TI Latvia today issued a call to members of Parliament to maintain ceilings on political party campaign expenditures.

Transparency International Latvia today sent a letter to all members of Parliament with explanations about the political party financing system which prevails in Latvia. TI Latvia calls on MPs to maintain ceilings on campaign spending. Parliament will review the issue on Thursday, February 8, when MPs will vote on a proposal by the People’s Party (TP) to revisit the law on financing political organisations and parties.

The TP hopes to eliminate campaign spending ceilings. At this time the law says that each party can spend no more than LVL 0.20 per voter during the election campaign (i.e., during the 270 days before the election). This amounts to a bit less than LVL 300,000. The proposed amendments would repeal this requirement, and that means that the hegemony of a few parties influenced by wealthy sponsors will become stronger.

In addition to this, the TP and the First Party of Latvia (LPP) will be able to avoid very likely fines of approximately LVL 500,000 and LVL 300,000 respectively for violations of financing laws in advance of the parliamentary election of 2006. With the help of the supposedly neutral organisations “The Public for Freedom of Speech” of Jurģis Liepnieks, then the chief of staff to the Latvian prime minister, and “Toward the Sun” of Ēriks Stendzenieks, an advertising specialist, the two parties spent considerably more money than was allowed, and the overspent money should be repaid to the national budget.

The initiative of the People’s Party represents a fundamental departure from a promise made to the media by the chairman of the party’s parliamentary faction, Māris Kučinskis. He said that a “complex approach” would be taken to reforming the country’s political party financing system. The draft proposal only speaks to the elimination of spending ceilings, and that would completely destroy the party financing system. Limits on income alone cannot ensure transparency in party financing.

In its letter, TI Latvia reminds all members of Parliament of the goals of the party system and of why regulations concerning financing are needed. TI Latvia points out that repeal of the spending ceilings would be in violation of the stated goal of the law – to ensure that the finances of parties are transparent, lawful and appropriate in a system of parliamentary democracy. Spending limits were introduced in 2004, and politicians voted in favour of them. The aim of the norm was to reduce the dependency of political party success on the amount of money that is available to them.

The People’s Party and the First Party of Latvia grossly violated the law which they themselves had supported. Because, in opposition to the promise by Māris Kučinskis, the new proposal speaks only to the lifting of spending ceilings, TI Latvia believes that the proposals is aimed not at improving the party financing system, but instead at legitimating the party’s own violations of the law and at saving money at the expense of the requirements of the law.

Without party spending limits, wealthy parties will have disproportional influence on election results. TI Latvia reminds MPs that “the battle over power is not comparable to the free market, where the owner of money can act freely with it in pursuit of his or her goals. During the campaign season, there is a battle over which political party will be authorised by members of the public to take decisions on issues which are of importance to all people. The holder of money must not decide the voting result – the result must be dependent on competition among parties and their programmes. When political parties are dependent on a few sponsors who contribute huge sums of money for campaigns, the principle of equality is violated, because the support of those who have the money determines the result of the election. This violations one of the most fundamental political rights” defined in the Latvian Constitution: “Parliament is elected in general, equal, direct, secret and proportional elections.”

TI Latvia also emphasises that income limitations and declaration of income alone do not ensure transparency of party financing. TI Latvia policy analyst Līga Stafecka points out that “the experience of Italy in the 1960s shows that parties simply do not declare donations which exceed limits, and so it is basically impossible to determine that the parties have received such donations in the first place. In Latvia, too, there were instances before the law was amended in which the courts determined fictive donations. Among those who were involved in this process was Ingrīda Ūdre, the former speaker of Parliament. Fictive donations are a classical sign of political corruption, and they are unacceptable in Europe. In fact, Ms Ūdre was kept from becoming a European commissioner because of this.”

TI Latvia argues that without spending ceilings, it is very hard to evaluate whether political advertising and the relevant expenditures are in line with party income and whether income limitations have been observed.

Stafecka: “Parties at this time have no justifiable reason for holding ‘secret treasuries’, because they are free to collect money, and outside of the 270-day election period, there are no spending limitations. Accordingly, secret treasuries must be seen as illegal dependency on moneybags who seek to ‘buy’ influence and who dislike the current limit on donations – LVL 10,000 per year. For the average voter, of course, that is an unimaginably huge sum for personal expenditures, let alone political contributions.”

TI Latvia would like to point out that party responsibility for overspending is the most effective control mechanism, because that makes parties responsible for campaign processes. TI Latvia chairperson Roberts Putnis: “There are just a few dozen legal entities, and they can be investigated and punished effectively. Lifting the spending ceilings will transfer responsibility to each individual in Latvia, and controls and sanctions will not be possible in a form that is compatible with the fundamental rights of freedom of speech in a democratic country.”

TI Latvia also argues in the letter to MPs that by proposing to lift the party spending ceilings, the People’s Party is evidently trying to escape the punishment related to its violations in the 2006 campaign, when it exceeded allowed spending by LVL 506,583. The Administrative Cases Department of the Supreme Court Senate has declared that with the help of “The Public for Freedom of Speech”, the People’s Party violated campaign spending violations (Case SA-5/2006), and this means that there is good reason to believe that the Corruption Prevention and Combating Bureau (KNAB) will punish the TP for this violation.

Putnis: “The TP has not even tried to confirm its good will in terms of refraining from any attempt to block the KNAB from evaluating last year’s campaign, it has not suggested that it might include a requirement in its new proposal which would ban the new rules from being applied retroactively. Given the Supreme Court ruling, it is very likely that the KNAB will order the People’s Party to return half a million lats to the national budget, but that will not be possible if the amendments take effect before it does so. A less harsh punishment in Latvia does have retroactive effect. Later amendments, too, could significantly improve the positions of the People’s Party in a possible legal case against the state over this punishment. The parliamentary decision is a classic example of a conflict of interest, and it is a gross violation of the separation of powers. The Constitutional Court should rule on this issue.”

TI Latvia calls on all MPs to serve the people by working constructively on ways of improving the party financing system. In its letter, it points to the most important issues which require a solution – a ban on political advertising in the broadcast media, which take the lion’s share of all spending and cause greater party dependency on major sponsors, as well as a debate about whether political parties in Latvia should be financed by the state.

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