Risks of illicit financing of political parties Igors Ivanovs Representative of The Corruption Prevention and Combating Bureau 29.11.2018.

Overview of situation Population of 1 950 000 (1,54M eligible to vote) 76 registered political parties 7 political parties elected to parliament in recent elections held on October 6, 2018 Phenomena of new political parties Reducing role and influence of money on politics

Sources of funding Political organizations are allowed to receive: Membership and joining fees from natural persons Donations from natural persons Income from economic activities of political party State funding Political organizations are restricted to receive: Donations from legal persons Donations from anonymous persons Donations exceeding EUR 21 500 from person per year Loans

Structure of funding Parliament elections EP elections Local elections

Structure of donations Structure of donations of the 4 largest political parties in Latvia in 2017

Publicity and transparency All donations, membership and joining fees are published in a publicly available data base at the homepage of KNAB - www.knab.gov.lv

Pre-election campaigning restrictions Limited expenses on placing advertisements (e.g., mass media, internet, outdoors) and charity events Limited expenses for third parties (persons unrelated with political party or candidates) Hidden pre-election campaigning Misuse of administrative resources

Case example: third party involvement

Case example: undeclared advertising

Cooperation with society

Liability Administrative liability: For breach of income declaration procedures, exceeding financing limits, illicit financing, intermediation or acceptance of illicit funding For breach of pre-election campaigning declaration procedures, misuse of administrative resources for advertising, exceeding financing limits for advertising by third persons Criminal liability: For illicit financing, intermediation or acceptance of illicit financing of political organizations (parties) or associations of political organizations on a large scale Large scale – 50 minimal monthly salaries (EUR 21 500)

Illicit financing scheme of political party TOTAL: EUR 60 734

Illicit financing scheme of political party (2)

Main risks False information in contracts and bills Use of unaccounted money to cover expenses Companies that organize campaigns for political parties periodically win public procurements and obtain contracts Writing-off debts of political parties Use of intermediaries when financing political parties (~25% persons have donated their legal income of last 3 years) Financing political campaigns by third parties Bribery and trading in influence

Structure of pre-election campaigning expenses in 2018 Increasing amount of political advertisements in social media and internet Structure of pre-election campaigning expenses in 2018

Multijurisdictional cooperation Challenge - monitoring and calculating political advertising in social media Initiated cooperation with Facebook, Google & Twitter Information was requested according to rights and powers stipulated by KNAB law Responses well and fast received

Thank you! Corruption Prevention and Combating Bureau Citadeles Str. 1, Riga, LV-1010, Latvia Phone: + 371 67356161 www.knab.gov.lv/en e-mail: knab@knab.gov.lv