1. Title Content Name of presentation here Regulating Money and Politics, a regional overview Some considerations from GRECO’s perspective Regional Conference on Money in Politics, Tbilisi, 18-19 Feb 2016

2. Title Content Name of presentation here Background information 1994: Conference of Ministers of Justice of the CoE States in Valetta, Malta: anti-corruption policies become a new topic for the intergovernmental cooperation (+ priority following 2nd Summit of Heads of State and Government 1997); programme of action against corruption (1996): multidisciplinary and global approach → Results: 6 anti-corruption instruments adopted between 1997 and 2003, including Recommendation (2003)4 of the Committee of Ministers to Member States on common rules against corruption in the financing of political parties and election campaigns: autonomous set of standards on political financing → Creation of GRECO in 1999 to monitor the implementation of all anti-corruption instruments (mutual evaluations, peer pressure): to date, 49 member States (+ negotiations EU), thematic evaluation rounds. Round 3 (2007-2011): transparency of political financing ; (2012…): Round 4; prevention of corruption of parliamentarians, judges and prosecutors; implementation of improvements examined through specific compliance procedure – over 350 reports in total to date NB1: Belarus, Liechtenstein and San Marino: no report as yet NB2: this presentation = only a snapshot of the situation at the time of evaluations; compliance procedures are often going on, many improvements have already been made or still need to be made. Apologies to the countries which have already implemented a lot of changes.

3. Title Content Name of presentation here Part 1 – sources of political financing Articles 1 to 9 of Rec (2003)4: general principles and sources of funding of political parties: - Funding should be available from State and citizens, - public support must be based on criteria for fairness and objectivity, - secret donations should be prohibited, - independence of political parties from public and private support to be preserved - Caution required for donations from legal entities: registration in corporate accounts; information of shareholders; donations from entities providing goods/services for any administration should be limited / prohibited / strictly regulated; prohibition of donations from public / State controlled entities - Caution required for foreign donations: need for limitations / prohibition / restrictions - Countries should consider ceilings on individual donations and on campaign expenditure All rules of Rec(2003)4 should apply by analogy to a) funding of election campaigns, b) elected representatives, c) entities related directly or indirectly to political parties Broad definition of “donation”: any form of economic and other advantage

4. Title Content Name of presentation here Part 1 – Issues concerning sources in practice - Frequent across many GRECO countries: inconsistent legal frameworks regulating a) party financing and/ or b) election campaigns + lack of consistency between a) and b) (e.g. Bulgaria, Croatia, Ukraine) - Generally, principle of public + private funding accepted; few exceptions such as no access to public funding (Azerbaijan) = risk for democratic pluralism, risk of hidden funding - Additional funding available locally + State media subsidy + other activities related to political parties: e.g. in Serbia one party established 40 associations; in Lithuania: charity-like NGOs created to capture / recycle impermissible support and unspent campaign income. Problems also: parl. groups, foundations - A variety of sources of private support, often not accounted for appropriately: special support from members, membership fees, donations in kind / at preferential value, expenses paid by “supporters” / “sponsors”, campaigning activity conducted / paid by a third party, propaganda conducted by newspapers related to / supporting a specific party - Loans improperly regulated: (if preferential rate, written off); e.g. Georgia, Montenegro, Poland, Romania, Russian federation - Misuse of public resources: e.g. Bulgaria, Georgia, Montenegro, Russian Federation, Serbia - Effectiveness of rules in place: e.g. prohibition of business entity support circumvented by donations made by business employees (e.g. Lithuania) or exceptions made for certain forms of support despite ceiling and disclosure obligations (e.g. Romania recent change: support in the form of real estate or otherwise for the party headquarter) NB: manipulation of legislation sometimes observed in central/eastern European countries

5. Title Content Name of presentation here Part 2 - Transparency of political financing Article 10Records of expenditure States should require particular records to be kept of all expenditure, direct and indirect, on electoral campaigns in respect of each political party, each list of candidates and each candidate. Article 11Accounts States should require political parties and the entities connected with political parties mentioned in Article 6 to keep proper books and accounts. The accounts of political parties should be consolidated to include, as appropriate, the accounts of the entities mentioned in Article 6 [entities related dir/indir to or controlled by parties) Article 12Records of donations a. States should require the accounts of a political party to specify all donations received by the party, including the nature and value of each donation. b. In case of donations over a certain value, donors should be identified in the records. Article 13Obligation to present and make public accounts a. States should require political parties to present the accounts referred to in Article 11 regularly, and at least annually, to the independent authority referred to in Article 14. b. States should require political parties regularly, and at least annually, to make public the accounts referred to in Article 11 or as a minimum a summary of those accounts, including the information required in Article 10, as appropriate, and in Article 12.

6. Title Content Name of presentation here Part 2 – Selected issues concerning Transparency of party and campaign funding in practice - lack of adequate accounting/bookkeeping format, for the proper itemisation of income/expenditure (e.g. Albania, Armenia, Estonia, Georgia, Moldova, Poland, Slovenia) - Inappropriate consolidation of accounts (e.g. Albania, BiH, Croatia, Hungary, Slovenia, Slovak Republic, Latvia, Lithuania, TFYROMacedonia, Russian Federation, Ukraine…) - lack of timely publication of party / campaign accounts (and/or major donors), or insufficient public access (e.g. Armenia, BiH, Czech Republic, Romania, Ukraine - anonymous / unregistered donations not clearly prohibited or inadequately regulated (e.g. Albania, Bulgaria, Hungary, Moldova, Romania) - Absent or inappropriate rules on disclosure of large donations and thresholds (e.g. Armenia, Hungary, Moldova, Russian Federation, Ukraine) Note: the publicity of large donations and the consolidation of accounts with the inclusion of local and other structures is / has been sometimes an even greater challenge for western European countries

7. Title Content Name of presentation here Part 3 – Public Supervision and sanctions of party and election campaign financing Article 14 Independent monitoring a. States should provide for independent monitoring in respect of the funding of political parties and electoral campaigns. b. The independent monitoring should include supervision over the accounts of political parties and the expenses involved in election campaigns as well as their presentation and publication. Article 15 Specialised personnel States should promote the specialisation of the judiciary, police or other personnel in the fight against illegal funding of political parties and electoral campaigns. Article 16 Sanctions States should require the infringement of rules concerning the funding of political parties and electoral campaigns to be subject to effective, proportionate and dissuasive sanctions.

8. Title Content Name of presentation here Part 3 – Public Supervision and sanctions – selected issues : ● a variety of models/bodies entrusted with supervision of political financing: ad hoc independent body, Electoral Commission, Parliament, Central public audit body, Ministry (finance, interior) etc. Combinations are seldom satisfactory (e.g. Romania – CEC had no clear power for income and expenditure); sometimes supervision scattered between up to 6 bodies (TFYROMacedonia) or a multiplicity of electoral commissions. ● supervisory body lacking operational independence (from the government, from the parties themselves), inadequate composition, inadequate decision process, e.g. Azerbaijan, Croatia ● supervisory body often lacks capacity of control or clear mandate: powers incl. access to info., adequate resources (expertise, staff...): e.g. Bulgaria, Estonia, Hungary + many others ● supervisory bodies’ often have overcautious approach : just doing the maths, checking formal compliance, no reactivity/proactivity, e.g. Azerbaijan, Lithuania, Poland, Ukraine + many others ● sanctions not available for all main requirements, or not proportionate and dissuasive (e.g. Ukraine: only warnings and criminal fine up to 465 €) + many other cases of poor application despite alleged problems Note: putting in place an (effective) system of supervision and sanctions has been a general challenge for all GRECO members evaluated

9. Title Content Name of presentation here Part 3 – Supervision and sanctions – private audit : ● Legislation sometimes provides for independent audit (private sector) of financial statements prior to public authority scrutiny : is a form of internal control + a best practice ● Audit report is often communicated to public authority ● Arrangements and practice seldom satisfactory across Europe: - Audit does not necessarily lead to intra-party scrutiny - over-reliance of public authority on audit report - no guarantees of independence other than general international standards = need for membership disqualification, rotation of auditors, “4 eyes” principle etc. - low financial audit standards, even among EU countries e.g. Bulgaria (margin of “error” of 50- 70%), Lithuania (30%). May be correlated with informal / shadow economy but official figures often perceived as “improved” - Private audit perceived as unreliable (Estonia) Audit: a general issue in most countries: need to reflect on the role and purpose of auditing – at least in connection with political financing Need to bear in mind that corruption and organised crime monies may feed political activities (allegations often heard in GRECO countries): under anti-money laundering rules, auditors are normally required to report suspicious transactions…

10. Title Content Name of presentation here Thank you for your attention Christophe.speckbacher@coe.int