Former MP who championed party financing law denounces lack of enforcement

Malta currently lacks an effective mechanism to enforce the political party financing law and politicians appear comfortable with the situation.

The law obliges political parties to publish annual accounts and reveal the sources of donations above €7,000. It also envisages fines and sanctions against incorrect reporting to the Electoral Commission.

But with the Electoral Commission rendered toothless by a court decision more than four years ago there is no one to enforce the legal provisions.

This situation is described by former Nationalist MP Franco Debono as akin “to having a criminal law without the police to enforce it”.

Debono had presented the first comprehensive Bill on the subject in 2012 and the current legislation, approved in 2014, is based on his proposal.

The law had vested the Electoral Commission with the power to investigate and sanction offenders.

But this power was neutered by a decision of the Constitutional Court in October 2018. The court upheld an appeal by the Nationalist Party that stopped the Electoral Commission from investigating, judging and enforcing any sanctions over suspected irregularities in donations by the db Group to the PN.

In its decision the court concluded that while the Electoral Commission’s investigative powers did not breach the right to a fair trial, it should not have the right to give rulings and impose administrative penalties since it was not a court.

The government had said it would address the situation by proposing amendments to the law.

In July 2021, then justice minister Edward Zammit Lewis had proposed a constitutional change to give regulators, such as the Electoral Commission, more bite by allowing them to impose fines following due process. A similar situation had cropped up with the Financial Intelligence Analysis Unit.

However, the constitutional amendment, which required a two-thirds majority, was defeated after the Opposition voted against. The Opposition insisted that any such fines had to be meted out by the court and not government-appointed bodies.

The issue came to the fore again that same year when faced with a complaint by Arnold Cassola requesting an investigation on whether Panama company Egrant was created as a vehicle to raise funds for the Labour Party, the Electoral Commission replied that  it is “impossible” for  it to investigate such cases under the Party Financing Act, in particular the handing down of any fines.

But more than four years after the court judgment that neutered the Electoral Commission, the situation has not changed, and Malta still lacks any effective authority which can fine political parties for breaches of the financing law.

And all this is happening despite mounting concern, also expressed by the public inquiry on the assassination of Daphne Caruana Galizia, over the influence of big business on the political class.

Debono insists legal amendments must be introduced as soon as possible: “How can we even talk about the links between big business and politics if we cannot enforce basic legislation regulating party financing which remains our only mechanism to tackle this problem?”

He says that reforming the law – which former justice minister Owen Bonnici had described as the Debono law when presenting it in 2014 - should happen “today before tomorrow”.

The solution to the impasse according to Debono is to establish an “enforcing authority” distinct from the Electoral Commission.

Debono explains that the Electoral Commission was entrusted to be the enforcing authority because of the trust it enjoys, pointing out that nobody has ever questioned its supervision of general elections since independence.

“It was a functioning, tried and tested organ. We could not afford to wait another 30 years to set up a new authority,” he says.

But Debono fears that inertia on addressing the problem raised by the Constitutional Court has effectively rendered the law he had piloted useless.

“It is unacceptable that the law has been left dormant for more than four years,” he says.

He also insists that having a functioning law regulating party financing is a precondition for any discussion on state funding for political parties.

“People will only accept state funding if parties have their house in order and their accounts are published and scrutinised,” he says.

The current law foresees administrative sanctions of up to €50,000 for different breaches related to the Act.

Parties have to present annual accounts and donation reports listing the names of individuals and companies who donate more than €7,000. Anyone who maliciously splits a donation in smaller components to circumvent the law can be liable to a maximum fine of €10,000. Party treasurers are also liable to fines of up to €20,000 if they do not comply to their reporting obligations.

Party officials who withhold information from the Electoral Commission’s auditor are also liable to “suspension from holding an office in a political party for a period of not more than three months.”

The party financing saga

In 1995, a commission chaired by the late former Central Bank governor Anthony Galdes proposed that political parties should declare every individual contribution above Lm5,000 (€11,500). Labour agreed to the proposals, but the PN objected, insisting that only donations over Lm20,000 (€46,000) should be declared.

The issue was raised once again by Debono in his parliamentary maiden speech in 2008. He had written his doctoral thesis on party financing. In 2010, Debono was entrusted by then prime minister Lawrence Gonzi to forge ahead with a report on political party financing reform.

Meanwhile, a report by the Council of Europe’s Group of States against Corruption (Greco) had also called on Malta to introduce a law which would make it mandatory for political parties to declare donations above certain amounts, and to disclose the identity of donors.

Greco also called on the Maltese government to ensure that donations from unknown sources be banned, and that political parties should keep proper accounting and auditing systems.

Increasingly ostracized by his own party, Debono went on to table a private members’ Bill in 2012 but this was never discussed.

With a change of government in 2013, then justice minister Owen Bonnici took up the baton and tabled a Bill, which eventually became law.

When presenting the Bill to parliament Bonnici hailed Debono for paving the way on the subject, stating that under the Italian custom of naming laws after the politicians behind them, the Bill would be known as the “Debono law.”

But the euphoria at having introduced such a bold reform has clearly faded. In a sign of lax enforcement, the most recent financial reports to be uploaded by the Electoral Commission date back four years.

The Labour Party’s accounts for 2019 – presented two years late in March 2022 – are still not available to the public because they are still being reviewed. The Nationalist Party has yet to submit its 2021 reports, and although all parties have submitted their financial and donation reports for 2020, none are yet published by the Electoral Commission.