Civic monitoring of political parties’ and election campaign funding in the Republic of Moldova www.promolex.md www.monitor.md

Regulatory framework on political parties and election campaign funding the Constitution of the Republic of Moldova, the Law on Political Parties (Law No 294 of 21 December 2007), the Electoral Code, Tax Code & Contravention and Criminal Codes, the Annual Budget Law, the Regulation of the Central Electoral Commission (CEC) on Political Parties Financing, the Regulation on Use of Cash Registers (CR) for Cash Settlements, other regulations and instructions of different authorized institutions. Product of a long lasting and intense work conducted by different stakeholders, including civil society organizations and experts specialized in election observation, monitoring of political financing and combating corruption. Evaluation Report elaborated in 2011 by the Group of States against corruption (GRECO) on political funding in Moldova as well as the election observation reports of the OSCE/ODIHR served as important trigger mechanisms for the reform in this field. The current legal framework on political parties and election campaign funding is the product of a long lasting and intense work conducted by different stakeholders, including civil society organizations and experts specialized in election observation, monitoring of political financing and combating corruption, who contributed to the improvement of the transparency and disclosure rules for political parties and election candidates. An important trigger mechanism for the reform in this field was the Evaluation Report on Moldovan Transparency of party funding and recommendations formulated on April 1, 2011 by the Group of States against corruption (GRECO) of the Council of Europe in the as well as by the findings and recommendations included in the election observation reports of the OSCE/ODIHR. www.promolex.md

Regulatory framework on political parties and election campaign funding On April 9, 2015 the Parliament adopted a set of amendments to the Law No 294 on Political Parties, Electoral Code, Criminal and Contravention Codes: the CEC was vested with the responsibility to supervise and control the political parties funding; the system of political parties funding was changed from exclusively private funding to a mixed system, in which the private funding is complemented by subsidies from the state budget, offered to the eligible parties since January 1, 2016; new provisions on the management and transparency of political funding, either public or private, were imposed in the Law No 294; palpable improvements to the legal framework in terms of reporting, disclosure and oversight of the political parties funding; sanctions for the infringement of the political funding regulations were provided in the Law No 294, and gradual sanctions were detailed in the Contravention and Criminal Codes. #PromoLEX

Donations Key funding source of the political parties/election candidates; Can be collected as: a) money, other than membership fees; b) donations in the form of property, goods, services. Limits of donations: 50 and 100 average salaries (Euro 11,451/22,902) for private and legal entities for financing of election candidates and 200/400 average salaries for private/legal entities financing the political parties; Even though the above mentioned ceilings were recently reduced by 4 times for the financing of election candidates, it is unlikely that such high levels of donations will serve the purpose of diversifying the sources of income or will motivate the parties and candidates to collect them at the grassroots level. In 2016 donations collected by political parties amounted approx. 2,184,706.34 Euro; Donations from individuals: 55% in 2013, 76% in 2014, 61% in 2015 and 49% in 2016; Donations from the legal entities: 8% in 2013, 6% in 2015 and 1% in 2016; Moldovan migrants are not allowed to financially support those parties/candidates they sympathize with. www.promolex.md

Membership fees There are no upper limits for membership fees. The ceiling of annual revenues of a political party cannot exceed the equivalent of 0.3% of the revenues of the national budget for that year. The share of this source of funding faced gradual but stable decrease from 37% in 2013 to 11% in 2016. In 2016 the membership fees accumulated by the political parties amounted approx. 486,320 Euro. CEC can suspend the transfer of state subsidies in case of non-payment of membership fees by more than half of the members of the party during a year. www.promolex.md

Subsidies from the state budget Offered to the eligible parties since January 1, 2016. In fact, in 2016, subsidies were allocated for eligible parties starting from the 3rd quarter; Up to 0.2% of the State Budget revenues, approved every year; Monthly distributed by the CEC among parties that took part in the parliamentary and general local elections (50% to 50%), in proportion to their performance; Electoral blocks are also eligible for distribution of subsidies; Funds not used in the current budget year will be available for use in the following years; The volume of monthly subsidy for 2017 was established by the CEC in the amount of MDL 1.11 for each valid vote obtained during 2014 parliamentary election and of MDL 0.47 for 2015 general local elections; In 2017 the subsidies allocated for funding political parties amount 1,895,735 Euro; A total amount of 94,787 Euro was unused by 9 political parties in 2016 due to the failure to open separate bank accounts for subsidies from the state budget; Political parties that will respect the quota of 40% of women candidates in the majoritarian districts will get an additional 10% to the subsidies from the state budget. www.promolex.md

Civic monitoring of party and campaign finances Civic monitoring of party and campaign finances. Main findings and concerns Although the reporting rate improved after the transfer to CEC of the mandate to control parties’ financial reports, many political parties still do not submit their financial reports. A specific problem - none of the parties submitted to the CEC their semi-annual financial reports for the second semester of 2016, as it is requested by the article 29(1) of the Law on political parties. CEC did not take any measure with regard to this infringement and interpreted this issue based on the CEC Regulation (art. 65), which has a different reading than in the law. Compared to parties, the election candidates seem to accept easier the reporting requirements. Thus, out of 12 candidates engaged in the Presidential race, 11 reported on time, in both rounds of the elections.

Civic monitoring of party and campaign finances Civic monitoring of party and campaign finances. Main findings and concerns Another common infringement of the reporting regulations refers to the presentation of incomplete data in the reports. In 2016 Promo‑LEX Association found that the expenses of 14 political parties in the total amount of 203,784 Euro were not reported;

Civic monitoring of party and campaign finances Civic monitoring of party and campaign finances. Main findings and concerns The problem of the accuracy of reporting campaign finances persist, just as in the case of political parties’ financial reporting. For example, in the context of 2016 Presidential campaign, 11 election candidates did not report completely their expenses. The total unreported expenses amount to at least 347,719.86 Euro. Promo-LEX EOM notified CEC about the non-compliance of election candidates with the legal provisions, particularly, violations as provided for in Article 481(2) and (3) of the Contravention Code, but no actions were taken in this regard.

Civic monitoring of party and campaign finances Civic monitoring of party and campaign finances. Main findings and concerns 8 parties infringed in 2016 the article 32 of the CEC Regulation on political parties’ financing - amount of cash donation exceeded the average monthly salary made by an individual to a party. The above mentioned provision of the CEC Regulation was subject to legal control and on September 30, 2016 was declared illegal by the decision of the Court. The decision was upheld by the Court of Appeal on 2 May 2017 and is final and enforceable, but CEC decided to revise its decisions after an irrevocable decision will be made by the Supreme Court of Justice. According Promo-LEX report, the cash donations collected in 2016 with the infringement of the CEC Regulation amounted 1,379,767 Euro.

Use of administrative resources The Contravention Code is defining the sanction for the use of administrative resources, but there are no examples of contraventions based on this type of irregularity. According to the General Inspectorate of Police, by February 2017, no contravention and criminal cases were documented based on the aforementioned article. In the context of the 2016 Presidential elections, Promo-LEX found at least 65 confirmed cases of use of administrative resources by election candidates. The most common forms of administrative resources used are: campaigning during working hours; meetings with civil servants organized during working hours; public servants involved in campaign activities during working hours; use of government means of transportation; and campaigning on public authorities’ premises.

Donations from charitable foundations associated with politicians Still, during 2016 Promo-LEX identified 16 charity activities carried out by 3 foundations - “Edelweiss” Foundation of Vlad Plahotniuc, “Renato Usatii” Foundation and “Solutia” Charitable Foundation associated with Igor Dodon. The most common activities organized through the foundations are the distribution of foodstuff and clothes, donation of money, inauguration of playgrounds and parks etc. In 2016 Presidential elections, two foundations indirectly impacted the electoral image of two candidates (Marian Lupu, nominated by the Democratic Party and Dumitru Ciubasenco, nominated by Our Party. “Renato Usatii” Foundation donated over 22,675 Euro for the development of some villages and towns, while “Edelweiss” Foundation installed playgrounds and created mobile pediatric offices.

Lack of transparency of political financing Ignorance of the decisions of the Constitutional Court & observers On 13 December 2016, the Constitutional Court confirmed the results of the presidential election in RM on 13 November 2016 with Decision No. 34. At the same time, the Constitutional Court issued 6 written requests to the Parliament. One of the six requests refers to the issue of electoral/political corruption. The Court found that there is no criminalization of voters' corruption in presidential elections. Thus, the Court underlined the need for Parliament to expressly regulate in the Criminal Code the criminalization of voters' corruption in the presidential election and to communicate the results of its examination within the time-limits laid down by law (3 months). Unfortunately, the Parliament didn’t address so far none of the six requests of the Constitutional Court. Another significant problem related to the transparency of political financing is the excessive use/reference to the Law on protection of personal data that is being quoted by different state institutions, including by the CEC when journalists or civic organisations/activists asks for disclosure of data included in the financial reports of the parties/candidates (specifically about the donors’ and party members’ jobs and other details that could led to building some links between their public positions and income). #PromoLEX

Recommendations for the improvement of political finance regulations Review the threshold of donations from individuals and legal entities; Implement financial incentives for political parties to promote gender equality; Provide explicitly in the law on political parties for the half-yearly and annual financial reporting deadlines; Amend the provision from the law on political parties that prohibits funding of election campaigns and political parties by Moldovan citizens who are temporarily abroad; Consider the explicit legal regulation of the organized transportation of voters, including from the perspective of the risk of voter corruption; Explicitly regulate the work of private foundations associated with politicians during the election periods; Change the legal framework to prohibit paid electoral advertising in the media, including outdoor electoral advertising; Extend the range of sanctions and penalties applicable to political parties for using unjustifiably subsidies from the state budget and for use of administrative resources, vote buying etc.; #PromoLEX

Recommendations for the improvement of political finance regulations The law enforcement bodies should investigate, in accordance with the provisions of contravention and criminal law, cases concerning illegal financing, voter corruption and the use of administrative resources; Political parties may consider decentralizing their financial management by nominating treasurers in every territorial branch; CEC should establish a more rigorous mechanism for checking the financial statements of election candidates and political parties; CEC ought to ensure transparency and accessibility to all data submitted to the CEC by political parties and election candidates, including donors’ identity, workplace; The threshold for donations that require verification by the Court of Accounts and the Main State Tax Inspectorate must be reduce from 3,401 to 2,268 Euro; Political parties, public authorities and other stakeholders should not allow using administrative resources and public funds in the interest of a party or candidate; Political parties should register and report all donations received, including material (in-kind) donations, to the Central Electoral Commission. www.promolex.md