The Crinis Project
Money in politics, everyone´s concern

Money is vital in democratic systems. It enables citizens to organise political parties, helps to train new leaders and is used to present government proposals in election races. Without money in politics, those in power would have an advantage over potential candidates, thereby minimizing the chances for another party to take office.

The Crinis project is based on the acceptance of money as a necessary element for democracies and parties to run smoothly as long as financing is transparent, properly accounted for, fully publicly disclosed and subject to effective governmental and social oversight mechanisms.

Political party and election campaign financing is a murky field in eight Latin American countries, according to a study released today by Transparency International (TI) and The Carter Center.

The study, part of the Crinis project, shows deep flaws in the standards and practices governing transparency and accountability in party and campaign financing systems in Argentina, Colombia, Costa Rica, Guatemala, Nicaragua, Panama, Paraguay and Peru - countries covered by the study. The main problems are: a lack of oversight for private donations, scarce accountability by candidates, unreliable data delivered by parties along with the fact that information about political financing is not made public in most of the countries studied.

“Our goal is not to criticise but to help democratic governments to do better. To achieve equitable participation for voters, we must prevent wealthy candidates and parties from deriving undue advantage from their superior resources and assure that donors do not unduly influence the decisions of elected officials whose campaigns they helped fund. Political financing regulation is essential to a healthy democracy,” said Jimmy Carter, former US president and founder of The Carter Center in a statement.

Money is a necessary element for democracies and parties to run smoothly but only as long as financing is transparent, properly accounted for, with full public disclosure and subjected to effective governmental and social oversight mechanisms. This guarantees citizens’ basic right to know the financial interests supporting candidates and the chance to consider them when casting their votes. Transparency and accountability also serve to monitor irregularities such as vote-buying and the flow of ill-gotten funds.

Crinis presents measures to help governments and citizens increase transparency and accountability levels. In addition to a comparative analysis of the data collected in eight countries, the study includes a narrative report on each country with findings and detailed recommendations.

“Citizens have no way of knowing who finances candidates and political representatives. The lack of transparency in political financing poses alarming risks of corruption since private donations easily become a channel for buying favours,” said Silke Pfeiffer, Regional Director for the Americas at Transparency International during the launch of the study in Panama City.

Increased transparency would lead these countries to greater compliance with international agreements such as the Organization of American States’ Democratic Charter and the United Nations Convention against Corruption. Both have been ratified by all the countries analysed in Crinis.

Private donations without scrutiny: In most of the countries studied, reports presented by parties to the electoral control agencies mainly cover public funds, leaving private contributions, which tend to make up the most significant parts of election funding, in the dark. Electoral control bodies in the four Central American countries studied and in Paraguay, either do not receive reports of private income or only record them. There are no reviews or audits. Oversight focusses solely on the proper use of public funds.

Unreliable data: In the eight countries reviewed, experts surveyed confirm that financial reports submitted by candidates and parties to the electoral bodies regarding their income and expenditures are unreliable or incomplete. In Argentina, Paraguay, Colombia, Costa Rica and Nicaragua, experts estimate that in general less than 50 percent of funds raised are actually reported.

When politicians feel a greater commitment toward their donors than toward citizens, it is the poor who suffer most since they lack sufficient resources to pressure politicians into keeping their electoral promises. This directly diminishes citizens’ quality of life and the credibility of a democracy. According to Transparency International’s Global Corruption Barometer 2006, individuals surveyed in ten Latin American countries consider political parties to be one of the most corrupt segments of society, with a score of 4.2 on a scale of 1 to 5 (where 1 is least and 5 is most corrupt).

Read the full report, here.

Crinis –ray of light in Latin– is a joint project from Transparency International and the Carter Center to promote transparency and accountability in political financing in Latin America. With this objective in mind, it engages in different types of activities:

Crinis meticulously evaluates the levels of transparency built into current legislation and political financing practices of political parties and candidates during election campaigns, as well as the financial activities of parties in non-election years, thereby detecting weaknesses and strengths in a given country’s system. It develops awareness-raising and activities to promote transparency in political financing by working with parties, electoral authorities, corporate donors, voters and other key national and international stakeholders in this area. The Crinis Index allows a thorough evaluation of the current situation in each country under review, comparisons between countries and the definition and sharing of best practices. The project recommends reforms based on a diagnosis of each country where Crinis has been applied.

The goal of Crinis is to help increase public trust in democracy and political parties by promoting transparency and accountability in political financing.

Money may come into conflict with the democratic principles of civic equality and fair competition in elections and can also undermine political representation.

For example

1. When the availability of resources becomes a decisive factor in winning elections instead of candidate proposals.
2. When money contributed to electoral campaigns safeguards private interests and inhibits political parties and candidates representing collective interests to communicate their ideas.
3. When a party in office uses the system and the resources of the State for the benefit of the electoral campaigns of its candidates.
4. When companies contribute to electoral campaigns in exchange for future favours from elected representatives.
5. When illegal groups, such as organized crime, drug-trafficking or other armed groups, support candidates who in performing their duties will represent illegal interests.
6. When resources used to fund electoral campaigns are raised individually by candidates and not by their parties, thereby creating the risk of personal commitment on the part of the candidate to the donor.
7. When candidates use financial resources for inappropriate purposes, such as vote purchasing or other forms of unfair competition.
8. When elected representatives have, in general, a greater commitment to donors than to the public.
9. When representatives use their post and attendant government resources to gain re-election.
10. When civic equality, reflected in the principle of each individual having one vote, is undermined by the unwarranted ability of some to contribute money to politics.

These conflicts affect the legitimacy of elected representatives as well as their ability to develop rules aimed to benefit the public. The negative impact of such on the quality of life of the people multiplies and the democratic system as a whole stands to lose credibility.

Shining a light on political financing is the best way to clean house. When parties and candidates disclose information about funds used to finance their activities, both during electoral campaigns and generally, scrutiny of illegal funds and influence peddling in politics is facilitated.

All politicians as well as the parties and groups that support them are either legally or morally required to report to the public. The accuracy and usefulness of reports will increase to the extent that they are fully disclosed to the public and to the media. Reports should be clear, complete, presented on time and reliable.

It is no coincidence that the transparency of resources linked to political financing is recognised as a universal principle in the United Nations Convention against Corruption (UNCAC).

Knowing the sources of funding used to finance electoral campaigns enables citizens to determine the financial interests that support candidates. This way, citizens are better equipped to cast their vote and monitor the activities of their representatives once elected. During the electoral process, citizens can reject any candidates whose campaign relies on a donor with a given profile, such as, for example, if funds are contributed by polluting industries. It is therefore important for such information to be made public prior to elections. At the same time, it will be easier after the elections to determine if a donor company is being favoured, for example, in public contracting processes.

Ultimately, voters should seek to stay informed about the sources of funding for political parties and candidates. Only by doing so will they ensure that their interests are better represented.

Transparency is the cornerstone of civic involvement to monitor the effects of money in politics. Citizens must demand greater transparency from political parties and candidates in their funding practices and greater commitment from electoral oversight bodies in performing their duties. In other words, citizens must demand transparency and use their votes to punish those who fail to disclose.

In countries with an Access to Information Law or a law governing political parties and campaign financing requiring the public disclosure of information, citizens have a legal right to know about party and candidate funding. Nevertheless, this does not guarantee that access to information exists in practice. Every country must have media committed to covering this issue, specialised non-governmental organisations and an active citizenry that requests this information from authorities exerting pressure for the system to become more transparent.

Transparency International and the Carter Center implemented the Crinis project in eight Latin American countries during 2006. The countries covered are: Argentina, Colombia, Costa Rica, Guatemala, Nicaragua, Panama, Paraguay and Peru. The results in the table below indicate the areas in which reforms are most needed in each country

The findings of Crinis indicate that several of the countries studied already have proper legislation in place. Others are in the process of developing legislation and practices on political financing. This notwithstanding, in key areas, it continues to be worrisome that:

• Citizens lack sufficient access to information: Despite the existence of modern technology for dissemination of information, public disclosure of information regarding the financial transactions of parties and campaigns is the indicator scoring worst in the Crinis Index. In Paraguay, Nicaragua and Guatemala, there was no response by stakeholders from whom detailed information was requested by the Crinis research team.
• Candidates fail to disclose information: In six of the eight countries, candidates are not required to disclose information about the funds they raise independently from their parties. Considering that in many countries it is the candidates, and not the parties, who raise a significant part of campaign funds, large sums of money bypass the oversight mechanisms put in place by government authorities and the public. Only Colombia and Panama require candidates to render accounts separately form parties. In Peru candidates are required to render accounts to their parties.
• Casting an informed vote is difficult: Only in Argentina does the law require parties to submit reports on how they finance their campaigns before elections. In Costa Rica, political parties are legally required to disclose information on a monthly basis, and in Peru on a bi-monthly basis, during the electoral process. In all other countries, information submitted beforehand on party and candidate campaign financing is completely absent or limited to an estimated budget submitted by parties and/or candidates, thereby denying the public the ability to take this information into account when casting their votes.
• Private donations remain hidden: Private contributions, which tend to account for the larges share of funds mobilized in election campaigns, are excluded from the information disclosed to electoral authorities. In Panama and Guatemala* parties only report on funds proceeding from the government budget. In Costa Rica, Paraguay and Nicaragua, government bodies only register reports of private income. These reports are not reviewed or audited as focus is placed solely on the proper use of public resources.
• Reports submitted are nor reliable: In all countries, experts confirmed that financial reports submitted by candidates and parties to electoral bodies regarding their finances are incomplete or unreliable. In Argentina, Paraguay, Colombia, Costa Rica and Nicaragua, experts estimated that in general less than 50 percent of funds raised are actually reported.
• Ineffective Government oversight: In five of the eight countries studied, the experts surveyed agree that sanctions currently in place are inadequate. In Costa Rica, fines cannot be imposed in the event of violations and in Panama and Guatemala, the possibility of cutting government subsidies as a consequence of irregular reporting does not exist. Only the electoral oversight bodies in Colombia, Panama and Costa Rica have a right to review bank accounts and transactions of parties and candidates, an important measure that can be used to verify the accuracy of reports submitted. The effectiveness of such measures depends in turn heavily on the capacity of oversight bodies.
• According to the study’s findings, several of the areas analysed (see table) have not yet been included in legislation or put into practice in all countries. As such, Transparency International and the Carter Center believe it is imperative that political financing become a priority on the region’s agenda for political reform. The irregularities caused in this area have a direct and negative impact on democracy and the quality of life of citizens.
• Although the project identifies best practices and issues recommendations for reform, Crinis recognizes that specific proposals for each country must adapt to the social, political-institutional and economic local characteristics. To access the complete reports submitted by each country under review in the first round of the Crinis project, as well as the methodology and a comparative analysis, visit www.transparency.org/tilac or www.cartercenter.org.

Transparency International (TI) is the global civil society organisation leading the fight against corruption. Through approximately 90 national chapters and its international secretariat in Berlin, Germany, TI raises awareness about the harmful effects of corruption. For more information about the organisation and its projects, please visit: www.transparency.org.

The Carter Center is a non-governmental, non-profit organisation that helps alleviate human suffering in over 65 countries by working in the areas of conflict resolution, human rights, economic opportunity and disease prevention. The Carter Center was founded in 1982 by former US President Jimmy Carter and his wife Rosalynn. For more information about the organisation and its projects, please visit: www.cartercenter.org.