Public Funding and Transparency in South Asia

Public Funding and Transparency in South Asia

  • March 23, 2016

The quest to promote a transparency and accountability in Nepal’s system of governance has continued to suffer setbacks. Ever since I first started to grasp the importance of transparency and accountability, both words have been treated as mere political catch phrases among politicians who only wish to pay lip service to them. There is a saying in Nepali, ‘jun jogi ayepani kani chireko’ which means that everybody has the same nature. Linking this saying to political parties, it might suggest that all political parties are the same regardless of the differences in their ideologies since they do not bring about change in the lives of ordinary Nepalese. There is widespread sentiment among citizens in Nepal that political parties are wildly corrupt, and this appears to be supported by Transparency International’s 2015 report that shows that Nepal’s political leadership has not seriously attempted to deal with corruption in the country.

So, why is Nepali political leadership not serious about combatting corruption? Does it have something to do with the finance of political parties? Who finances political parties? What benefits do the financiers receive? I believe that these questions have led me to understand the dynamics of my country’s system of governance and have convinced me that the opacity of political finance is the crux of the country’s problems with corruption and a very dangerous threat to the sustainability of Nepal’s democratic system. The multi-party democratic system that Nepal has adopted through its constitution means that political parties must contest in elections, and to run political parties, they require money and must be funded by somebody. Political parties regardless of their size claim membership fees and levies as their main sources of income. In reality, however, money collected through these sources dwarfs in comparison to the large sums donated by businesses and individuals in the course of elections.

The problem is not that parties require funds and accept donations, but rather that they are not transparent in naming their big donors. Neither those receiving money nor the donors themselves want their names to be made public. People need to know who is paying for election campaigns. The nexus between political leaders and corporate regimes affects the policies and plans of governing parties after elections and could logically serve the interest of an elite group funding political parties. Simply conducting elections should not be the only measuring tools to determine whether a country is democratic; understanding the ways elections are held and the varying degrees of transparency should be key indicators. Can political parties ensure transparency in reality? In Nepal, political parties are required by law to provide reports of their expenditures to the Election Commission (EC). It is then the duty of the EC to monitor the activities of political parties to ensure free and fair elections. However, the common perception is that the EC is incapable of restricting unscrupulous spending by candidates and political parties during elections. So, corruption and black money continue to play a significant role in politics and in elections of the country.

Law alone cannot be the solution to this problem. The role of party leadership is highly responsible in this regard. To a certain extent the issue of political finance has been raised and parties have even called for all donations and expenditures to be run through bank accounts capable of being monitored by the EC. These are just preliminary steps to institute public funding as a means to show transparency during elections and after it is all forgotten. Such measures are believed to enable citizens to ask questions about the sources of the money in their elections. All of this, however, is easier said than done.

What works? A scheme for state funding of political parties and candidates could be introduced as a possible solution. Either the number of seats in the parliament or number of votes received in the last national election could be the criteria for deciding the level of funding the state would provide for each party. Such a system could enable ordinary people to say, “Since you receive support from public exchequer, now you must account for it.

Public funding can limit the influence of interested money and thereby help curb corruption. If political parties and candidates get at least a basic amount of money from the public purse this has the potential to limit the likelihood of them feeling the need to accept “interested money” from donors who want to influence their policies, rhetoric, or voting behavior in the legislature. Throughout the world, there has been a rise in the number of countries funding political parties through public subsidies. Today, around two-thirds of the world’s countries provide direct public funding.

South Asia stands out from much of the rest of the world as direct public funding for political parties is rare. In fact, the Maldives is the only country in the region that provides ongoing public funding to political parties (Bhutan and Sri Lanka provide public funding to political parties specifically for election campaigns).

Money, Politics and Transparency (MPT) shows that South Asian countries have strongly-worded and relevant laws on political finance that are not followed properly due to a general lack of autonomous and robust organizations to oversee their implementation. For example, most of the countries in this region have laws to limit candidates’ expenditure during elections that are almost always broken without repercussions. Therefore, South Asian countries fared poorly in MPT’s assessment of transparency compared to global averages as well as other regions. The average composite score among south Asian countries is only 31, compared to a global average of 45 and an average of 52 in the 11 Latin American countries.

According to the IDEA database, 68 percent (116 countries) have provisions for direct public funding to political parties, although the figure varies from 27 per cent of countries in Oceania to 86 per cent of European countries. Asia has 58 percent. Among the Asian countries, most of South Asian countries have no provision for direct funding.

Public funding could be one solution to make political parties to push forward and make themselves more transparent. There could be different mechanisms for providing this funding. But, state resources should be banned from being given to or used in the election campaigns to favor specific political party or candidate. When public funding is used the laws for regulating political party expenditure can be made stronger. In this regard government should effectively regulate political donations from businesses and trade unions and restrict payments from foreign organizations and foreign citizens. Also, Election Commissions should be properly empowered to supervise and monitor the funding of parties and campaigns given that only a strong EC can reduce election expenses and abuses. EC should have the power to conduct investigations of parties or candidates in regard to a code of conduct so that the candidates are careful enough to consider the severity of the penalties. The nature of such a penalty should be strict. Transparency has to be ensured in election expenses at any cost. For this, the EC should make each candidate’s election expenditure public after the election is over (within six months). The EC should also publicize its expenditure.

CMR-Nepal chair TILAK PATHAK is a Reagan-Fascell Democracy Fellow at the National Endowment for Democracy and did a research on campaign finance reform and the need for financial transparency in Nepal’s political parties.

Originally published in the 21st Century Parties.

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