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Lack of Transparency in political financing poses serious problems for countries

New study calls for monitoring campaign and party financing

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.

Hidden political financing

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).

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Download English brochure.

See the full report in English here.

See more information on TI's CRINIS project click here.

On 12 and 13 July 2007, Transparency International (TI), the Social Science Research Centre, Berlin (WZB) and the Ibero-American Institute, Berlin (IAI) will hold a conference on:

TRANSPARENCY – WHO CARES?
Benefits and Limits of Transparency in Party- and Election Funding

For more information, download the conference announcement.


For any press enquiries please contact

Berlin:

Marta Erquicia
T: +49-30-34 38 20-651
E: merquicia@transparency.org

Gypsy Guillén Kaiser
T: +49-30-34 38 20-662
E: ggkaiser@transparency.org

Panama:
Silke Pfeiffer
T: (507)67604329