Political party members to be exempt from party financing law

A draft law on party financing proposed by the Maltese government will not restrict donations made by political party members, and sets a very high €10,000 ceiling for the publication of the names of other donors.

In what appears to be yet another law aimed at facilitating the financing of parties through influential donors and industry-backers, the evident loopholes were identified in a compliance report issued by the Council of Europe's anti-corruption watchdog GRECO (Group of States against Corruption).

The Maltese government divulged the contents of its proposed law, regulating the way political parties will declare from where they get their cash, when replying to GRECO's queries on Malta's compliance to a report issued in 2009.

GRECO has objected to the distinction made in the new law between party and non-party members and described the €10,000 threshold for the publication of the names of other donors as "critically high".

By way of example, an industrialist or entrepreneur can become a registered member of the party to enjoy an exemption from party financing laws - a loophole that undermines the very essence of a party financing law.

According to GRECO, the proposed law states that contributions or sponsorships to political parties made by non-members of the party exceeding €3,000 will be publicly declared.

The law will also stipulate that the name of the contributor is to be made public if the contribution exceeds €10,000.

"It appears, however, that there are no such rules in respect of donations from party members, which is not in line with GRECO's recommendations, where such a distinction is not made," the report stated.

In a report issued in 2009, GRECO had called on Malta to introduce a general requirement for both political parties and election candidates to disclose all individual donations, including those of a non-monetary nature they receive above a certain value together with the identity of the donors.

But GRECO notes that the draft bill does not contain a general ban on anonymous donations.

On the contrary, Article 39 of the draft Bill states that political parties, their members or candidates may receive donations from unidentified sources when the amount is less than €2,000, and from anonymous donors whose identity is not made public by the party of up to €10,000 per year.

GRECO describes the €10,000 threshold amounts to be "critically high in comparison with the situation in other European countries."

GRECO welcomed the fact that the draft Bill contains binding rules upon the treasurer of a political party to keep accounting records, which disclose the financial position of the party at any time including income, expenditure, assets and liabilities.

The accounts must also contain the records of entities which are related directly or indirectly to a political party or otherwise under its control. The law will also bind treasurers of any political party to submit the annual statement of the accounts to the Electoral Commission within four months from the end of the financial year, and make the statement available for public scrutiny.

But according to GRECO the effectiveness of such publication depends on how detailed the annual statement is and how the annual statements are made available to the public, something that is not explained in the draft law.