PRESENTATION ON POLITICAL FINANCE (CHALLENGES FACED BY ECP) BY SYED SHER AFGAN JOINT SECRETARY (ELECTIONS) NOVEMBER 3, 2010

1.Political Parties in Pakistan 2.Political Finance Regulations–Existing Position 3.Challenges faced by Election Commission 4.Recommendations SCHEME OF PRESENTATION

a)There are 148-Political Parties recognized by ECP b)Symbols allocated to about 55-parties c)11-Parties represent in Central and Provincial Legislatures d)No public funding of political parties in Pakistan e)About 50 political parties file their statements of accounts f)Generally Political Parties are run on donations & contributions g)Law on ‘election expenses’ and ‘assets & liabilities’ deals with contesting/returned candidates and not political parties POLITICAL PARTIES IN PAKISTAN

Political Finance, as reflected in existing regulations, comprise: 1.Annual Statement of Accounts by Political Parties 2.Limits on Election Expenses & Returns of Election Expenses 3.Disclosure of assets and liabilities by candidates and Members of Parliament and Provincial Assemblies POLITICAL FINANCE REGULATIONS (EXISTING POSITION)

CHALLENGES FACED BY ELECTION COMMISSION

a)Lacks provisions on maintenance of proper books of accounts, on the basis of which, audit of accounts of political parties is to be conducted by the Chartered Accountant to fulfill the requirement of law; b)Absence of prescribed manner for maintaining accounts of parties renders it difficult to ascertain the accuracy of the financial position of the party mentioned in the statement of accounts. c)No enforcement system in case of default; d) No mechanism to scrutinize the statements; e) No sanctions envisaged CHALLENGES REGARDING ANNUAL STATEMENTOF ACCOUNTS

1.A defaulting political party is allowed to obtain symbol if it files its statements of accounts of previous years at the time of an election, no other way to enforce compliance 2.Over a period of time, filing of statements of accounts by political parties has become merely a formality to fulfill a requirement of law and no meaningful purpose is served Only sanction is that defaulter party will NOT be entitled to obtain ‘symbol’ to contest election CHALLENGES REGARDING ANNUAL STATEMENTOF ACCOUNTS

1.By amending the existing laws, a Political Finance Enforcement Agency may be established [It may be ECP itself] 2.The proposed Enforcement Agency may be appropriately empowered to conduct audit of accounts of political parties in accordance with the procedure that may be laid down for this purpose; 3.The Enforcement Agency may also be empowered to proceed against political parties who commit violations of law on its own or on receipt of complaints and impose sanctions; RECOMMENDATIONS

4.The law may also provide for maintenance of proper Book of Accounts by political parties; 5.By law, limits may be placed on donations and contributions; spending limits may be prescribed; rules regarding receiving donations and contributions and preventing their misuse may also be laid down; 6.Law may also be suitably amended to provide for appropriate sanctions in case of violation of laws; RECOMMENDATIONS

1.Suspension of defaulters and their immediate restoration on submission of statements of assets and liabilities; 2.Statement of assets if found false in material particulars, person who filed it can be prosecuted for ‘corrupt practice’ 3.No scrutiny mechanism of these statements by ECP; 4.A complaint can be filed against a person for his being involved in ‘corrupt practice’ before the Sessions Judge and an appeal lies before a Division Bench of the High Court 5.Provisions as to filing of complaint by or under the direction of ECP against a person for being involved in ‘corrupt practice’ are ambiguous; CHALLENGES REGARDING STATEMENTS OF ASSETS & LIABILITIES

1.Existing law needs to be amended to provide for scrutiny of statements of assets and liabilities; 2.If, upon scrutiny, a statement is found to be false in material particulars, ECP may be enabled, by amendment in law, to direct filing of a complaint in the appropriate court of law; 3.Law, however, may provide for giving an opportunity of being heard to person whose statement has been found to be false in material particulars, before initiating any action against him in accordance with law; 4.In addition to suspension from Membership of Parliament or a Provincial Assembly, imposition of fine for each day of default may also be provided for RECOMMENDATIONS

1.Lack of enforcement mechanism for failure to file returns; 2.Lack of mechanism to look into the veracity of Returns, if filed; 3.If, ECP directs Returning Officer to launch proceedings in appropriate court of law, he is obliged to issue notice to the defaulter before filing such complaint; 4.If, returns are filed at notice stage, filing of complaint will no more be justified; and there is no mention about delayed submission of returns nor any penalty has been provided for such delayed filing of returns; 5.Thus complexity of procedure in itself is discouraging CHALLENGES AS TO LIMITS ON ELECTION EXPENSES AND RETURN OF ELECTION EXPENSES

 The existing legal provisions need to be suitably amended to enhance the limits of election expenses to Rs.5.00 million for a National Assembly seat and Rs.3.00 million for a Provincial Assembly seat.  In order to discourage non-serious candidates, security deposits for National Assembly and Provincial Assembly seats should be reasonably enhanced from Rs.4000/- & Rs.2000/- respectively to Rs.25,000/- and Rs.20,000/- and it should be made non-refundable  Appropriate enforcement mechanism should be put in place, which should also include notice to defaulting party, to ensure compliance of law; RECOMMENDATIONS

Existing law [Section-83, which declares failure to file returns an ‘illegal practice’] should be replaced with a penalty of DISQUALIFICATION for three-to-five-years, TO BE DECIDED by the ECP on failure to file returns within prescribed time; Such provisions, if made, should be applicable to all contesting/returned candidates, inasmuch as, it might be difficult for a returned candidate to file a carefully prepared return of election expenses within a short span of ten-days Appropriate scrutiny mechanism need to be provided in law enabling the ECP to examine the returns with a view to form a prima facie view that the provisions of Section 49 have been violated. RECOMMENDATIONS

Where law ends, tyranny begins POINT TO PONDER

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