, although not in the direction commonly stipulated by the advocates of party finance regulation.