Regional Conference Money in Politics Session 5. How to design effective financial monitoring bodies for the enforcement of political finance law? Lina Petronienė Central Electoral Commission of the Republic of Lithuania Tbilisi, February, 2016

B ACKGROUND Majoritarian and proportional systems The candidates may be nominated by: themselves, political parties. The lists of candidates may be nominated by: political parties election committees consisted of voters. The Central Electoral Commission (CEC): conducts all kind of election and referendum controls over funding of political campaigns and political parties. 2

W HAT IS REGULATED ? The key elements of regulation on funding of political parties and political campaigns concern: legal sources of funding and limits oof donations, legal expenditure and limits of political campaign expenditure, accounting and publicity of funding of political parties and political campaigns, requirements for political advertising, control by the CEC and other institutions, use of IT in exercising control. 3

Participant of political campaing Media Journalists Voters Analysts CEC IS Auditor CEC and other institutions Monitoring groups Registers of: 1.Residents, 2.Legal entities, 3.Party members State Tax Inspectorate IS 4 Political party

S OURCES OF FUNDING OF POLITICAL CAMPAIGNS 1.Donations of natural persons 10 average monthly earnings for each participant per campaign, EUR in 2015, no more than 10% of the annual income per year, 2.funds received by the political party, 3.own (personal) funds of a candidate 20 average monthly earnings, ~ EUR, 4.interest on the funds kept in the bank account. 5

A BILITY TO CHECK D ONORS AND D ONATIONS Entered information before election: within 10 working days the data on donations received Possibilities for treasure: to get an information from State Tax Inspectorate, if the donor has declared his(her) income and the sum of his (her) donations doesn’t exceed 10 per cent of the amount of the annual income and other information on fulfilling requirements. Published data: donor name and surname, date, sum 6

E XPENDITURES AND REPORTS Possibilities for treasure: to control total amount of expenditure and debts, to control limit of expenditure, to compare data on political advertising with date submitted by media and observers of political advertising, to generate all reports, they have to submit to CEC Published data: reports, data according to expenditure groups, the list of contracts. 7

S OURCES OF FUNDING OF POLITICAL PARTIES 1.Membership fees of the political party (~ 7,8 % in 2014*), 2.state budget appropriations (~67,6 %), 3.funds received from political party’s other activities ( publishing, organization of political and cultural events, property, etc. ) (<1,9%), 4.loans given by the banks registered in the Republic of Lithuania (<13,5%), 5.interest on the funds kept in the bank account (<0,03%), 6.voluntarily allocated one per cent of the annual income tax paid by a Lithuanian resident (<9,2 %). *excluding political campaigns 8

M EMBERSHIP FEES Limits of membership fees: The limit of membership fee depends on average monthly earnings (20 earnings, EUR in 2015). If a member pays more than 360 EUR per year, he has to declare assets and income. The member cannot pay more than 10% of the declared income of previous year. Possibilities for party: to get an information from Ministry of Justice if mebership fee is paid by party member; to get the information from the State Tax Inspectorate if a party member has declared income and paid membership fees per year don’t exceed 10 per cent of declared income,in case the total amount paid by party member during calendar year exceeds 360 Euros. 9

A UDITORS Independent auditors carry out inspection of the political campaign according to the terms of reference approved by the CEC which sets the scope of the work performed by the auditor. Possibilities for auditor: to get all information concerning participant (entered by treasure, media, observers); to fulfill report on findings. Published data: reports on findings 10

A NALYSIS TOOL The information on political advertising from three different sources: participants of the political campaign, media, monitoring groups. This information enables the CEC: to establish any facts of hidden advertising or hidden expenditure for political advertising, to analyse if the same rates of political advertising were given to all participants of political campaign, to control how much debts of political campaign are unpaid. It helps to apply sanctions in case of irregularities. 11

Thank you for your attention 12