Brosura AEP - A4 - 01.10.2013

POLITICAL FINANCING.
THE ROMANIAN EXPERIENCE
POLITICAL FINANCING.
THE ROMANIAN EXPERIENCE
POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

COORDINATORS: ANA MARIA PTRU (PRESIDENT OF THE ROMANIAN PERMANENT ELECTORAL AUTHORITY) CRISTIAN-ALEXANDRU LEAHU (DIRECTOR OF LEGISLATION, PARLIAMENT LIAISON AND ELECTION DISPUTE RESOLUTION DEPARTMENT, THE ROMANIAN PERMANENT ELECTORAL AUTHORITY)
Foreword
The inextricable link between money, political parties, and electoral campaigns raises suspicions and gives room to concerns amidst the public opinion, as it became evident that money ows from private sources has often compromised the autonomy of political parties and authorities in the performance of their duties. This paper aims at proving that clear rules and transparent accounts are the key to restoring or preserving citizens' trust in parties and politicians in Romania. It also shows the substantial progress made by Romania and the Permanent Electoral Authority during the past three years in the monitoring of political nancing. This document is intended for consultation, a working tool that, we hope, will be useful for politicians, electoral management bodies, civil society organizations, and scholars. ANA MARIA PTRU PRESIDENT OF THE PERMANENT ELECTORAL AUTHORITY
CONTENT
Law no. 334/2006 regarding the nancing of political parties and electoral campaigns Government Decision no. 749 of July 11, 2007 on approving the Methodological Norms for applying Law no. 334/2006 on nancing activities of political parties and electoral campaigns Third Evaluation Round Evaluation Report on Romania on Transparency of Party Funding An assessment of international organizations' recommendations addressed to Romanian authorities on the area of political parties registration, nancing of political parties and electoral campaigns Assessment of the political party accounting monitoring procedures in Romania provided by law no 334/2006 and government decision no 749/2007 Needs assessment Department of Control of Political Parties and Electoral Campaigns of the Permanent Electoral Authority Report on international standards and best practices on electoral nancing to promote women's political participation
pag. 8 pag. 20
pag. 36
pag. 61
pag. 72 pag. 83 pag. 91
Law no. 334/2006 regarding the nancing of political parties and electoral campaigns
Chapter 1. General provisions

ART.1. (1) This law aims at ensuring equality of chances for the political competition and transparency of the funding both the activity and the campaigns of the political parties. (2) The public or private nancing cannot aim at limiting the independence of the political parties. (3) Political parties activity nancing is done solely under the law. ART. 2. Political parties can detain, under the law's conditions, movable and immovable (real estate) assets that are necessary for the accomplishment of their specic activity. ART. 3. (1) The nancing sources for the activity of a political party are: a) party membership fees; b) donations, legacies and other liberalities; c) incomes from the party's own activities, according to art. 12; d) subsidies from the state's budget. (2) The political parties are not allowed to have and use other nancing sources than the ones stipulated at para (1). (3) The political parties have the obligation to organize their own accounting books, according to the accounting provisions currently in force. (4) The cash and payment operations of the political parties shall be made through bank accounts, in lei and foreign currency, opened at banks having their headquarters in Romania, according to the law. (5) The incomes from the activities stipulated at para (1) letter c) are exempted from taxes and fees.
Chapter 2. Private nancing

SECTION 1 Membership fees
ART.4. (1) The amount, repartition and usage of the dues are settled by decisions of the political party, according to their statute. (2) The total income coming from membership fees is not limited. (3) The amount of the membership fees paid by a member per year cannot exceed 48 minimum gross salaries at national level. The minimum gross salary at national level taken for reference is the one valid at 1st of January of that year. (4) The political parties have the obligation to publish within the Romanian Ofcial Journal, Ist part, the total amount of the incomes from the membership fees, as well as the list of the members who paid in a year fees whose total value exceed 10 minimum gross salaries at national level, until 31st of March next year. (5) The list stipulated at para (4) shall contain the following mandatory elements: the full name of the party member, citizenship, personal identication number, the value and the date the membership fees were paid.
SECTION 2 Donations
ART. 5. The donations received by a political party in a scal year cannot exceed 0,025% of the incomes provided by the state's budget for that year. (2) In a scal year when general elections, local elections, parliamentary ones or for the European Parliament, or Presidential elections are taking place, the limit shall be 0.050% of the incomes provided by the state's budget for that year, (3). The donations coming from an individual in one year may reach a total up to 200 minimum gross salaries at national level at the ongoing value on 1st of January of that year. (31) In the scal year in which more elections are taking place, the donations from an individual may reach a total up to 400 minimum gross salaries at national level, at the value valid on the 1st of January of that year, for each electoral campaign or campaign for referendum, with the observance of the provisions of para (2) above. (4) The donations from a legal person for one year may reach a total up to 500 minimum gross salaries at national level, at the value valid on the 1st of January of that year.
POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 9
(41) In the scal year in which several elections are taking place, the donations from a legal person in one year may reach a total up to 1.000 minimum gross salaries at national level, at the valid on 1st of January of that year, for each electoral campaign or campaign for referendum, with the observance of the provisions of para (2) above. (5) The total amount of donations from legal persons directly or indirectly controlled by another person or group of natural or legal persons cannot exceed the limits provided by paragraphs (3) and (4) above. (6) The real value of movable and immovable (real estate) assets donated to the party, as well as the value of the free of charge services offered is included in the value of the donations, within the limits provided by para (1) (4) above. (7) It is forbidden for legal persons that, at the time of donation, have debts older than 60 days to the state budget, to the social security budget or to the local budgets, to make donations to political parties, unless they are liable to recover amounts exceeding their own debts. (8) When the donation is made, the political party has the obligation to require the donator - legal person - to submit a declaration on his/her own liability regarding the compliance with the conditions laid down by para. (7) above. (9) It is forbidden for political parties to accept, under any circumstances, directly or indirectly, donations of goods, money or free services made with the obvious intention of gaining an economic or political advantage or donations made with the non compliance of the provisions of para (8 ) above. ART. 6 The discounts that exceed 20% of the value of goods and services offered to political parties and independent candidates will be considered donations and they will be registered distinctly in the accounting books of the party or those of the independent candidate, according to regulations issued by the Ministry of Public Finances. ART. 7 (1) When receiving a donation, checking and registering the donor's identity, no matter the public or condential character of the donation, is mandatory. (2) At the donor's written request, his/her identity may remain condential, in the situation in which the donation is up to the limit of 10 minimum gross salaries at the national level for one year. (3) The total amount received by a political party as condential donations shall not exceed the equivalent of 0.006% of the incomes provided by the state budged for that year. ART. 8 (1) All the donations shall be registered in a proper way within the accounting documents, mentioning the date when the donations were made, as well as other information allowing the identication of the nancing sources. (2) Donations of goods and free of charge services will be registered in the accounting books at their real value, settled according to the law. (3) Voluntary activities deployed according to the law are not to be considered donations. ART. 9 (1) The political parties have the obligation of publishing within the Romanian Ofcial Journal, Ist part, the list of the natural and legal persons who have made within one scal year donations whose cumulated value exceeds 10 minimum gross salaries at national level, as well as the total amount of condential donations received, until the 31st of March of the next year. (2) The list mentioned at para (1) shall contain the following mandatory elements: a) for natural persons - donor's full name, personal identication number, citizenship, value, the type and date the donation was made; b) for legal persons - name, address, nationality, unique registration code, value, the type of donation and the date the donation was made. ART. 10 (1) It is forbidden to use the nancial, human and technical resources belonging to public institutions, autonomous administrations, national companies, trade companies or banks where the state or territorial administrative units are main shareholders, in order to support the activity of political parties or their campaign, otherwise than under the conditions settled by the electoral laws. (2) Political parties are not allowed to accept donations or free of charge services from an authority or public institution, autonomous administrations, national companies, trade companies or banks with total or majority state capital. (3) It is forbidden to accept donations from trade unions or religious cults, regardless of their nature. (4) All the amounts received by breaching the provisions of para (2) and (3) shall be conscated and made revenue at the state budget. (5) The provisions of para (1) - (4) shall be accordingly applied for the political alliances, electoral alliances as well as independent candidates. ART. 11 (1) Accepting donations from other states or foreign organizations, as well as from foreign natural or legal persons is forbidden. (2) Donations representing material goods necessary for the political activity, but which are not electoral propaganda materials, coming from international political organizations to which the party is afliated or from political parties or political formations having political cooperation relations are excepted from the provisions of para (1) above.
10 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE
Propaganda materials can be received, but only those that are used only in the electoral campaigns for the election of the representatives of Romania in the European Parliament. (3) Donations received under para. (2) will be published in Ofcial Journal of Romania, Part I, until 31st of March next year. (4) The donations mentioned in para. (2) are exempted from customs duties, excepting the vehicles used for transport. (5) All the amounts received by breaching the provisions of para (1) shall be conscated and made revenue at the state budget
SECTION 3 Other income sources

ART. 12 (1) Political parties are not allowed do deploy activities specic tot the commercial societies. The following activities are exceptions, the political parties being permitted to obtain incomes: a) editing, elaborating and disseminating publications or other propaganda and political culture materials; b) organizing meetings and seminars with a political, economic or social theme ; c) cultural, sports and recreation activities; d) internal services; e) renting locations that are in their own patrimony for conferences or social-cultural activities and for organizing parliamentary ofces; f) selling lands and buildings from their patrimony, but only after at least 10 years from their registration within the patrimony, with the exception of the political parties in course of dissolution. The 10 years term is not applicable for the situation of the inherited immovable (real estate) assets; g) selling movable assets from their patrimony, unless it represents acts of trade; h) subleasing to parliamentary ofces premises received according to art. 21 para (1)-(3), under the condition that the value of the monthly rent foreseen by the subleasing contract would not exceed the value of the monthly rent foreseen by the lease agreement concluded with local authorities. The maintenance expenses shall fall under the responsibility of the parliamentary ofce, as per the concluded contract. (2) Political parties can get incomes from bank interests. (3) The political parties have the obligation to publish within the Romanian Ofcial Journal, Ist part, the total amount of the incomes obtained from other sources, until 31st of March of the next year. ART. 13 (1) If a party is associated, according to the law, with a non-political formation, the nancial contribution of the latter to that specic type of association cannot exceed, for one scal year, the value of 500 minimum gross salaries at national level, valid by 1st of January of that year. (2) The total nancial contribution under different types of association with non-political formations cannot have per year a bigger value than the equivalent of 0,006% of the income provided by the state budget for that year. (3) All the amounts received by breaching the provisions of para (1) and (2) shall be conscated and made revenue at the state budget (4) The political parties have the obligation to publish within the Romanian Ofcial Journal, Part I, the total amounts para (1) refers to, until 31st of March of the next year.
Chapter 3. Public nancing

Subsidies from the state budget
ART. 14 (1). Political parties receive annually subsidies from the state's budget, according to the law. (2) The total amount assigned annually to political parties cannot exceed 0,04% of the income stipulated in the state's budget. For political parties that promote women on their electoral lists, on eligible places, the total amount assigned will be increased proportionally with the number of mandates obtained in the elections by the women candidates. (3) The subsidy from the state's budget is granted under the following criteria: a) number of votes received in parliamentary elections; b) number of votes received in local elections. (4) In the case of political or electoral alliances, the subsidy will be divided, according to the agreement, among the members of the alliance, or, in case of no agreement, according to the number of mandates obtained. ART. 15 75% of the annual budget granted to political parties will be divided to political parties, giving each a
proportional amount with the number of votes received in the parliamentary elections, which is the average of the valid votes cast for the Chamber of Deputies and the Senate, if they reached the electoral threshold. ART. 16 25% of the annual budget granted to political parties will be divided to political parties, giving each a proportional amount with the number of valid votes, received in the local elections for county and Bucharest Municipality counsellors, if they obtained at least 50 county and municipal counsellors mandates. ART. 17 Political entities and political or electoral alliances receive annual grants from the state budget under the conditions provided by the law. ART. 18 (1) The subsidy from the state budget shall be monthly transferred within the bank account of each political party, through the budget of the Permanent Electoral Authority, and it shall be distinctly registered within the accounting books of the political parties. (2) At the level of the Permanent Electoral Authority, a specialized department for the allocation of the subsidy from the state budget shall be set up. ART. 19 (1) Granting the subsidy from the state budget may be temporarily suspended by decision of the Permanent Electoral Authority for breaching the provisions of art. 3 para. (3), art. 4 para. (4), art. 9, art. 11 para. (3), art. 12 para. (1), art. 13 para. (4), art. 39 and art. 40 para. (2), until fullling the legal requirements. (2) The Permanent Electoral Authority shall previously notify the political party on the irregularities they have found, as well as on the deadline for their remedy. (3) The deadline granted to the political parties for the remedy of the irregularities cannot exceed 15 days. (4) The decision on the temporary suspension of the monthly instalments from the state budget can be challenged in a term of 15 days from the communication at the competent administrative contentious court, which shall render a decision in 15 days since the complaint was led. The decision of the court is nal and irrevocable. (41) On the period of temporary suspension of the subsidy, the amounts shall be kept by the Permanent Electoral Authority until the court renders a nal decision, and the amounts shall not be reimbursed, at the end of the year, at the state budget. (5) In term of 10 days from the written notications of the political party regarding the addressing of the irregularities, the Permanent Electoral Authority shall render a decision on lifting the decision on the suspension of the monthly instalments. ART. 20 (1) The incomes representing subsidy from the state's budget can have the following destinations: a) expenses for maintenance and functioning of premises; b) personnel expenses; c) expenses for media and propaganda; d) expenses for organizing political activities; e) expenses for travelling inside the country and abroad; f) telecommunications expenses; g) expenses with foreign delegations; h) expenses for fees owed to international political organizations the party is afliated to; i) investments in movable and immovable (real estate) assets, necessary for the activity of the parties; j) protocol expenses; k) ofce equipments expenses; l) electoral campaign expenses . (2) The use of the incomes from public funding for any other destinations than those mentioned at para (1) above is forbidden. (3) The leading bodies of political parties will decide the effectiveness and appropriateness of these costs, according to their statute and to the legal provisions. ART. 21 (1) The authorities of the central and local public administration shall ensure, with priority, in a term of maximum 90 days from the request, premises for the central and local headquarters of the political parties, as well as the due lands, at their motivated solicitation. (2) The political parties are allowed to receive maximum one headquarter for an administrative territorial unit. (3) Renting by the local authorities of the premises for the headquarters of the political parties is subject to the juridical regime for renting premises for housing. (4) The political parties ceasing their activity as a result of reorganization, self dissolution or dissolutions mentioned within nal decisions of the courts have the obligation to handle the local public administration authorities, in a term of 30 days, the premises they had detained through a renting contract with these authorities. The premises detained in their own patrimony shall be transmitted according to the law. (5) In a term of 30 days, the Bucharest Tribunal shall notify on the ceasing of the activity of the political party the Ministry of Interior and the Administrative Reform and the Permanent Electoral Authority.
(6) In a term of 15 days from receiving the notication, the Ministry of Administration and Interior shall transmit these decisions to the prefect institution in all the counties and the Bucharest municipality for taking over the premises rented by the public authorities, through bailiffs, if they had not been handled within the legal term. ART. 22 The payment of all the expenses of a political party related to the telecommunications, electrical energy, gas, etc is the exclusive responsibility of this party and the price shall be the one for the premises for housing.
Chapter 4. Financing during the electoral campaigns

SECTION 1 Contributions for the electoral campaigns
ART. 23 (1) The donations and legacies received from natural or legal persons after the beginning of the electoral campaigns shall be declared to the Permanent Electoral Authority by the nancial manager, in a term of 5 working days from receiving them. (2) The donations and legacies received after the beginning of the electoral campaigns shall be used for the electoral campaign only after declaring them at the Permanent Electoral Authority. ART. 24 (1) Campaign nancing, directly or indirectly, by foreign natural or legal persons is forbidden. (2) All the amounts received in such conditions shall be conscated and made revenue at the state budget. ART. 25 (1) Financing in any way the electoral campaign of a political party, alliance of political parties or an independent candidate by public institutions, autonomous administrations, national companies, trade companies or banks where the state or territorial administrative units are main shareholders, or by commercial societies deploying activities nanced by public funds is forbidden. This interdiction is applicable to the commercial societies which, 12 months before the beginning of the electoral campaign have deployed activities nanced by public funds. (2) Trade unions, religious cults, and associations or foreign foundations are forbidden to nance, in any way, the electoral campaigns of a political party, an alliance or an independent candidate. (3) All the amounts received by breaching the provisions of para (1) and (2) shall be conscated and made revenue at the state budget.
SECTION 2 Financial manager

ART. 26 (1) Receiving donations or legacies from natural or legal persons shall be done only through a nancial manager, appointed for this purpose by the leading bodies of the political party. (11) In the case of the elections for the Chamber of Deputies and Senate, the donations and the legacies for a candidate or political party, received after the ofcial announcement of the elections date, shall be done only through a nancial manager of the candidate or of the political party. This manager may be appointed by the leading bodies of the political parties, of the political alliances, electoral alliances, organizations of the Romanian citizens belonging to national minorities, for their candidates, or he/she may be personally chosen by each candidate. (2) The nancial manager has the obligation to keep the evidence of the nancial operations, as it follows: a) at national level, in the case of elections for the President of Romania and for the elections of Romania's representatives within the European Parliament; b) for each electoral college, in the situation of the elections for the Chamber of Deputies and for the Senate; c) for each electoral county circumscription, in the situation of the elections for county counsellors and presidents of the county councils; d) For each electoral local circumscription, for the candidates for the mayor and local counsellors functions. (3) The nancial manager has the following attributions: a) organizes the book keeping for the incomes received for the electoral campaign, the transfer of other funds coming from the revenues obtained in other periods than the electoral one, as well as the expenditure made for the electoral campaign; b) Checks the legality of the nancial operations made during the electoral campaign, the observance of the legal provisions on the donations registered in the period between the ofcial announcement of the elections date and the end of the electoral campaign; c) Sends to the Permanent Electoral Authority the report on the observance of the legal conditions regarding the nancing of the political parties during the electoral campaign. (4) The nancial manager is held responsible together with the political party which appointed him/her for the
legality of the nancial operations made during the electoral campaign as well as for the observance of the provisions of art. 23 - 25. (5) The nancial manager may be a natural or a legal person. (6) A political party may have several nancial managers, at a central level, for the territorial branches or for the candidates; in this situation their powers of manager shall be clearly delimited and a coordinating nancial manager shall be appointed. (61) The coordinating nancial manager is representing the party in the relationship with the Permanent Electoral Authority. (62) During the campaigns for the elections of the Chamber of Deputies and the Senate, the nancial operations of each candidate are registered by a personal nancial manager, which may be the same for several candidates. The nancial managers of the candidates shall send the reports stipulated by the law to the Permanent Electoral Authority, through the coordinating nancial manager. (63) The Permanent Electoral Authority can request, whenever it considers necessary, supplementary documents or explanations to the nancial managers of the candidates. (7) The services of the same nancial manager cannot be used by several political parties, with the exception of the situation in which the political parties are part of the same political or electoral alliance. (8) The quality of nancial manager is obtained only after its ofcial registering at the Permanent Electoral Authority. The registering of the nancial manager shall be made in the period between the moment of the ofcial announcement of the elections date and the beginning of the electoral campaign, being published within the newspapers or on the website of the political party. (9) The candidates are not allowed to be nancial managers. ART. 27 The provisions of art. 26 shall be applied accordingly to the independent candidates. ART. 28 The expenditures for the organization and deploying of the electoral operations shall be paid from the state budget, or, as the case may be, the local or county budgets, according to the provisions of the electoral law. ART. 29 (1) The access to the public radio and TV services during the electoral campaign, as well as to the special places of electoral billing is guaranteed and shall be ensured according to the provisions of the electoral laws. (2) The political parties and alliances, as well as the independent candidates, have the obligation of printing on all their propaganda materials the following information: a) the full name of the independent candidate , the name of the political party or the political or electoral alliance which has ordered them, as the case may be; b) the name of the economic operator which made them . (3) The expenditure regarding the electoral propaganda materials are paid exclusively by their beneciaries independent candidates, political parties or political or electoral alliances. (4) Political parties and alliances, as well as the independent candidates have the obligation to declare to the Permanent Electoral Authority, through the nancial manager, the number of the electoral propaganda materials which were produce, on categories. (5) It shall be deemed electoral propaganda material any written, audio or video material fullling the following conditions: a) it refers to a clearly identied candidate or political party ; b) It is used during the electoral campaign, established according to the law on the elections organization; c) it has an electoral objective and it is aimed for the public; d) it goes beyond the limits of the journalistic activity of informing the public. (6)Using the written, audio or video material for the election of the leading bodies of the political parties shall not be made by breaching the provisions of para (5) letters b) d)
SECTION 3 Maximum limits of expenditure

ART. 30 (1) The maximum limits of the expenditure a political party or alliance can make in each electoral campaign shall be calculated by summing up the maximum values allowed by the law for each candidate proposed for the elections. (11) At central level, over the maximum limits allowed for each candidate, the party can spend a sum of maximum 50 minimum gross salaries at national level for each candidate. (2) The maximum values allowed for each candidate are settled according to the minimum gross salary at national level, valid on 1st of January of the electoral year, as it follows: a) 350 minimum gross salaries at national level for each candidate for the Deputy seat; a1) 500 minimum gross salaries at national level for each candidate for the Senator seat;
b) 2.500 minimum gross salaries at national level for each candidate for the seat of Romania's representative within the European Parliament; c) 50 minimum gross salaries at national level for each candidate for the seat of county or local counsellor in the General Council of the Bucharest Municipality d) 30 minimum gross salaries at national level for each candidate for the seat of local counsellor in the councils of the municipalities - county capital and in the councils of the districts of the Bucharest Municipality. e) 25 minimum gross salaries at national level for each candidate for the seat of counsellor in the councils of cities and municipalities; f) 20 minimum gross salaries at national level for each candidate for the seat of counsellor in the councils of communes; g) 10.000 minimum gross salaries at national level for each candidate for the seat of general mayor of the Bucharest Municipality; h) 2.500 minimum gross salaries at national level for each candidate for the seat of mayor of a district in the Bucharest Municipality or of another city or municipality; i) 30 minimum gross salaries at national level for each candidate for the seat of mayor of a commune; j) 3.500 minimum gross salaries at national level for each candidate for the seat of president of a county council. (3) The maximum limits of expenditure mentioned at para (2) are also applicable for independent candidates. ART. 31 (1) The candidates proposed for the elections by a political party are allowed to nance electoral propaganda activities only through the political party. (11) In the case of the electoral campaign for the election of the Chamber of Deputies and the Senate, at the level of county electoral circumscriptions, each party shall open, as the case may be, an account of the party or an account or sub- account for each candidate for the deputy or senator function. (12) The electoral propaganda activities of each candidate, as well as the donations and the legacies received by each candidate in the name of the party shall be deployed only through the accounts or sub-accounts stipulated at para (11). (2) The amounts of money received from the candidates proposed for elections by a political party shall be deemed donations and the provisions of this law shall be applied accordingly. (3) The provisions of this law are not applicable for the bank deposits made with the view of ling the candidateship documents for the deputy or senator function, stipulated by art. 29 para. (5) - (7) of the Law no. 35/2008 on the election of the Chamber of Deputies and the Senate and on amending the Law no. 67/2004 on the election of the local public administration authorities, the Law no. 215/ 2001 on the local public administration and the Law no. 393/2004 of the statute of the local elected ofcials, with further amendments. ART. 32 (1) Until the validation of the mandates, the leading bodies of the party, of the county organization, the candidates at the deputy or senator function, or as the case may be, the independent candidate shall le at the Permanent Electoral Authority a declaration on the observance of the limits stipulated at art. 30 para (2). (2) The amounts exceeding the limits stipulated at art 30 para (2) shall be made revenue at the state budget. ART. 33 (1) The maximum limit of expenditure that a party, political alliance or independent candidate can spend during the electoral campaign for Presidential elections is 25.000 minimum gross salaries at national level. (2) The provisions of art. 23 - 29, of art. 32, 39, 42 and 47 shall be applied accordingly. (3) In the situation in which the elections for the President of Romania are taking place at the same time with the elections for the Chamber of Deputies and Senate, the political parties which propose a candidate for the function of President of Romania shall appoint a special manager for the electoral campaign of that candidate. ART. 34 When a candidate is proposed for more functions in an electoral campaign, the maximum limit of the expenditures which can be made shall be established at the biggest value, according to art 30 or 33, as the case may be.
Chapter 5. The control of nancing the political parties and the electoral campaigns
ART. 35 (1) The Permanent Electoral Authority is the public authority authorized to control the observance of the legal provisions on nancing the political parties, the political or electoral alliances, the independent candidates and the electoral campaigns. (2) The control of the subsidies from the state budget shall be also made simultaneously by the Court of Accounts, according to the provisions of the Law no. 94/1992 on the organization and functioning of the Court of Accounts, republished, with further amendments.
(3) Within the Permanent Electoral Authority, a Department for the control of nancing the political parties and the electoral campaigns shall be set up in 60 days from the date of this law's entering into force, by supplementing the existent personnel scheme. (4) The Department for the control of nancing the political parties and the electoral campaigns shall be run by a general director, appointed in a term of 90 days since this law's entering into force. (5) Any person cumulatively fullling the following conditions can be appointed as a general director of the Department for the control of nancing the political parties and the electoral campaigns: a) he/she can occupy a function, under the conditions mentioned at art. 11 para (1) letters a) h) in the Law no. 7/ 2006 on the statute of the parliamentary public servant; b) he/she has a university diploma for economic or juridical sciences; c) He/she has not been a member of a political party during the last 5 years. (6) The contest for occupying the function stipulated at para (4) is organized by a special commission, made of 7 members, appointed in a term of 30 days from the date of this law's entering into force, through order of the president of the Permanent Electoral Authority; the members of the commission shall be professors with economic or juridical studies. (7) The Commission stipulated at para (6) shall settle the regulation of the contest and designate the winning candidate, who shall be appointed in the function by the president of the Permanent Electoral Authority, in a term of 15 days from the designation. (8) The general director of the Department for the control of nancing the political parties and the electoral campaigns has the following exclusive attributions: a) organizes the activity of control of nancing the political parties ; b) coordinates the activity of the subordinated personnel; c) Proposes the application of the sanctions stipulated by the law to the president of the Permanent Electoral Authority. ART. 36 (1) Every year, and each time a request is led, the Permanent Electoral Authority veries for each party the observance of the legal provisions on the nancing of the political parties. (2)The Permanent Electoral Authority may receive requests from any person bringing evidence regarding the non observance of the legal provisions on the nancing of the political parties. (3) The deed of the person mentioned at para (2) of making in bad faith false statements regarding the non observance of the legal provisions on the nancing the political parties is an offence and shall be punished with imprisonment from 1 to 3 years. (4) The annual report shall be published within the Romania's Ofcial Journal, Ist part, as well as on the Permanent Electoral Authority webpage until the 31st of March of the next year. (5) The Permanent Electoral Authority can also control the observance of the legal provisions on the nancing the political parties when there are some suspicions on breaching the legal provisions on the nancing the political parties, either at the request of any interested person, or ex ofcio. (6) The results of each control shall be published within the Romania's Ofcial Journal, Ist part, as well as on the Permanent Electoral Authority webpage in a term of 15 days from that control. ART. 37 The public authorities have the obligation to support the Permanent Electoral Authority when making the control on the nancing the political parties. ART. 38 (1) In a term of 15 days from the date of the elections, the nancial manager has the obligation to present the Permanent Electoral Authority a detailed report of the electoral incomes and expenditures for each political party, political alliance, electoral alliance, organizations of the Romanian citizens belonging to national minorities or independent candidate. (11) After the expiration of the term stipulated at para (1), the Permanent Electoral Authority shall inform the public about the list of the political parties, political alliances, electoral alliances, organizations of the Romanian citizens belonging to national minorities or independent candidates having sent the detailed report of the electoral incomes and expenditures, turn by turn as they are transmitted to the Authority, by successive publishing within the Romania's Ofcial Journal, Ist part. (2) The reports shall be published by the Permanent Electoral Authority within the Romania's Ofcial Journal, Ist part, in a term of 30 days since the publication of the result of the elections. (3) The mandates of the candidates who have been declared elected cannot be validated if the detailed report of the electoral incomes and expenditures for each political party or independent candidate has not been sent under the conditions of the law. ART. 39 (1) For verifying the legality of the cash and payment operations made by the political parties, the Permanent Electoral Authority can request supplementary declarations and documents if necessary (2) The political parties have the obligation to present the requested documents to the representatives of the
Permanent Electoral Authority inn a term of 15 days. (3) In a term of 30 days from receiving the report, or as the case may be, of the supplementary requested documents, the Permanent Electoral Authority shall render a decision on the legality of the electoral accounting books and of the made payments. (4) If irregularities are found, the sanctions provided by this law shall be applied. (5) The decision rendered according to the para (3) may be challenged at the competent court under the conditions of the law. ART. 40 (1) The Permanent Electoral Authority has the obligation to publish on its webpage all the reports which have to be published within the Romania's Ofcial Journal, Ist part according to the art. 4 para (4), art. 9 para. (1) and (2), art. 11 para (3), art. 12 para (3), art. 13 para (4) and art. 38 para (2), as well as the declarations stipulated by art. 23. (2) The political parties have the obligation to sent the data mentioned at para (1) in electronic format.
Chapter 6. Sanctions
ART. 41 (1) Breaching the provisions of art. 3 para (2) and (3), art. 4 para (3) and (4), art. 5, 6, 7, 8, 9, art. 10 para (2) and (3), art. 11 para (1) and (3), art. 12 para (1) and (3), art. 13 para (1) and (2), art. 20 para (2), art. 23, art. 24 para (1), art. 25 para (1) and (2), art. 26 para. (1), (2), (3), (7) and (9), art. 29 para (2) - (4) and (6), art. 30 para (2) and (3), art. 31, 38 and art. 39 para (2) shall be deemed contraventions and punished with a ne from 5.000 lei to 25.000 lei. (2) The sanctions shall be applied, as the case may be, to the political party, the independent candidate, the nancial manager and/or the donor who has breached the provisions of para (1). ART. 42 (1) In the situations mentioned at art 41 para (1), the person who has committed the contravention shall transfer to the state budget the amounts of money and/or the money value equivalent to the assets and services which were the object of the contravention, on the basis of the decision of the Permanent Electoral Authority. (2) In the same way, the donations accepted by a political party undergoing dissolution, or by a political party acting on the basis of a modied statute, although the modications have not been communicated to the Bucharest Tribunal, according to the legal provisions, or the court has rejected the request on the approval of the statute's modication, shall be made revenue at the state budget. ART. 43 (1) The contraventions stipulated at art 41 are found by the representatives of the Permanent Electoral Authority, and the sanction shall be applied through decision of the Permanent Electoral Authority. (2) The decision of the Permanent Electoral Authority may be challenged at the competent court, under the conditions of the law. ART. 44 The provisions of the art 41 and 43 shall be completed with the provisions of the Government Ordinance no. 2/2001 on the juridical regime of the contraventions, approved with amendments through the Law no. 180/2002 , with further amendments. ART. 45 (1) In a term of 30 days from the date when the court decision on the minute regarding the contravention remained nal and irrevocable, or , as the case may be, from the expiration of the term for challenging the minute regarding the contravention, the amounts equivalent to the unpaid nes may be withhold from the monthly instalments which are to be paid as public nancing, with the application of the procedure regarding the enforcement of court decision through garnishment, stipulated within the Government Ordinance no. 92/2003 on the Fiscal Procedure Code, republished, with further amendments. (2) The Ministry of Public Finances, through its authorized bodies, shall inform the Permanent Electoral Authority on the fact that the nes applied by the Permanent Electoral Authority have not been paid within the term provided for in para (1). ART. 46 (1) In the situation in which, through a nal court decision, one or more candidates of a political party who have been declared elected were convicted for an offence related to the nancing of the political party or, as the case may be, of the electoral campaign, they become incompatible with the position of parliamentarian or local elected for the obtained mandate, which shall be annulled. (2) The incompatibility status shall be found through decisions of the Chambers of the Parliament, or as the case may be, of the county or local council, and the vacant positions of deputies, senators or counsellors shall be occupied by the alternate representatives on the list of that political party. (3) The provisions of para (1) and (2) shall be also applied to the political alliances, electoral alliances and independent candidates, in this situation the vacant position being occupied by the alternate representative of the political party or electoral alliance which has obtained the biggest number of valid votes.
ART. 47 The procedure for the application of the measures within the art 46 shall be mentioned within the Regulations of the Chambers of the Parliament, as well as the regulations of the county and local councils.
Chapter 7. Final transitory provisions

ART. 48 The provisions of this law shall be accordingly applied to the organizations of the Romanian citizens belonging to national minorities which are assimilated to the political parties, political alliances, electoral alliances and independent candidates, under the conditions of the electoral law. ART. 49 (1) The Permanent Electoral Authority keeps a scal register of the political parties, political alliances and independent candidates, in which the data on their nancial activity, as well as the applied sanctions shall be recorded. (2) In a term of 120 days from the date of this law's entering into force, the Permanent Electoral Authority shall take over, on a minute basis, the scal register from the Court of Accounts. ART. 50 The Law no. 373/2004*) on the election of the Chamber of Deputies and of the Senate, published in Romania's Ofcial Journal, Ist part, no. 887 on 29th September 2004, with further amendments, is modied as it follows: 1. Article 28, para (2) shall have the following content: "(2) The organization and functioning of the structures of the Permanent Electoral Authority, the number of positions, the personnel's statute, its attributions and organizational structure shall be settled trough the Regulation for the organization and functioning, approved through decision of the permanent ofces of the two Chambers of the Parliament, at the proposal of the Permanent Electoral Authority. The personnel of the Permanent Electoral Authority has the same statute as the personnel of the two Chambers of the Parliament. The provisions of the art XVI within the Title III of the Book II in the Law no 161/ 2003 on certain measures for ensuring the transparency in exercising high rank ofcial functions, the public functions and in the business environment, as well as for preventing and sanctioning the corruption, with further amendments shall not be applicable for the organization and functioning of the structures of this authority. 2. Article 29 para (4) shall have the following content: "(4) In fullling its attributions, the Permanent Electoral Authority adopts decisions, resolutions and instructions, which shall be signed by the president and by the vice presidents. The decisions of the Permanent Electoral Authority shall be published in Romania's Ofcial Journal, Ist part, and they are mandatory for all the bodies and authorities having electoral attributions. *) The Law no. 373/2004 was repealed through the Law no. 35/2008. ART. 51 The new organizational structure of the Permanent Electoral Authority shall be approved through decision of the permanent ofces of the two Chambers of the Parliament, for ensuring the functioning of the Department for the control of nancing the political parties and the electoral campaigns and of the specialized department for the allocation of the subsidy from the state budget. ART. 52 (1) In a term of 90 days from the date of this law's entering into force, the methodological norms for the application of the provisions of this law shall be elaborated and sent for approval by Government Decision, at the proposal of the Permanent Electoral Authority. (2) The methodological norms shall regulate: a) the current accounting of the political parties; b) the modalities and the form of registering, keeping the list and publishing the donations, membership fees and other incomes of the political parties; c) granting and using the state subsidies; d) specic modalities and forms of registering the incomes and expenditures within the electoral campaign ; e) the attributions of the nancial manager; f) the procedure and methodology of the control. ART. 53 *** Repealed NOTE: Here are the provisions of art. IV para (2) (11) in the Government Emergency Ordinance no. 1/2007, as it was amended by art I of the Emergency Government Ordinance no. 8/2007 and by art II of the Emergency Government Ordinance no. 84/2007. "(2) The provisions of art. 14 -19 in the Law no. 334/2006, with further amendments, on granting the subsidies
from the state budget shall be suspended until 31st December 2007. (3) In 2007, the political parties shall be granted subsidies from the state budget through the budget of the General Secretariat of the Government, according to the following methodology: 1. The subsidy shall be monthly transferred within the account of each political party through the budget of the General Secretariat of the Government and it shall be distinctly registered within the accounting books. The annual sum allocated to the political parties cannot exceed 0,04% of the incomes provided for the state budget. 2. The political parties which at the beginning of a legislature have representatives in the parliamentary groups, at least in one Chamber, shall receive a basic subsidy. The total amount of the basic subsidies represents 1/3 of the budgetary subsidies allocated to the political parties. 3. The political parties represented within the Parliament also receive a subsidy proportional with the number of the obtained mandates. The total amount for a mandate shall be set up by dividing the rest of 2/3 of the state subsidies for the political parties at the total number of the members of the Parliament. 4. The total subsidy granted from the state budget to a political party, after all these operations, cannot exceed 5 times the basic subsidy. 5. The political parties which don't have parliamentary mandates, but have obtained at most 1% under the electoral threshold, shall receive equal subsidies, established by dividing the unused sum, according to the provisions of point 4, at the number of political parties which are in such situation. The total amount granted to the non parliamentary political parties cannot exceed a basic subsidy. 6. The unused sums after the redistribution, according to the provisions of point 5, shall be divided to the political parties proportionally with the number of their mandates. 7. The unused sums at the end of the nancial year shall be carried up for the next year. (4) The funds allocated through the Law no 486/2006 on the State budget for 2007, with further amendments, for nancing the political parties, funds which are mentioned within the budget of the Permanent Electoral Authority, shall be transferred, having the same destination, to the budget of the General Secretariat of the Government. (5) The Ministry of Public Finances is authorized to introduce at the proposal of the main credits chiefs account the necessary amendments within the structure of the state budget , as well as within the volume and structure of the budget of the General Secretariat of the Government and of the Permanent Electoral Authority. (6) Until the date of 31st December 2007, the control attributions of the Permanent Electoral Authority, referring to granting the subsidies from the state budget, as well as the control, evidence and sanction attributions referring to the nancing of the electoral campaigns, attributions stipulated within the Law no. 334/2006 with further amendments, shall be exercised by the Court of Accounts. (7) In a term of 15 days from the publishing of the result of the elections, the nancial manager appointed according to the Law no. 334/2006, with further amendments, has the obligation to send a detailed report of the electoral incomes and expenditures both to the Permanent Electoral Authority and the Court of Accounts a detailed (8) For checking the legality of the cash and payment operations made during the electoral campaign, the Court of Accounts can request any supplementary declarations and documents it considers necessary. (9) In a term of 30 days from receiving the report stipulated at para (7) or, as the case may be, the requested supplementary documents, the Court of Accounts, having the composition mentioned in art 56 of the Law no 94/1992 republished, with further amendments, shall render a decision on the legality of the electoral book keeping and the made payments. If there are some irregularities or breaching of the legal provisions regarding the electoral incomes and expenditures, the Court of Accounts, having the same composition, may decide on the total or partial restitution of the subsidy from the state budget. (10) The decision rendered by the Court of Accounts, according to the para (8), may be challenged at the High Court of Cassation and Justice, under the conditions of the Law. (11) The provisions of the para (3) and (4) shall be applied accordingly for the organizations of the Romanian citizens belonging to national minorities."
Government Decision no. 749 of July 11, 2007 on approving the Methodological Norms for applying Law no. 334/2006 on nancing activities of political parties and electoral campaigns
It approves the Methodological Norms for applying Law no. 334/2006 on nancing activities of political parties and electoral campaigns, in Annex forms an integral part of this decision. ANNEX 1 METHODOLOGY RULES For the application of Law no. 334/2006 on nancing activities of political parties and electoral campaigns.
Chapter 1. General Provisions

ART. 1 These detailed rules shall specify how the application of Law no. 334/2006 on nancing activities of political parties and electoral campaigns, as amended, hereinafter Law 334/2006. ART. 2 (1) The purpose of these detailed provisions, terms and expressions used have the following meanings: a) political party - the political association, as dened in Art. 1 of Law no. 14/2003 on political parties; b) election campaign - political activity undertaken by a political party to promote his electoral program in a specic period determined by law, general or partial elections for local authorities, the Romanian Parliament, President of Romania and the European Parliament and the referendum; c) Gender - applying the same legal rules in the nancing of political parties work to prevent creating advantages or disadvantages to any political party; d) competition policy - a legal political party activity, held in opposition to other parties, in order to achieve its political program and / or election; e) nancing activities of political parties - the parties to obtain cash funds from funding sources provided for in Art. 3 of Law no. 334/2006; c) transparency in funding - public disclosure through publication in the Ofcial Gazette, Part I, funds and materials obtained by the parties in legal sources and expenditure; g) the fair value of assets - market value of goods movement on liberality, established by law; h) liberality - free acts performed under the provisions of the Civil Code; i) the tax year - nancial year, as dened in Art. 2 pts 1 of Law no. 500/2002 on public nance, as amended. (2) Financing activities of political parties based on the principles of transparency and equal opportunities in political competition between them. (3) Financing activities of political parties can not seek to limit or hindering their independence campaign. (4) nancing activities of political parties and electoral campaigns are conducted only by law. ART. 3 (1) Political parties may have under the law, movable and immovable property to use in achieving their specic activities, including election campaigns. (2) Possession, use and / or alienation of movable or immovable is made according to the law. (3) Duties and taxes owed by political parties for the owned movable and immovable property are paid in accordance with the law. (4) Political parties can not constitute collateral or separate ownership of buildings received for public or private premises of the state or local authorities. ART.4 (1) Transparency of political party funding sources is provided in accordance with Art. 3 of Law no. 334/2006. (2) For control reasons, political parties are required to submit all documents relating to their funding sources. (3) Financing activities of a political party shall be ensured only from the sources referred to in Art. 3. (1) of Law no. 334/2006. (4) The receipt of donations and legacies aimed at limiting the independence of political parties or their diversion from satisfying their public mission is prohibited by law.
Chapter 2. Current accounts of political parties

SECTION 1 General principles
ART. 5 (1) Political parties are obliged to organize their own accounts at central and county branch level, according to legal provisions. For this purpose they may create their own special compartment or lease services of accounting rms. (2) Organization of political parties accounts are done in accordance with accounting regulations for non-prot legal persons, approved by Ministry of Public Finance no. 1829/2003. Income, expenses and results should be developed to meet the accounting and reporting requirements for each activity or current election, and to identify the branch, organization or candidate. (3) The records of income is kept separately for each funding source provided by law. (4) All nancial transactions of payments and receipts of political parties are carried out through bank accounts
and foreign currency opened at banks located in Romania, and cash, according to law. (5) Payment of the membership fee shall be based on the tally-sheet or receipt, except for amounts which, in one installment, are 3 national gross minimum wage or more, which is done under para. (4). (6) Political parties are not liable for income taxes from activities referred to in art. 3. (1). c) of Law no. 334/2006. (7) Inventory of assets is made in accordance with rules for organization and inventory of assets and liabilities, approved by Ministry of Public Finance no. 1753/2004, as amended.
Section 2 Modalities and registration form, registration and publication of donations, membership fees and political parties' own revenue
2.1. Donations and related ART. 6 (1) Liberalities received by a political party consisting of donations and/or legacies according to the provisions of the Civil Code. Donations also include hand gifts whose value exceeds 3 gross minimum wage country. (2) In a scal year, the liberalities received by a political party can not exceed the amounts provided for in art. 5. (1) - (5) of Law no. 334/2006. (3) If during the scal year, adjustments occur to the state budget, the ceilings set out in para. (2) remain unchanged. (4) Donations received from natural persons are signed up separately, on donors, in the donation sheet for natural persons, form FD1a, and are also registered in the annual summary record of the donor natural person, form Fd2a. (5) At the end of the year, the donations made by each donor and stored in form FD2a shall be totalized, checking compliance with the prescribed amount of art. 5. (3) of Law no. 334/2006, the difference being made revenue to the state budget. (6) Donations received from legal persons are signed up in the donation sheet for legal persons, form FD1b, and are also registered in the annual record of the donor legal person, form Fd2b. (7) At the end of the year, the donations made by each donor and stored in form FD2b shall be totalized, checking compliance with the prescribed amount of art. 5. (4) of Law no. 334/2006, the difference being made revenue to the state budget. ART. 7 (1) The total amount of donations from legal persons directly or indirectly controlled by another person or group of natural or legal persons may not exceed the ceilings laid down in art. 5. (3) and (4) of Law no. 334/2006. (2) Direct control of a legal person by a person or group of natural or legal persons shall be made where a person or group of individuals owns more than 25% including the value of its shares and indirect control is achieved when the percentage is below 25% but less than 5%. (3) The donation includes the fair value of movable and immovable property donated to the party and its services free of charge, within the art. 5 para. (1) - (4) of Law no. 334/2006. (4) Legal persons making donations under art. 5 para. (7) of Law no. 334/2006 are required to submit the declaration referred to in Art. 5 para. (8) of Law no. 334/2006. (5) At the time of donation, the political party has a legal obligation to require the donor a declaration on his own accountability stating that the conditions under par. (4) are observed and also documents showing that the conditions under par. (1) and (2) are met. (6) It is prohibited for political parties to accept in any way, directly or indirectly, donations of material goods, money or free services, made with the obvious aim of achieving a political or economic advantage to the donor or in breach of para. (1), (2) and (4). ART. 8 (1) The price reductions exceeding 20% of the goods or services offered to political parties and independent candidates are considered donations and are recorded separately in the accounts of their own party or independent candidate in accordance with applicable accounting regulations issued by the Ministry of Economy and Finance. (2) Upon receipt of the liberalities, verication and registration of donor is binding, regardless of their public or condential nature. (3) Upon the written request of the donor or of the executor for legacy, the identity of the persons making donations shall be kept condential, when they are within the annual amount of 10 minimum salaries national gross. (4) The total amount received by a political party as condential donations or legacies cannot be higher than the amount provided for in art. 7 para. (3) of Law no. 334/2006. ART. 9 (1) The liberalities shall be adequately highlighted in the records, separately on donations and legacies, by
specifying the date on which they were made and other information to identify sources of funding. (2) Other information identifying the funding sources of donations refers to the scal identication code of the legal person, bank account and bank payments were made, and the address of the testator or executor of the property, when donations and legacy of immovable goods are concerned, as well as any other information. (3) Donations of goods and services provided free of charge shall be accounted at their fair value determined under the law. (4) The voluntary activities performed according to the law shall not be considered donations and shall not be accounted for. (5) The activities in which political parties can use volunteering are those provided in art. 2 let. b) of Law no. 195/2001 on volunteering, republished. ART. 10 (1) Political parties are obliged to publish in the Ofcial Journal, Part I, until March 31 next year, the list of natural and legal persons who, in a scal year, made donations whose single or cumulated value exceeds 10 gross minimum wage country and the total amount of condential liberalities. (2) The list referred to in para. (1) shall include the data referred to in art. 9 para. (2) of Law no. 334/2006. (3) The donations at the level of each branch shall be recorded in forms FD3a and FD3b; these are centralized by each party in forms FD4a and FD4b, containing data needed to donations publication in the Ofcial Journal of Romania, Part I. (4) The condential donations shall be recorded by the party in form FD5, which collects the data for publication in the Ofcial Journal, Part I, under para. (1). (5) At the end of the year, the donations received shall be centralized in form FD6 that will be submitted to the Permanent Electoral Authority until March 31 next year. ART.11 (1) The use by political parties of nancial, human and technical resources belonging to public institutions, regies autonomous, national companies, trade companies and banking companies in which the state or administrativeterritorial units are majority shareholders, in their own activity or campaign, under other conditions than those set by electoral law, is prohibited according to art. 10 para. (1) of Law no. 334/2006. (2) Political parties may not accept donations or free services provided from an authority or public institution, a regies autonomous or a national company, a trade company or a banking company majority state owned. (3) Political parties are prohibited to accept donations of any kind from a union or a religious cult, according to art. 10 para. (3) of Law no. 334/2006. (4) The amounts received in violation of para. (2) and (3) shall be applied art. 10 para. (4) of Law no. 334/2006. (5) Paragraph. (1) - (4) shall apply accordingly and political alliances, electoral alliances and independent candidates. ART.12 (1) Political parties, political alliances, electoral alliances and independent candidates cannot accept donations from other states, organizations, natural and legal persons abroad, according to art. 11 para. (1) of Law no. 334/2006. (2) Donations representing material goods necessary for political activity, which are not electoral propaganda materials, coming from international political organizations to which the party is afliated or from political parties or political formations having political cooperation relations are excepted from the above mentioned rule. (3) Donations under para. (2) must be within reasonable limits, necessary to the political parties' activities for no more than 365 days in a scal year. (4) Propaganda materials to be used only within the campaign to elect members of Romania in the European Parliament can be received. (5) Donations under para. (2) published in Ofcial Journal, Part I, until March 31 next year. (6) Donations under para. (2) are exempt from customs duties, except vehicles. (7) Amounts received in contravention of para. (1) shall be subject to art. 11 para. (5) of Law no. 334/2006. (8) If the amounts provided in para. (7) were spent in whole or in part, their value is deducted from other income, excluding allocations from the state budget. (9) The decision of the Permanent Electoral Authority stating breach of regulations under para. (1) and ordering conscation, as well as the decision to apply the misdemeanour may be appealed before the competent court according to law. Provisions of Government Ordinance no. 2/2001 on the legal regime of misdemeanours, approved with amendments by Law no. 180/2002, with subsequent amendments, shall apply accordingly. 2.2. Membership fees ART. 13 (1) Total revenue received by a political party from membership fees are not ceiled. (2) The membership fee paid by a party member in a year may not exceed the ceiling laid down in art. 4 para. (3) of Law no. 334/2006.
(3) The maximum amount of membership fees received by a party in a given year is the result of multiplying the number of party members at the ceiling provided in para. (2). (4) Collection of contributions is made within the organization by form Fc2. (5) The membership fee shall be registered in the personal statement record contributions, form FC1, which is kept at the level of the organization. At the end of year, the contributions paid during the year shall be accounted for every member of the party, and if for some members total contribution exceeds the amount provided for in art. 4. (4) of Law no.334/2006, the form FC3 shall be lled in - list of party members who paid membership fees in an amount that exceeds summed scale of 10 national gross minimum wage. This form is forwarded from the organization/branch to central level. (6) Political parties must publish in the Ofcial Journal, Part I, until March 31 next year, the total income from membership fees, and the list of party members who paid in one year membership fees in an amount that exceeds the amount referred to in para. (5), list that result from pooling at the party level of forms FC3. (7) The list referred to in para. (6) must include the elements listed in art. 4. (5) of Law no. 334/2006. (8) The centralised statements FC5 and FC6 can be used for their own needs record. (9) The quarterly statement - Income from membership fees, form FC7, is a situation that will be submitted to the Permanent Electoral Authority quarterly, within 30 days from the beginning of next semester. 2.3. Own revenues of political parties ART. 14 (1) According to art. 12 para. (1) of Law no. 334/2006, political parties cannot carry on business as dened in art. 3 of the Commercial Code. (2) The activities referred to in art. 12 para. (1) and (2) of Law no. 334/2006, in which political parties may obtain income, under the law, are exempted from the provisions of para. (1). (3) The activities referred to in art. 12 para. (1). e) and f) of Law no. 334/2006 are allowed only if the immovable property is the party's property. (4) The activity referred to in art. 12 para. (1). f) of Law no. 334/2006 cannot be completed before the end of at least 10 years of recording in the accounts of the immovable goods. (5) The political parties in the situation referred to in art. 21 para. (5) of Law no. 334/2006 are exempted from the provisions of par. (4). (6) Political parties shall publish in the Ofcial Journal, Part I, the total income from sources referred to in para. (2), until March 31 next year. (7) At the end of the year, political parties prepare annual statement of other sources of income, form FAV1. The centralised statement is made based on information contained in the forms FAV2, FAV3, FAV4, FAV5, FAV6, FAV7, FAV8, produced by the branches of parties who are required to transmit them also to the Permanent Electoral Authority, until March 31 next year. ART. 15 (1) In case of a political party association with a non-political party, all its nancial contribution to that shape of association may not exceed in any scal year the amount provided for in art. 13 para. (1) of Law no. 334/2006. (2) If a political party is associated with more non-political parties, their total nancial contribution in any scal year may not exceed the amount provided for in art. 13 para. (2) of Law no. 334/2006. (3) The total nancial contribution taken into account in calculating the amounts provided in par. (1) and (2) includes the contribution of money, goods and/or services. (4) If during the scal year state corrections to the budget occur, the value for which the amounts provided in par. (1) and (2) are calculated remains unchanged. (5) The amounts received in contravention of paragraph. (1) and (2) shall be applied art. 13 para. (3) of Law no. 334/2006.
Chapter 3. Provision and use of subsidies from state budget

ART. 16 (1) Political parties receive annual subsidies from the state budget, in terms of art. 18 para. (1) of Law no. 334/2006. (2) The subsidy from the state budget allocated annually to political parties cannot be higher than the percentage specied in art. 14 para. (2) of Law no. 334/2006. (3) Political parties that promote women on electoral lists on eligible seats receive subsidy from the state budget increased in proportion to the number of mandates obtained in the election of women candidates. (4) If during the scal year budget adjustments occur, the rate prescribed in para. (2) remains unchanged. (5) The state budget subsidy shall be granted according to the criteria laid down in art. 14 para. (3) of Law no. 334/2006. (6) Political or electoral alliances shall share the grant between its members, in accordance with art. 14 para.
(4) of Law no. 334/2006. ART. 17 (1) Since 2008, political parties receive subsidies from the state budget through the budget of the Permanent Electoral Authority and are required to register separately in its accounts the grant received. (2) Annual subsidy to political parties is divided in the proportions set out in art. 15 and 16 of Law no. 334/2006. ART. 18 The subsidies from the budget are allocated to each political party based on the following algorithm: The Permanent Electoral Authority distributes the amount within the quarterly provisions, approved according to Law no. 500/2002 on public nances, with the subsequent amendments and completions: S_a --> quarterly division --> S_t1, ... S_t4 Where: S_a = annual subsidy; S_tx = subsidy for quarter x. Calculation of monthly subsidy: S_l = S_tx / 3 1. The calculation of the subsidy according to the Parliamentary elections The subsidy to be allocated to political formations/alliance/parties with Parliamentary representation: S_p = S_l x 75 / 100 1.1. The calculation of the subsidy proportional to the number of women MPs a) Coefcient of the proportional increase of the subsidy in favour of political formations/alliances/parties that have women MPs: k = P_f / P_t Where: P_f = total women MPs; P_t = total MPs. b) Calculation of the subsidy increase for the political formations/alliances/parties that have women MPs: M_spf = S_pxk c) The coefcients for distributing the increase, proportional to the number of women MPs for each political formation/alliance/party: z_p1 = P_f(p1) / Pf ... z_pn = P_f(pn) / Pf Where: P_f(x) = total women MPs the political formation/alliance/party p1, pn. d) Calculation of the increase, proportional to the number of women MPs at the level of political formation/alliance/party: M_spf(p1) = M_spf x z_p1 ... M_spf(pn) = M_spf x z_pn 1.2. Calculation of the subsidy proportional to the average number of valid votes cast
a) The value of the subsidy to be allocated, according to the number of valid votes cast in the Parliamentary elections: S_rp = (1 - k) x S_p b) The average for each political formation/alliance/party between the number of valid votes cast for candidates elected in the Senate and the number of valid votes cast for candidates elected in the Chamber of Deputies: M_vp(p1) = [V_s(p1) + V_cd(p1)] / 2 ... M_vp(pn) = [V_s(pn) + V_cd(pn)] / 2 Where: V_s(x) = number of valid votes cast for the candidates elected in the Senate for the political formation/alliance/party p1, pn, V_cd(x) = number of valid votes cast for the candidates elected in the Chamber of Deputies for the political formation/alliance/party p1, pn. c) The amount of the average number of valid votes cast for candidates elected to Parliament: T_vp = M_vp(p1) + ... + M_vp(pn) d) The coefcients of distribution of the subsidy according to the number of valid votes cast for each parliamentary political formation/alliance/party: q_p1 = V(p1) / T_vp ... q_pn = V(pn) / T_vp e) Setting the subsidy amount according to the number of valid votes cast for each parliamentary political formation/alliance/party: S_rp(p1) = S_rp x q_p1 ... S_rp(pn) = S_rp x q_pn 1.3. The calculation of the total subsidy for each parliamentary political party: a) The total amount of the subsidy for each political formation/alliance/party: T_sp(p1) = S_rp(p1) + M_spf(p1) ... T_sp(pn) = S_rp(pn) + M_spf(pn) b) In the alliances' cases, the allocation of the subsidy is done according to the protocol established between its members. If no protocol was signed, the calculation of the subsidy for each political party member of the alliance is done proportional to the number of Parliamentarians of each party. 2. Calculation of the subsidy according to the results of local elections for the election of county counsellors and counsellor of the city of Bucharest The subsidy shall be granted to the political formations/alliances/parties that obtained in the country at least 50 mandates for county counsellor and counsellor of the city of Bucharest: S_cl = S_l x 25 / 100 2.1. Calculation of subsidy proportional to the number of women county counsellors and counsellor of the city of Bucharest a) The value of the grant increase coefcient for the political formations/alliances/parties that have women local counsellors: k_cl = C_lf / C_lt
Where: C_lf = total local consellors women; C_lt = total local consellors. b) The value of the grant increase for the political formations/alliances/parties that have women local counsellors: M_sclf = S_cl x k_cl c) Calculation of the distribution increase coefcients, proportional to the number of women local counsellors for each political formation/alliance/party which has obtained in the country at least 50 mandates of county counsellor and counsellor of the city of Bucharest: z_cl1 = C_lf(p1) / C_lf ... z_cln = C_lf(pn) / C_lf Where: C_lf(x) = total number of women local counsellors for the political formation/alliance/party p1, ... pn. d) The value of the grant increase proportional to the number of women at the level of the political formation/alliance/party: M_sclf(p1) = M_sclf x z_c11 ... M_sclf(pn) = M_sclf x z_cln 2.2. Calculation of subsidy proportional to the average number of valid votes cast a) The value of the subsidy to be granted according to the number of valid votes cast in local elections: S_rcl = (1 - k_cl) x S_cl b) The total number of valid votes cast for the candidates elected county counsellors and counsellors of Bucharest Municipality form the parties that obtained, in the country, at least 50 mandates for county counsellor and counsellor of the city of Bucharest: T_vcl = V_cl(p1) + ... + V_cl(pn) Where: V_cl(x) = number of valid votes cast for local counsellors for political formations/alliance/party p1, ... pn. c) Calculation of distribution coefcients subsidy according to the number of valid votes cast for each political formation/alliances/party which obtained in the country at least 50 mandates of county counsellor and counsellor of the city of Bucharest: q_cl1 = V_cl(p1) / T_vcl ... q_cln = V_cl(pn) / T_vcl d) The value of the subsidy calculated according to the number of valid votes cast for each political formation/alliance/ party that obtained in the country at least 50 mandates of county counsellor and counsellor of the city of Bucharest: S_rcl(p1) = S_rcl x q_cl1 ... S_rcl(pn) = S_rcl x q_cln 2.3. Calculation of total subsidy for each political party having county counsellors and counsellor of the city of Bucharest: a) The total amount of the subsidy for each political formation/alliance/party: T_scl(p1) = S_rcl(p1) + M_sclf(p1) ... T_scl(pn) = S_rcl(pn) + M_sclf(pn)
b) In the alliances' cases, the allocation of the subsidy is done according to the protocol established between its members. If no protocol was signed, the calculation of the subsidy for each political party member of the alliance is done proportional to the number of county and Bucharest counsellors of each party. 3. Calculation of the total amount of the subsidy form the state budget The total value of the subsisy granted from the state budget for each political party: T_s(p1) = T_sp(p1) + T_scl(p1) ... T_s(pn) = T_sp(pn) + T_scl(pn) ART. 19 (1) Political parties shall submit the necessary grant documents. To this end, bodies representing political parties in their relations with public authorities shall make an application to the Permanent Electoral Authority stamped and signed by the chief executive body of the party and nancial agent coordinator responsible for managing party assets. (2) An application under par. (1) shall contain the following elements: a) identication data: - Full and abbreviated name of the party; - Symbol of the party and electoral symbol; - Headquarters address, - Bank account and banking company that is open; - Tax identication code; - Telephone, fax, email; - Legal representative; - Financial agent coordinator; b) certied copy of the decision of acceptance of the application for registration of political party. ART. 20 (1) The grant is given in the rst decade of the month, in the amounts referred to in art. 14 to 16 of Law no. 334/2006. (2) Monthly, the Permanent Electoral Authority requests the Ministry of Public Finances the opening credits for the award of subsidy budget for the next month. (3) To grant the subsidy provided by para. (2), the Permanent Electoral Authority issued orders for each political party separately. ART. 21 (1) Grant of subsidy from the state budget may be suspended temporarily by decision of the Permanent Electoral Authority for breach of art. 3 para. (3), art. 4 para. (4), art. 9, art. 11 para. (3), art. 12 para. (1), art. 13 para. (4), art. 39 and art. 40 para. (2) of Law no. 334/2006, until the fullment of the legal requirements. (2) Before issuing a decision, the Permanent Electoral Authority, following the review carried out, shall notify the political party the deciencies ascertained and the deadline for their remediation. (3) The decision temporarily suspending the granting of monthly subsidy form the state budget may be appealed to the competent administrative contentious court within the period provided in art. 19 para. (4) of Law no. 334/2006. (4) Within 10 days from the written notication of the political party for remedying deciencies, the Permanent Electoral Authority shall determine, by decision on lifting the suspension of the monthly allocation of subsidy from the state budget. Decision to maintain or lift the suspension shall be notied to the party within 5 days from the adoption. ART. 22 (1) The subsidies obtained by political parties from the state budget can only be used for destinations specied in art. 20 para. (1) of the Law. 334/2006. (2) When using the subsidy from the state budget for purposes other than those provided in para. (1), the provisions of art. 41 and art. 42 para. (1) of the Law. 334/2006 shall be applied. (3) The monthly situation of the subsidy from the budget and expenditure of this amounts shall be registered in the form FS1, which shall be submitted at the Permanent Electoral Authority until the 25th of next month.
Chapter 4. Detailed and specic format for the registration of revenues and expenditures in election campaign
ART. 23 (1) Donations and legacies received after the opening the electoral campaign from natural or legal persons must be declared to the Permanent Electoral Authority by nancial manager, within 5 working days of receipt. (2) Donations and legacies received under para. (1) can be used only after being declared to the Permanent Electoral Authority. (3) Articles 6 to 10 shall apply accordingly. (4) The prohibitions referred to in art. 10 to 11 of Law no. 334/2006 shall apply to donations received after the opening campaign. (5) The amounts received in contravention of para. (2) - (4) shall be applied art. 10 para. (4) and art. 11 para. (5) of Law no. 334/2006. ART. 24 (1) The maximum limit of expenditure that can be made by a political party or political or electoral alliance during each campaign shall be calculated by summing the maximum allowed by law for each candidate proposed for election. (2) The maximum amounts allowed for each candidate are as specied in art. 30 para. (2) and art. 33 para. (1) of Law no. 334/2006. (3) Before validation of mandates, the party leadership, the county organization or, where appropriate, independent candidate shall submit to the Permanent Electoral Authority a declaration of compliance with limits set in para. (2), form FRVC1. (4) The amounts exceeding the ceilings set in para. (2) shall be applied art. 32 para. (2) of Law no. 334/2006. (5) If a candidate is proposed for several positions in an electoral campaign, the maximum expenditure that can be performed shall be determined at the highest value of one of the positions the candidate runs for.
Chapter 5. Financial Manager

ART. 25 (1) The nancial manager may be a natural or legal person, the activity of the nancial manager cannot be performed on a voluntary basis. (2) *** Repealed (3) The quality of nancial manager is acquired only after the ofcial registration with the Permanent Electoral Authority and it shall also be made public through media and by publishing it on the website of the party. (4) Form FMF1 or FMF2 shall be used for the declaration and registration of the nancial manager. (5) A political party may have more nancial managers, centrally, for branches or candidates; in this case, they are limited in their powers and a coordinator nancial manager shall be appointed. (6) Several parties may not use the same manager services, unless the parties belong to the same political or electoral alliance. (7) The nancial manager shall keep records of nancial transactions separately for each kind of choice under the provisions of art. 26 para. (2) of Law no. 334/2006. ART. 26 (1) The nancial manager shall: a) receive donations and / or legacies from donors natural and legal persons, b) organize the records of the revenue received for the campaign, transfers from other funds outside the election period and expenditure for the campaign; c) verify the legality of transactions made during the election campaign, observance of the provisions relating to donations made during the election campaign; d) verify and record the identity of the donor and request donor legal persons the declaration under article. 5 para. (8) of Law no. 334/2006; e) forward the Permanent Electoral Authority, within the period specied in art. 38 para. (1) of the Law. 334/2006, the report on the compliance with legal requirements on the nancing of political parties during the electoral campaign and make the declaration provided for in art. 32 para. (1) of that Act. f) submit to the Permanent Electoral Authority statements referred to in art. 23 para. (1) and art. 29 para. (4) of Law no. 334/2006; g) prepare and submit for publication in the Ofcial Journal, Part I, the situations described in art. 4 para. (4), art. 9 para. (1), art. 11 para. (3), art. 12 para. (3) and art. 13 para. (4) of Law no. 334/2006.
(2) The nancial manager shall be held liable, soldierly with the party that appointed him, by the legality of transactions made during the election campaign, under the law.
Chapter 6. Control procedure and methodology

ART. 27 (1) Compliance with laws on political parties funding is done by the Permanent Electoral Authority through the funding of political parties and electoral campaigns Control Department. (2) The control referred to in para. (1) shall be exercised on political alliances or electoral campaign and independent candidates. (3) In the situation referred to in art. 35 para. (2) of Law no. 334/2006, the control shall be simultaneously performed by the Court of Accounts, including following procedures jointly agreed with the Permanent Electoral Authority, under the law. (4) Annually, or whenever notied, the Permanent Electoral Authority shall perform for each party the control referred to in para. (1). (5) Control on the compliance with laws on nancing political parties can be performed in any of the forms mentioned in art. 36 para. (5) of Law no. 334/2006. ART. 28 (1) Permanent Electoral Authority shall notify, 15 days before, the entities listed in art. 35 para. (1) of Law no. 334/2006 that will be controlled. (2) In cases referred to in art. 36 para. (2) and (5) of Law no. 334/2006, the control may be on the spot, in which case the period prescribed by para. (1) is no longer necessary. (3) During the control, political parties have to make available to representatives of the Permanent Electoral Authority documents and information required to determine compliance with the laws on party nancing activity. (4) Permanent Electoral Authority may ask political parties to provide documents and information at the premises of the Authority also, about their funding sources, which are required to comply within the period specied in art. 39 para. (2) of Law no. 334/2006. (5) In order to verify the legality of the funding sources of political parties activity, the Permanent Electoral Authority may require documents and information from natural and legal persons who made donations or provided services free or at cost, and any public authority, which are required to provide the necessary assistance. ART. 29 (1) The results of each control carried out shall be recorded in a report published in the Ofcial Journal, Part I, and on the website of the Permanent Electoral Authority within 15 days of making. (2) The control report shall state the deciencies and the time required to correct them, which can not be more than 15 days. (3) Upon completion of control, representatives of the Permanent Electoral Authority concluded an ofcial report stating the deciencies and the timeframe to address them; a copy of the ofcial report shall be handed to the controlled entity, based on signature. (4) Upon the expiry of the period provided for in para. (2), the Permanent Electoral Authority may check on the spot if where the deciencies are corrected or may request the controlled entity to submit a report thereon. (5) If, during the control, the Permanent Electoral Authority representatives nd violations of Law. 334/2006, they shall conclude a report with proposed penalties. The penalty is applied by the Permanent Electoral Authority decision. (6) Permanent Electoral Authority shall report annually the results of controls, which shall be published until March 31 next year in the Ofcial Journal, Part I, and on its website. ART. 30 The main objectives required for control compliance with Law no. 334/2006 are: 1. checking the organization of accounting and professional standards used for providing real information; 2. verifying the organization of records of contributions; 3. verifying the organization of records of donations; 4. verifying the organization of the expenditure incurred in subsidies from the budget; 5. verifying the compliance with the scales of costs allowed in election campaigns by candidates in order to validate the types of candidates; 6. verifying the correspondence between the reports on membership fees and the donations published in the Ofcial Journal and record data; 7. checking the modality of reporting the nancial manager and the professional reports with the accredited political formation;
8. Check the compatibility/incompatibility of natural/legal persons who made donations to political formation. ART. 31 Steps, procedures and documents used in the development of Mission Control are provided in Appendix. 1.
Chapter 7. Establishment and enforcement

ART. 32 (1) If irregularities in the nancing activity of political parties and electoral campaigns activity, the sanctions provided in art. 41 para. (1) of Law no. 334/2006 may be applied. (2) The penalties shall be applied, as appropriate, to the political party, independent candidate, nancial manager and/or donor who violated the provisions of para. (1). (3) The political party and nancial manager or, where appropriate, the independent candidate and nancial manager cannot be sanctioned for the same ascertained misdemeanour. ART. 33 (1) The misdemeanours shall be ascertained by the representatives of the Permanent Electoral Authority who draw up ofcial reports, and the penalty shall be applied by a decision of the President of the Permanent Electoral Authority. (2) The decision referred to in para. (1) may be appealed to the competent administrative contentious court, under the law. ART. 34 (1) In cases referred to in art. 41 para. (1) of Law no. 334/2006, the offender shall pay to the state budget the money and/or value of goods and services that were a misdemeanour, upon the decision of the Permanent Electoral Authority. (2) If the offender does not pay the state budget amounts provided in para. (1) or fails to pay within the statutory nes, their consideration may be deducted from the subsidy granted by the state budget, through enforcement execution, as provided by Government Ordinance no. 92/2003 regarding the Fiscal Procedure Code, republished, with subsequent amendments. (3) The measure provided in para. (2) shall be ordered by the Permanent Electoral Authority based on the communications received from the competent organs of the Ministry of Economy and Finance, about the failure by the offender of the obligations imposed on it as a result of the penalty. ART. 35 Ascertaining and enforcing Law no. 334/2006 shall be done according to the provisions of Government Ordinance no. 2/2001 on the legal regime of contraventions, approved with amendments by Law no. 180/2002, with subsequent amendments.
Chapter 8. Final Provisions

ART. 36 (1) These methodological rules shall apply to organizations of citizens belonging to national minorities which are assimilated to political parties, political alliances, electoral alliances and independent candidates. (2) Permanent Electoral Authority shall keep a scal record of political parties, political alliances and independent candidates, which will include all data related to their nancial activities and the sanctions. (3) The records referred to in para. (2) will be taken by the Permanent Electoral Authority from the Court of Accounts, based on minutes of handover, according to art. 49 para. (2) of Law no. 334/2006. (4) Permanent Electoral Authority shall publish in the Ofcial Journal, Part I, and on their website all reports and statements referred to in art. 40 para. (1) of Law no. 334/2006. (5) In all cases where the wording of Law no. 334/2006 refers to the gross minimum wage for the country, its value is as at January 1 of that year. ART. 37 (1) Recording and processing personal data of candidates and nancial agents are subject to Law no. 677/2001 on Protection of Individuals with regard to processing of personal data and free movement of such data, with subsequent amendments. (2) In the exercise of its functions, Permanent Electoral Authority will be recorded as personal data operator in National Supervisory Authority for Personal Data Processing.
ART. 38 (1) Where, by nal court decision, one or more candidates declared elected to a political party were convicted of a crime related to nance political party or, where applicable, the election campaign, the provisions of art. 46 to 47 of Law no. 334/2006 shall be applied. (2) As of July 1, 2007, Department of Control of nancing political parties and election campaigns provided in art. 35 para. (3) of Law no. 334/2006 shall execute control of the business-funded political parties and electoral campaigns. (3) Models of forms FAV1, FAV2, FAV3, FAV4, FAV5, FAV6, FAV7, FAV8, MF1, MF2, FRVC1, FS1, FD1a, FD1b, FD2a, FD2b, FD3a, FD3b, FD4a, FD4b, FD5, FD6, FC1, FC2, FC3, FC4, FC5, FC6, FC7 are provided in Appendix. 2. ART. 39 Appendices. 1 and 2 are an integral part of these detailed rules.
Summary of Appendix 1 to the detailed provisions SCHEDULE, PROCEDURES AND DOCUMENTS Used in carrying out the mission control
In carrying out an inspection mission, the following steps and procedures:
A. Preparation Mission Control 1. Mission timing control - procedure P01 - A-01 Document Calendar control is an internal document of the business planning stages, procedures, time, persons involved and venue. It is determined based on the annual plan of control by the control team chief. Timetable approved by the Director General of Department of control of political party funding and electoral campaigns, hereinafter Control Department. 2. Order of service - procedure P02 - A-02 Document Service order is made by the Director General of the control department under the approved control plan. Order of service is the mandate for action and intervention methods of nancial controllers election so they can start monitoring mission. 3. Declaration of Independence - procedure P03 - A-03 Document Independence candidates selected nancial controllers to achieve a mission control must be declared by the declaration of independence by each team member. 4. Notication control - procedure P04 - Document N-01 The Department noties the control to the policy formation to be controlled to 15 days before the start of the mission control, notifying the purpose, the main objectives, its duration and the fact that during the mission control program will be established later, in agreement with formation political control. 5. Collecting and processing information - procedure P05 - A-04 Document At this stage candidates require nancial controllers and collect general information about controlled formation. Preparation of control is based on information related to prior periods. Control is established trails in agreement with Director General of control. Information processing consists of: - Analysis of structure and regulatory framework governing political party controlled activity; - Analysis of factors likely to hinder the progress of the mission control; - Analysis of results of previous inspections; - Analysis of external information related to policy formation. After analyzing this information is dened targets/controlled concrete activities that are included in questionnaires A-04. 6. Develop monitoring program - procedure P06 - A-05 documents Objectives and activities subject to control are distributed between the control team members, the control techniques used and the type checking being mentioned. Political party inspection program is an internal document, comprising the division of objectives/activities controlled on electoral nancial controllers, specifying the type of verication and the technique used, and during the
examination. Procedure control program is intended for: a) ensuring the inspection department head that all aspects of mission control objectives were taken into account; b) ensuring the allocation of tasks and planning. 7. Meeting Presentation - procedure P07 - document M-01 Meeting presentation will take place in policy formation to be controlled, involving control team, the nancial manager and the other political party representatives. Agenda of the meeting presentation should include: - Presentation of the controllers to perform control; - Presentation of control objectives; - Setting themes in detail; - Accepting calendar appointments; - The conditions necessary for conducting the review. Political party control may require postponement of control, where justied. Deferral should be discussed with Director General of Department of Control and notied to the President of the Permanent Electoral Authority (PEA). Hearing date of presentation, participants, key issues arising from the discussions will be recorded in the minutes of hearing the presentation. Minutes shall be signed by all participants. B. Operation Control 1. Execution control - procedure P08 - A-06 Document The control operation consists of the collection of documents, analysis and evaluation of the political party headquarters, an operation that may be total or partial. Verication techniques are: - Comparison - to conrm the identity of an information after receiving it from two or more sources; - Examination - involves tracking and detecting errors or irregularities; - Recalculate the operation of checking all mathematical calculations; - Conrmation - the request for information from two or more independent sources, in order to validate it; - The agreement - the process of matching two different types of records; - Guarantee - the verication of the correctness of transactions from the article made towards supporting primary documents; - Tracking - checking procedures from the documents to the registered article; - Physical observation - the way electoral nancial controllers form an opinion; - Interview - the process by which controllers obtain information by interviewing people in connection with the issue checked; - Analysis - to break down a problem into parts that can be isolated, quantied and measured separately. Following the control operation for each objective/activity, ndings are drawn in form control-06, form the answer to each question in questionnaire A-04. 2. Finding Offences - Procedure P09 - A-07 Document The form of nding and reporting violations shall be drawn up if the electoral nancial controllers ascertain the existence or the possibility of deviations from the law. Director General of control department will inform the AEP President within 3 days. AEP President may decide to extend control. If irregularities mentioned in art. 41 of Law no. 334/2006 are found, an ofcial report to ascertain the misdemeanour shall be prepared. The template of the ofcial report is approved by order of President of AEP. 3. Working Papers Review - procedure P10 - Document C-01 Review is done by checking the electoral nancial controllers, before preparing the draft inspection report to ensure that working documents are prepared properly. 4. Closing session - procedure P11 - M-02 Document Closing session aims at presenting the view of nancial controllers, the nal recommendations of the draft inspection report and the timetable for implementation of recommendations. A meeting minutes is drawn, recording the position of political party representatives in relation to the ndings of inspection team. Minutes shall be signed by all participants. C. Inspection report 1. Preparation of the draft control report - procedure P12 - Document R-01 In preparing the project report must be considered and the following principles:
a) observations inserted in the draft report to be in line with mission control and be supported by appropriate evidence; b) the controller must express only opinions, based on ndings; c) report to be prepared based on the ndings of inspection forms; d) ndings should be presented in a relevant and compelling manner; e) to avoid the polemical tone, offensive, biased. The draft report must include at least: a) the purpose and objectives of the mission control; b) identication of mission control; c) the conduct of inspection, procedures, methods and techniques, reviewed documents, materials produced during the control action; d) ndings; e) conclusions and recommendations; f) documentation attached, which must include explanatory notes, notes, relationships, situations, acts, documents and other supporting material or probative value. Forwarding the draft control report The draft inspection report shall be submitted to political party controlled and it can transmit up to 15 days from receipt of its views. The views received to be reviewed by nancial controllers election. 2. Conciliation meeting - procedure P13 - document M-03 Within 10 days of receipt of the views, nancial controllers election held conciliation meeting with controlled structure in which to examine the ndings and conclusions in order to accept the recommendations. Shall prepare a memorandum on the conduct of the conciliation meeting. At the conciliation meeting involved: - Head control team; - AEP counsel; - Political party representatives. 3. Develop nal report control - procedure P14 - Document R-02 Final control report must include the changes discussed and agreed in the conciliation meeting. The nal inspection will be accompanied by a summary of main ndings and recommendations. 4. Dissemination of the inspection report - procedure P15 The head of the control team makes the presentation of the inspection report with the results in terms of reconciliation, as well as the political party's opinion, to the Director General of the Department for review and approval. After approval, the Director shall submit inspection reports to the President of AEP approval After approval, the report is sent to control political party controlled, and its content is published within 15 days on AEP website and in the Ofcial Journal, Part I. 5. Supervision Mission Control - P16 procedure Director General of control department is responsible for supervising all phases of deployment of mission control. The goal of the supervisory action is to ensure that the mission's objectives were achieved under quality conditions. The supervisory action is necessary to carry out the mission set instructions, check the correct execution of program control, it veries the existence of evidence to verify process control and drafting the nal report is accurate, clear and concise and made the deadlines set. If the Director General of control department is involved in mission control, supervision is provided by a person appointed by the President of AEP. D. Follow recommendations Follow-up - procedure P17 - A-08 Document The objective of this phase is to ensure that the recommendations listed in the report control are applied just in time. Accountability structure is controlled in implementing recommendations: a) develop an action plan with a timetable for its execution; b) establishing responsible for each recommendation; c) implementation of recommendations; d) the regular stage of implementation of recommendations. Political party controlled should inform on the established deadlines how the recommendations were implemented.
Third Evaluation Round Evaluation Report on Romania on Transparency of Party Funding
(Theme II) Adopted by GRECO at its 49th Plenary Meeting (Strasbourg, 29 November 3 December 2010
I. INTRODUCTION
1. Romania joined GRECO in 1999. GRECO adopted the First Round Evaluation Report (Greco Eval I Rep (2001) 13E) in respect of Romania at its 8th Plenary Meeting (8 March 2002) and the Second Round Evaluation Report (Greco Eval II Rep (2005) 1E) at its 25th Plenary Meeting (14 October 2005). The aforementioned Evaluation Reports, as well as their corresponding Compliance Reports, are available on GRECO's homepage (http://www.coe.int/greco). 2. GRECO's current Third Evaluation Round (launched on 1 January 2007) deals with the following themes: - Theme I Incriminations: Articles 1a and 1b, 2-12, 15-17, 19 paragraph 1 of the Criminal Law Convention on Corruption, Articles 1-6 of its Additional Protocol1 (ETS 191) and Guiding Principle 2 (criminalisation of corruption). - Theme II Transparency of party funding: Articles 8, 11, 12, 13b, 14 and 16 of Recommendation Rec(2003)4 on Common Rules against Corruption in the Funding of Political Parties and Electoral Campaigns, and more generally - Guiding Principle 15 (nancing of political parties and election campaigns). 3. The GRECO Evaluation Team (hereafter referred to as the GET) carried out an on-site visit to Romania from 21 to 25 June 2010. The GET for Theme II (23-25 June) was composed of Mr Richard ROGERS, Senior Counsel to the Assistant Attorney General, Department of Justice (United States of America) and Mr Tibor SEPSI, Government adviser, Ofce of the Prime Minister (Hungary). The GET was supported by Mr Christophe SPECKBACHER from the GRECO Secretariat. Prior to the visit, the GET experts were provided with replies to the Evaluation questionnaire (document Greco Eval III (2010) 1E, Theme II), as well as copies of relevant legislation. 4. The GET met with ofcials from the following state institutions: Ministry of Justice (Department for the Reform of the Judiciary and Countering Corruption and Department for Drafting Legislation), Permanent Electoral Authority, Court of Accounts, Ministry of Public Finance (Department of Tax Legislation), National Integrity Agency, National Anticorruption Directorate, Bucharest Court of Appeal, Administrative section. The GET further met with the representatives of three political parties (one of which submitted responses in writing after the visit), the Romanian Academic Society, the Institute for Public Policy, a Romanian public television channel, a daily newspaper and an internet news agency. 5. The present report on Theme II of GRECO's Third Evaluation Round on Transparency of party funding was prepared on the basis of the replies to the questionnaire and the information provided during the on-site visit. The main objective of the report is to evaluate the effectiveness of measures adopted by the Romanian authorities in order to comply with the requirements deriving from the provisions indicated in paragraph 2. The report contains a description of the situation, followed by a critical analysis. The conclusions include a list of recommendations adopted by GRECO and addressed to Romania in order to improve its level of compliance with the provisions under consideration. 6. The report on Theme I Incriminations, is set out in Greco Eval III Rep (2010) 1E, Theme I.
II. TRANSPARENCY OF PARTY FUNDING GENERAL PART

Denition of political party 7. Pursuant to Article 1 of the Law no. 14/2003 on Political Parties (hereinafter, the LPP), political parties are the associations with political character of the Romanian citizens who have the right to vote and to freely participate in the formation of their political will; they serve the citizens' political will and accomplish a public mission guaranteed by the Constitution. Founding and registration 8. Pursuant to articles 2 to 11 of Law no. 14/2003, political parties are public law entities which enjoy legal personality. Only political associations which are formed under the law can operate as political parties insofar as they comply, in their campaigning activity, with the requirements inherent to the preservation of national sovereignty, independence and unity of the State, territorial integrity, the rule of law and principles of constitutional democracy. Each political party and political alliance (the association is established in a protocol) must have a full name, an abbreviated name (acronym) and a permanent symbol. These features must be clearly distinguishable from those of previously
1 Romania ratied the Criminal Law Convention on Corruption (ETS 173) on 11 July 2002 (it entered into force in respect of Romania on 1 November 2002), and the Additional Protocol to the Criminal Law Convention (ETS 191) on 29 November 2004 (entered into force in respect of Romania on 1 March 2005). Romania did not make any reservations to either instrument.
registered parties (using graphic symbols that have already been used is prohibited). Each political party is required to adopt and lay down in writing its statutes and political program, and to have these approved by the statutory / constituting bodies. 9. The procedure of registration of a political party is regulated by article 18 para. (1) of Law no. 14/2003. Registration is to be made with the Tribunal of Bucharest, and requires the submission of the following documents: a) the registration application, signed by the ofcer of the political party's executive body and by at least 3 founding members (who are required to be present); b) the party's statutes; c) the program of the party; d) the constitutive act along with the list of support signatures of the founding members; e) a statement concerning the location (address) of the central ofce and the party's patrimony; f) the evidence regarding the opening of a bank account. Registration takes place after a verication process which must be completed within 15 days and which is detailed under articles 18, 20 and 21 of the Law2. Similar rules exist for political alliances in articles 29 and 30 of Law no. 14/2003. 10. The Tribunal of Bucharest keeps a specic register which contains, at the date of 1st of March 2010, 47 ofcially declared political parties. Participation in elections 11. Romania is a Parliamentary republic in which the President is chosen by direct vote by the citizens. The government is answerable to both the President and the parliament. 12. Participation in elections is not the exclusive right of political parties and individual candidates may present themselves for any local, parliamentary or presidential election. Romania elects on a national level a head of state - the president - and a legislature. The president is elected for a ve year term by the people (after a change from four-year terms after the 2004 election). The last presidential elections took place in November and December 2009. The Romanian Parliament (Parlamentul Romniei) has two chambers; special arrangements exist for the election of representatives of national minorities. The Chamber of Deputies (Camera Deputailor) has 334 members, elected for a four year term by uninominal vote according to the principle of proportional representation, in uninominal colleges. The Senate (Senatul) has 137 members, elected for a four year term in the same way as the Chamber. The most recent parliamentary elections were held in November 2008. The proportional representation in parliament and other factors usually result in the absence of a party holding a majority in parliament and the formation of coalition governments. Since November 2007, Romanians elect their representatives also to the European Parliament. The last such elections were held in June 2009. Elections are also held to designate at local level, the local councils and mayors, as well as the county councils and their presidents. The last local elections took place in June 2008. 13. According to art. 29 of Law no. 35/2008 on the election of the Chamber of Deputies and the Senate and for amending Law no. 67/2004 for the election of local government authorities, Law no. 215/2001 on the local government and Law no. 393/2004 on the status of local elected ofcials, in each uninominal college, each electoral competitor can propose only one candidate who can participate in the parliamentary elections. At the same time, a candidate can represent only one electoral competitor in the elections. Nominations for candidates are submitted to the electoral constituencies operating at the same level with that to which the candidates are to be elected, not later than 40 days before the election date. The candidacy appointment done by the national minority's citizens' organizations is sent to the Central Electoral Bureau. 14. When the candidacies submission is taking place, each political party, political alliance, electoral alliance, organisation of national minority citizens, independent candidate has to provide evidence of the deposit made, in the account of the Permanent Electoral Authority (PEA), in the amount of 5 minimal gross salaries for each candidate (3.000 RON, approximately 700 euro)3. To collect the deposits, the PEA opens one account in each county and in Bucharest. The amounts are reimbursed to the organisations of national minority citizens that obtained a mandate of deputy, to the political parties, political and electoral alliances that have totalled 2% or more of the total number of validly cast votes at the national level and to the independent candidates that have totalled 20% or more of the total number of validly cast votes in the uninominal college where they competed.
2 According to art. 18 para. (2) and (3) of Law no. 14/2003, the application for registration shall be displayed at the Bucharest Tribunal for 15 days. Within 3 days from the date of ling the registration request, the notice thereof shall be published by the applicant in one of the major, central newspaper. The Bucharest Tribunal examines the application in public session, with the participation of the Public Prosecutor's representative. Natural or legal persons interested may intervene in the process, if they have a personal legitimate interest to do so in accordance with the Code of Civil Procedure; such a request for intervention shall be communicated ex ofcio to the signatories of the application (article 20). The Bucharest Tribunal is ruling on the application for registration of the party no later than 15 days after the lapse of the period provided in art. 18 para. (2). The persons referred to in art. 18 para. (1) let. a) (the ofcer of the executive body of the political party and by at least 3 founding members), the Public Ministry or the persons referred to in art. 20 para. (2) (interested natural or legal persons who intervened in the process) may lodge an appeal against the decision of the Bucharest Tribunal to the Bucharest Court of Appeal, within 5 days from the communication (article 21). The latter will consider the matter in open session, no later than 15 days from registration. Its decision is nal and irrevocable. 3 According to art. 2 of the Government Decision no. 1051/2008 on establishing the minimum gross salary per country guaranteed payment, starting January 1, 2009, the gross minimum salary in the country guaranteed payment is set at 600 RON per month [approx. 140 Euros]. The value established by this normative act was not modied for 2010.
15. According to art. 30 of Law no. 35/2008, independent candidates must be supported by at least 4% of the total number of voters listed on the permanent electoral lists from the uninominal college they run for (and no less than 2,000 voters for the Chamber of Deputies and 4,000 voters for the Senate). The independent candidates for the constituencies of the Romanian citizens who reside abroad must be supported by a minimum of 4% of the voters residing in one of the states that are part of the uninominal college for which they run, but not least than 2.000 electors for the Chamber of Deputies and 4.000 for the Senate (art. 30 para. 11 from Law no. 35/2008). 16. According to art. 47 of Law no. 35/2008, the electoral threshold to be reached in order to be eligible in the national parliament is: a) for the Chamber of Deputies, 5% of the valid votes cast in all constituencies, for all political parties, political alliances, electoral alliances and organizations of the national minority's citizens; b) for the Senate, 5% of the valid votes cast in all constituencies, for all political parties, political alliances, electoral alliances and organizations of the national minority's citizens; c) for the Chamber of Deputies and Senate, by cumulative fullling the condition of obtaining 6 uninominal colleges for the Chamber of Deputies and of 3 uninominal colleges for the Senate, in which candidates of political parties, political or electoral alliances and organizations of the national minority's citizens come rst, according to the number of the valid votes, even if the conditions mentioned in let. a) and b) are not fullled; d) in the case of the political and electoral alliances, to the 5% threshold set out in pt. a) and b), a 3% of the valid votes cast in all electoral constituencies is added, for the second member of the alliance, and for each member of the alliance, starting with the third, a 1% of the total number of valid votes cast in all electoral constituencies is added, without exceeding 10% of these votes. Party representation in Parliament 17. In the last parliamentary elections of November 2008, the participation of political parties, coalitions of parties and independent candidates was as follows: No. Political Formation Applications in total PARLIAMENTARY PARTIES 1 2 3 4 5 PSD+PC Alliance PNL PD-L UDMR PRM PNG-CD 7 8 9 10 11 12 13 PVE PPPS PNDC PSR PRE Independents Organisations of the national minorities TOTAL for the country 452 452 451 449 441 NON -PARLIAMENTARY PARTIES 452 118 87 6 2 1 31 18 2960
2
Chamber of Deputies
1
Senate
315 315 314 313 309 315 70 63 3 1 1 28 18 2065
137 137 137 136 132 137 48 24 3 1 0 3 0 895
1 PSD Social Democratic Party; PC Conservative Party; PNL National Liberal Party; PD-L Democratic-Liberal Party; UDMR Hungarian Democratic Union in Romania; PRM Great Romania Party 2 PNG-CD New Generation Party - Christian Democratic PVE Romanian Ecologist Party PPPS People's Party and Social Welfare PNDC National Christian Democratic Party PSR Romanian Socialist Party PRE - European Romania Party
18. Following the above election, the representation in Parliament is as follows: Name Mandates for the Chamber of Deputies Number PD-L POLITICAL ALLIANCE PSD+PC PNL UDMR TOTAL: 115 114 65 22 316 (+18 more seats obtained by organisations representing national minorities) Overview of the political funding system Legal framework 19. From open sources of information, it appears that the various relevant provisions on the nancing of parties and campaigns (which existed in the Law on Political Parties of 1996 as amended; Law no. 69 of 1992 on the Election of the President of Romania; Law no. 68 of 1992 on the Election of the Chamber of Deputies and the Senate and the Law no. 67 of 2004 on Local Elections) were consolidated into Law no. 43/2003 (as amended by Law no. 90/2003) on political party and campaign nancing, which was then replaced by the currently applicable Law no. 334/2006 on the nancing of the activity of political parties and electoral campaigns. This law was then amended in 2008 by three emergency ordinances3 and the Romanian authorities indicated that it was republished after the on-site visit as Law 334/2006, with a different numbering of articles but no substantive changes (the present report has, however, kept the references and numbering applicable at the time of the on-site visit). The above mechanism on the transparency of political life in Romania is complemented by a system of declaration of assets and interests of elected candidates, currently provided under Law no. 176/2010 on enhancing integrity in the exercise of public positions and dignities, amending Law no. 144/2007 on the setting up of the National Integrity Agency (NIA). These declarations are collected by the Central Electoral Ofce (or to the constituency electoral ofce, depending on the case, together with the candidacy acceptance statement) and then examined by the NIA. A few weeks before the on-site visit, the procedure before the NIA was declared unconstitutional and the collection of declarations and their publication was suspended. A legislative proposal that would answer the concerns of the Constitutional Court was in Parliament at the time of the visit and it was subsequently adopted and entered into force on 6 September 2010. 20. Basically, Law no. 43/2003 introduced a system of public funding with a mechanism for monitoring political funding, rst under the responsibility of the Court of Accounts and with the Law no. 334/2006, also under that of the Permanent Electoral Authority (PEA), the former controlling the correct use of public subsidies by the beneciary parties, and the latter supervising the overall compliance with Law no. 334/2006. 21. Law no. 334/2006 (republished after the on-site visit) contains provisions covering the various aspects of political nancing and its supervision. Chapters 1 to 5 deal with the private nancing of political parties (membership fees, donations, other sources of income), public nancing, nancing during election campaigns of parties as well as (party or independent) candidates (contributions for election campaigns, appointment of a nancial manager, limits on expenditure, monopoly of parties for the nancing of their candidates). Chapters 5 and 6 regulate the control mechanism by the PEA and the applicable sanctions. Chapter 7 contains nal transitional provisions on the transfer of responsibilities from the Court of Accounts to the PEA, among other arrangements. An important piece of secondary legislation was adopted with Government Decision no. 749 of 11 July 2007 On approving the Methodological Norms for applying Law no. 334/2006 on nancing activities of political parties and electoral campaigns (hereinafter Government
3 In general, political nancing legislation is frequently amended by emergency ordinances (source: Safeguarding the Rule of Law in an enlarged EU: The Cases of Bulgaria and Romania, CEPS Special Report/April 2009; Susie Alegre, Ivanka Ivanova and Dana Denis-Smith, page 63)
Mandates for the Senate Number 51 49 28 9 137 Percentage (%) 37,22 35,76 20,43 6,56 100
Percentage (%) 36,39 36,07 20,56 6,96 100
Decision no. 749 / 2007); this text comprises as an annex a series of implementing measures including, for instance, more precise provisions on donations and the forms to be used for their registration, and the mathematic formula for the calculation of the state subsidy. Additional annexes detail i.a. the procedural steps for controls performed by the PEA. 22. Romania has thus adopted a system of mixed public private funding of political parties and campaigns where parties, coalitions and candidates may receive donations both from natural and from legal persons, subject to compliance with certain ceilings (also as regards campaign expenditure). Restrictions apply to donations from abroad and from entities like trade unions, religious organisations, public institutions etc. Parties may also generate an income through activities except those which are economic / commercial by nature. Political parties may own movable and immovable property that is necessary for the accomplishment of their specic activity. According to art. 3 para. 1 of Law no. 334/2006, the nancing sources are: a) party membership fees; b) donations, legacies and other liberalities; c) income from party activities; d) subsidies from the state's budget. 23. During the electoral campaigns, nancing the activity of campaign participants (independent candidates, political parties, electoral/political alliances, organisation/groups of national minorities) can be done through donations and legacies. The annual state grant attributed to parties is also meant to cover electoral expenses. The political parties, electoral/political alliances, organisation/groups of national minorities can also transfer amounts from other funds that represent income from external activities to the campaign. Public funding of political parties and election campaigns 24. As regards direct public funding, political parties receive annually a subsidy from the state's budget, under the provisions of the law (art. 14 para. 1, Law no. 334/2006). Currently, out of the 47 registered parties, 4 receive this direct state aid; the GET was told on site that there is no clear estimate of the proportion of private funding compared to public funding, but the PEA considers that the former exceed the latter in electoral years. The subsidy is paid in monthly instalments. The total amount assigned annually to political parties cannot exceed 0,04% of the amount stipulated in the state budget for that year. For political parties that promote women on their electoral lists, the total amount assigned will be increased proportionally with the number of mandates obtained in the elections by the women candidates (art. 14 para. 2, Law no. 334/2006). In case of political or electoral alliances, the grant is divided in accordance with the political agreement or proportionally to the number of seats obtained where no such agreement exists. 25. The political parties, political or electoral alliances, the organisations of national minorities are eligible to public funding if they are in at least one of the following situations: a) they reach the electoral threshold in parliamentary elections (see paragraph 16); b) they obtain at least 50 county counsellors mandates (including counsellor only for Bucharest Municipality). 75% of the annual budget allocated to the public grant is divided among the political parties proportionally with the number of votes received in parliamentary elections, respectively the average of the votes cast for the Chamber of Deputies and Senate, if they reached the threshold. The remaining 25% is divided among the parties proportionally to the votes received at the local elections. 26. According to art. 20 para. 1 from Law no. 334/2006, the income representing subsidy from the state's budget can have the following destination, which includes the covering of election campaign expenditure: a) expenses for maintenance and operation of premises; b) personnel expenses; c) expenses for media and propaganda; d) expenses for organising political activities; e) expenses for travel inside the country and abroad; f) communications expenses; g) expenses with foreign delegations; h) expenses for fees owed to international political organisations the party is afliated to; i) investments in movable and immovable property, necessary for the activity of the parties; j) protocol expenses; k) ofce expenses; l) electoral campaign expenses. 27. The state subsidy cannot be used for purposes other than those mentioned above (art. 20 para. 2, Law no. 334/2006). According to art. 19 of Law no. 334/2006, the payment of the subsidy is subject to compliance of the beneciaries with certain essential provisions (otherwise, the PEA may suspend the payment of the grant): a) art. 3 para. 3 (the obligation to keep individual accounting records, accordingly to the general accounting provisions); b) art. 4 para. 4 (the obligation of publishing within the Ofcial Journal the total amount of revenues from the membership fees until the 31st of March of the following year and the list of the party members who have contributed within one year time fees exceeding 10 minimum gross salaries); c) art. 9 (the obligation of publishing within the Ofcial Journal the list of natural and legal persons who made donations whose amount exceed 10 times the gross minimum salary at the national level and the total amount of condential donations; non compliance with the obligation of publishing within the Ofcial Journal the mandatory elements of the: for natural persons - donor's full name, personal identication number, nationality, amount, type and date the donation was made; for legal persons - name, address, nationality, unique registration code, value, type of donation and the date the donation was made); d) art. 11 para. 3 (donations representing material goods necessary for political activity, which are not electoral propaganda materials, coming from international political organisations to which the party is afliated or from political parties or political formations having political cooperation relations); e) art. 12 para. 1 (performing activities specic to private commercial companies); f) art.
13 para. 4 (the obligation of publishing in the Ofcial Journal the total amount of nancial contributions of a non-political organisation, if the political party is associated with the mentioned organization); g) art. 39 (the obligation to submit to the PEA the documents it requested from the political party); h) art. 40 para. 2 (the obligation to electronically submit to the PEA all reports required to be published in the Ofcial Journal of Romania, Part I), until the legal requirements are met. 28. Indirect public support is available in the form of premises and free broadcasting time. The central and local public administration's authorities ensure with priority, no later than 90 days from the request, locations for the central and local headquarters of the political parties, as well as related land space, upon their motivated request (art. 21 para. 1, Law no. 334/2006). Political parties can receive at most one ofce per territorial-administrative unit of the State (art. 21 para. 2, Law no. 334/2006). Access to radio and television public services within the electoral campaign, as well as to the special assigned places for electoral display is granted and is ensured according to the law's provisions (art. 29 para. 1, Law no. 334/2006). According to art. 38 para. 1 from Law no. 35/2008 on the election of the Chamber of Deputies and the Senate, political parties, political alliances, electoral alliances, the national minority's citizens' participating in elections for the Chamber of Deputies and Senate and independent candidates have free access to public radio and television services in proportion to the number of candidates proposed. Private funding 29. The permissible sources of private funding are enumerated by article 3 of Law no. 334/2006: a) party membership fees; b) income from the parties own activity; c) donations, legacies and other liberalities. 30. As regards membership fees, these are to be determined by the statutes of each party. There is no general ceiling for the overall amounts collectable from this source of income. However, the amount of the membership fees paid by a member per year cannot exceed 48 minimum gross salaries per county (28.800 RON, approximately 6.850 euro). The minimum gross salary per country taken for reference is the one valid at 1st of January of that year (art. 4 para. 3, Law no. 334/2006). Contributions from elected representatives are to be handled as normal donations. The GET noted that the payment of membership fees shall be based on the tally-sheet or receipt, except for amounts which, in one instalment, exceed 3 minimum gross salaries which are to be paid through a bank account (article 5 para. 4 of Government Decision no. 749/2006). 31. When it comes to income from their own activities, parties are in principle excluded from engaging into business, with the exception of the following sources of income: a) editing, elaborating and disseminating publications or other propaganda and political culture materials; b) organising meetings and seminars with a political, economic or social theme; c) cultural, sports and recreation activities; d) internal services; e) renting locations that are in their patrimony for conferences or social-cultural activities and for organising parliamentary ofces (since the State does not provide for a separate funding for the parliamentary groups in Parliament); f) selling of real estate from the party's patrimony (but only after the assets have been in the party's possession for at least 10 years, except in case of dissolution of the party and assets acquired through legacies); g) alienating movable property from the patrimony, unless it represents acts of trade. Moreover, political parties can receive revenues from bank interests (art. 12 paragraph 2, Law no. 334/2006). 32. Donations are regulated in detail under articles 5 to 11 of Law no. 334/2006 and articles 6 to 12 of Government Decision no. 749/2007. The GET noted that there is no denition of donations that would spell out what is to be considered as donations for the purposes of party and election campaign nancing; but art. 6 of Government Decision no. 749/2006 provides that liberalities received by a political party consist of donations and/or legacies according to the provisions of the Civil Code. Donations also include hand gifts whose value exceeds 3 gross minimum wages [EUR 420]. The provisions of article 5 of Law no. 334/2006 make clear that the real value of movable and immovable assets donated to a party as well as the value of services provided free of charge fall under the concept of donations. Likewise, discounts that exceed 20% of the value of goods and services offered to political parties (and independent candidates) are considered donations (art. 6, Law no. 334/2006). Voluntary activities are not to be considered donations (art. 8 para. 3, Law no. 334/2006). Loans and fundraising activities are not addressed in the legislation, according to the replies to the questionnaire. But the Romanian authorities underlined that the former are not an allowed source of funding since the list of such sources, contained in Law no. 334/2006, does not deal with these. 33. Donations must always be identied and the identity of the donor veried by the political party (article 7 of Law no. 334/2006). At the donor's written request, his/her identity may remain condential to the general public as long as the value of the donation does not exceed 10 MGS [EUR 1400] over a period of one year. Moreover, the total amount of anonymous donations may not exceed 0,006% of the income provided in the state's budget for that year. 34. Parties may receive donations both from legal and from natural persons, with the exception of trade unions or religious entities, foreign persons, foreign countries or organisations (goods coming from international political
organisations and which are necessary for the political activity may be accepted under certain circumstances under the Law no. 334/2006 art. 11 para. 2). 35. Donations received by a political party in a scal year cannot exceed 0,025% of the income provided in the state's budget for that year (0,050% during electoral years) A ceiling also applies to support from a given donor, which may not exceed in one year 200 minimum gross salaries (MGS) [EUR 28,000] in case of a natural person, and 500 MGS in case of a legal person [EUR 70,000]. These limits are increased for the years where multiple elections are held: 400 MGS for natural persons and per election, and 1000 MGS for legal persons and per election. Donations made by several entities which are under the direct or indirect control of the same legal person must altogether comply with these limits. 36. The above limit of 500 MGS is also applicable to assets originating from a non-political group with which the party is associated. The total amount of nancial contributions that would be raised through associations with various such formations cannot exceed 0,006% of the income provided in the state's budget for the year under consideration. 37. In principle, legal persons which, at the time of a donation, have debts older than 60 days to the state budget, to the social security budget or to the local budgets, may not make donations to political parties. It is also forbidden for political parties to accept, under any circumstances, directly or indirectly, donations of goods, money or free services done with the obvious intention of gaining an economic or political advantage. (art. 5 para. 7 to 9 of Law no. 334/2006). 38. A series of prohibitions apply to prevent the (mis)use, for party and campaign nancing purposes, of nancial, human and technical resources belonging to public institutions, autonomous administrations, national companies, trade companies or banks where a majority of ownership is in the hands of a public institution. This applies explicitly to donations or free of charge services from such public institutions. These provisions apply similarly to political and electoral alliances and independent candidates (art. 10 of Law no. 334/2006). 39. Political parties are not subject to the income taxation for all membership fees, donations, legacies, income from activities and the possible public funding received (this results from a combination of article 3 paragraph 5 of Law no. 334/2006, and article 15 of the Fiscal Code. Donations to political parties, entities afliated with political parties, elected representatives, candidates in elections and election campaigns are not tax deductible by the donor (art. 48 para. 7 of the Fiscal Code). 40. The PEA explained that public subsidies are provided only at the central level of a political party. Election campaigns 41. As indicated earlier, the public grant to political parties may be used to cover a variety of party expenditure, including electoral costs, and indirect support during campaigns is made available. Part of the above provisions on the nancing of political parties is also relevant in the context of election campaigns. Chapter 4 of Law no. 334/2006 provides, in addition, for specic requirements applicable to that context. Some of the principles applicable to party nancing are reiterated (e.g. prohibition of sources of donations which are public institutions or otherwise under their control, trade unions, religious organisations, foreign natural or legal persons, as well as foreign foundations (art. 24 and 25). The various provisions under this chapter make it also clear that requirements apply equally to independent candidates. 42. Article 31 of Law no. 334/2006 claries the respective nancial roles of political parties and their candidates during election campaigns. In principle, candidates proposed for the elections by a political party may nance propaganda activities only through the political party. The latter is required to open a central account in each county electoral constituency for its candidates standing for parliamentary elections, or an account or sub-account for each candidate as the case may be. The law further states that the electoral propaganda activities of each candidate, as well as the donations and the legacies received by each candidate in the name of the party shall be deployed only through the accounts or sub-accounts opened for such purpose. The amounts of money received from the candidates proposed for elections by a political party shall be deemed donations. 43. Political parties and independent candidates are required to choose and appoint a nancial manager (a legal or natural person) who will be responsible for the collection of donations or legacies and to keep the evidence of the nancial operations (article 26 of Law no. 334/2006), including expenditure. In the case of parliamentary elections, this monopoly for the collection of donations applies after the announcement of the date of elections. The tasks of the nancial manager include the following: a) organising the book-keeping for the income received for the electoral campaign, the transfer of other funds coming from the revenues obtained in other periods than the electoral one, as well as expenditure made for the electoral campaign; b) checking the legality of the nancial operations made during the
electoral campaign, the observance of the legal provisions on the donations registered in the period between the ofcial announcement of the elections date and the end of the electoral campaign; c) submitting to the PEA the report on the observance of the legal conditions regarding the nancing of the political parties during the electoral campaign. 44. Together with the political party, the nancial manager is responsible for the legality of the nancial operations made during the electoral campaign as well as for the observance of the provisions concerning contributions for election campaigns (articles 23 to 25). 45. A political party may have several nancial managers, at a central level, for the territorial branches or for the candidates; in this situation their powers of manager shall be clearly delimited and a coordinating nancial manager shall be appointed who shall also represent the party in the relationship with the PEA (sending reports, including supplementary documents or explanations). During the campaigns for the elections of the Chamber of Deputies and the Senate, the nancial operations of each candidate are registered by a personal nancial manager, which may be the same for several candidates. The services of the same nancial manager cannot be used by several political parties, with the exception of the situation in which the political parties are part of the same political or electoral alliance. The quality of nancial manager is obtained only after the ofcial registration with the PEA, which is to be made in the period between the moment of the ofcial announcement of the elections date and the beginning of the electoral campaign. Candidates are not allowed to be nancial managers. 46. Romanian legislation has opted for a system of ceiling on campaign expenditure. The maximum limits a political party or a political or electoral alliance, or independent candidate can make in each electoral campaign shall be calculated by summing up the maximum values allowed by the law for each candidate proposed for the (local, parliamentary, presidential and European) elections; these vary between 20 minimum gross salaries [EUR 2800] for each candidate counsellor in the communal councils to 10,000 MGS [EUR 1,4 million] for each candidate for the seat of general mayor of the Bucharest municipality. A special ceiling applies to campaign expenditure for the presidential elections, which is 25,000 MGS [EUR 3,5 million] (articles 30, 31 and 33 of Law no. 334/2006).
III. TRANSPARENCY OF PARTY FUNDING SPECIFIC PART (i) Transparency (Articles 11, 12 and 13b of Recommendation Rec(2003)4)
Books and accounts Political parties 47. The GET noted that under Law no. 334/2006, there are two general requirements for the political parties to organise their own accounting books, according to the accounting provisions in force, and these requirements are detailed in the secondary legislation. Article 2 paragraph (3) of Law no. 334/2006 provides that the political parties have the obligation to organize their own accounting books, according to the accounting provisions currently in force. The implementing provisions of Government Decision no. 749/2007, article 5, make it clear that: 1) political parties are obliged to organise their own accounts at central and county branch level, according to the legal provisions. For this purpose, they may create their own special department or hire the services of accounting rms; 2) the accounts of political parties must be kept in accordance with the accounting standards applicable to non-prot organisations, as contained in the Order no. 1829/2003 [this order was however repealed in 2007 see below] of the Ministry of Public Finance. Income, expenses and results should be presented so as to meet the accounting and reporting requirements for each activity or election, and to identify the branch, organisation or candidate; 3) a record of income is kept separately for each funding source provided by law; 4) all nancial transactions of payments and receipts of political parties are carried out through bank accounts, in Lei and foreign currency opened at banks located in Romania, and those in cash according to law; 5) the payment of membership fees shall be based on the tally-sheet or receipt, except for amounts which, in one instalment, are 3 national gross minimum wage or more, which is done under para. (4) (). 48. The replies to the questionnaire indicate that the rules and practices for keeping books, records, nancial accounts and supportive documents of income and expenditure are regulated by Law no. 82/1991 on accountancy, republished, and by the Minister of Public Finances Order no. 1969/2007 regarding approval of accountancy regulations for legal persons without a patrimonial interest. This order of 2007 repealed in fact the above Order no. 1829/2003 of the Ministry of Public Finance. 49. According to art. 20 from Law no. 82/1991, the compulsory accounting books are the following: the Journal Registry, the Inventory Registry and the Big Book. Preparation, editing and maintaining accounting records shall follow the rules developed by the Ministry of Public Finance. The books are used in strict accordance with their intended use and presented in an orderly manner and complete as to allow, at any time, the identication and control of the
accounting operations performed (art. 21 from Law no. 82/1991). 50. In order to verify the correct registration in the accountancy of the transactions performed, the trial balance is prepared at least annually, when the nancial exercise ends or observing the deadlines for compiling accounting reporting established by law (art. 22 from Law no. 82/1991). 51. Persons using automatic data processing information systems are required to ensure the processing of data recorded in the accounts in accordance with applicable accounting rules, to control and maintain their technical supports (art. 23 from Law no. 82/1991). 52. The Minister of Public Finance (MPF) Order no. 1969/2007 approving the accounting rules for legal persons without patrimonial purpose provides in art. 3 that the legal persons without patrimonial purpose draw up annual nancial statements including: balance sheet, the account of the exercise's results, explicative notes to annual nancial situations. Organizations and trade unions and other organizations without patrimonial purpose, without economic activity, prepare simplied annual nancial statements, including: abbreviated balance sheet, abbreviated account of the exercise's result, explanatory notes to simplied annual nancial situations. 53. According to art. 10 from MPF Order no. 1969/2007, the subunits with no legal personality, belonging to the legal persons without patrimonial purpose resident in Romania organize and lead their own accounts up to the trial balance, without having the obligation to prepare annual nancial statements. 54. Legal persons without patrimonial purpose organise and lead the accounts usually in distinctive departments, led by the chief nancial ofcer, the accounting ofcer or other person empowered to perform this position. They should have higher economic education and, together with the coordinated personnel, are charged with keeping the accounting according to the law. 55. All nancial transactions have to be based on primary supporting documents, which must contain the following main elements: a) the document name; b) the name and address of the legal person preparing the document; c) the number of the document and date it was prepared; d) the parties involved in the commercial operation (when applicable); e) content of economic/commercial operation (collection, payment); f) quantity and value data related to the operation performed; g) full name and signatures of persons who prepared the supporting documents; h) other details to ensure complete record of transactions. Political parties shall carry out all nancial transactions based on the chart of accounts for legal persons without prot-making purpose, as follows: a) "Class I - capital accounts, contributions and reserves"; b) "Class II - accounts for restraint"; c) "Class III - accounts for stocks and production in progress"; d) Class IV - accounts of third parties"; e) "Class V - treasury accounts"; f) "Class VI - expenditure accounts"; g) "Class VII - income accounts"; h) "Class VIII - special accounts. 56. In accordance with the provisions of the Government Decision no. 749/2007 on approving the methodological norms for the application of Law no. 334/2006, political parties are required to show both the revenues, respectively fees, donations and other income, and also the expenses, as follows: I. Income Membership fees: o o o Personal data sheet to record contributions; Table with the collected fees for the month/year; The list of the party members who paid in the scal year.... membership l value that exceeds the range of 10 minimum gross salaries per
fees of tota country; o o o o o o o
The list of party members who paid in the scal year.... membership fees The half-yearly situation o f the income obtained from membership fees. The sheet of donations for natural persons; The sheet of donations for legal persons; The annual record sheet for the donor - natural person; The annual record sheet for the donor - legal person ; The list of donors - natural persons who made donations in the scal
of total value that exceeds the range of 48 minimum gross salaries per country; Donations:
year...., donations whose total value exceeds the range of 10 minimum gross salaries per country;
The list of donors - legal persons who made donations in the scal
year...., donations whose total value exceeds the range of 10 minimum gross salaries per country; o o o II. Expenditure o The half-yearly situation of income from donations; The situation of the condential donations in the scal year.... The annual situation of income from sources other sources, detailed for The monthly situation of expenditure, divided by destinations.
Other income: each source of income.
57. The expenditure of political parties is recorded on the basis of the invoices issued by suppliers. 58. Law no. 334/2006 and Government Decision no. 749/2007 do not allow political parties to receive collective donations or to take a loan. 59. As for entities related directly or indirectly, and organisations afliated to political parties, subunits lacking legal personality that belong to legal persons without patrimonial interest having the ofce or domicile in Romania organise and run their own accountancy down to the level of trial balances,, without drawing up annual nancial books. Law no. 334/2006 on nancing of political parties and electoral campaigns does not provide practices and rules of records-keeping, nancial reports and supportive documents of income and expenditure of organisations afliated to political parties. Election campaigns 60. Rules and practices for keeping books, records, nancial accounts and supportive documents of income and expenditure related to campaigns are provided by the Law no. 334/2006 and Government Decision no. 749/2007 on approving methodology norms for the application of Law no. 334/2006 on nancing of political parties and electoral campaigns. 61. The replies to the questionnaire indicate that in the accountancy of the political parties, and political/electoral alliances, there is no distinction made between regular income and expenditure on one side, and income and expenditure related to electoral campaigns on the other. Income and expenditure from the electoral campaign are registered in a Report of income and expenditure, that after being veried by the Department of control of political parties and electoral campaigns of the PEA, will be included in the book-keeping of the political party. 62. As indicated in the general part, political parties and independent candidates are required to appoint a nancial manager who is in charge i.a. of the registration of income during election campaigns. 63. Donations and legacies received from natural or legal persons after the beginning of the electoral campaigns have to be declared to the PEA by the nancial representative within 5 working days (art. 23 para. 1, Law no. 334/2006). They can be used to nance the electoral campaign only after being declared to the PEA (art. 23 para. 2, Law no. 334/2006). 64. Law no. 334/2006 prohibits the funding of election campaigns from the following sources: a) foreign natural or legal persons, whether directly or indirectly (art. 24 para. 1, Law no. 334/2006); b) public authorities, public institutions, autonomous administrations, national companies, trade companies or banks where the state or territorial administration units are main shareholders or companies that have activities nanced with public funds as well as companies which, in the last 12 month before the beginning of the electoral campaign, had activities nanced with public funds (art. 25 para. 1, Law no. 334/2006); c) trade unions or religious cults, associations or foundations from abroad to nance by any means the electoral campaign of a party, an alliance or an independent candidate (art. 25 para. 2, Law no. 334/2006). 65. For each expenditure, it is necessary to have supportive documents that were at the basis of its registration (contract, bill, payment order).
Reporting obligations 66. Reporting requirements are provided under Law no. 334/2006 and the implementing provisions of Government Decision no. 749/2007 on approving methodology norms for the application of Law no. 334/2006 on nancing of political parties and electoral campaigns. Political parties 67. Outside election periods i.e. on a permanent basis; the political parties have to submit to the PEA the following reports and information: Information to be provided regularly by parties to the PEA No. 1. 2. 3. 4. Type of report Situation of received donations Half -yearly situation of income resulting from membership fees Annual situation of other sources of income Monthly situation of the subsidy and expenses incurred Election campaigns 68. During election campaigns, political parties and candidates have to submit to the PEA the following information: No. 1. 2. agent The declaration regarding the compliance with the ceilings provided by art. 30 para. 2 from Law no. 334/2006 69. The nancial manager also has to submit to the PEA the following information: No. 1. Type of report Do nations and legacies received after the beginning of the electoral campaigns 2. The report on the compliance with the legal provisions on nancing political parties during the electoral campaign 3. The number of propaganda materials produced, divided by categories 4. The declaration regarding the compliance with the ceilings provided by ar t. 30 para. 2 from Law Until the mandates are validated Within 5 working days after the electoral campaign was closed Within 15 days fr om the publication of the elections result Deadline Within 5 working days from their receipt By the validation of mandates Type of report The registration of the nancial Deadline Before the electoral campaign begins by the 25th day of the following month Deadlines 31 March of the following year 31 July of the current year 31 January of the following year 31 March of the following year
no. 334/2006 5. The detailed report of electoral income and expenditure Third parties 70. Third party support during elections is not regulated. Access to, and keeping of accounting records. 71. The PEA, where necessary, may request supplementary statements and documents, and the political parties are required to submit the requested documents within 15 days (as required by art. 39 paras. 1 and 2 of Law no. 334/2006). Besides, the AEP may request for documents and information from natural or legal persons that made donations or provided services (whether for free or not), as well as from any public authority, that has the obligation to provide the necessary support (art 28, para. 5 from the Government Decision no. 749/2007). 72. Accounting records and the supporting documents must be kept for 10 years in the archives of the legal persons without patrimonial purpose, starting from the end of the nancial year when kept, except payrolls which are kept for 50 years (art. 24 from Law no. 82/1991 on accounting, as republished). 73. During the election campaigns, the nancial agent of each party submits to the PEA, as indicated earlier, a series of reports and statements including the report on election income and expenditure (art. 38 para. 1); the GET was told on site that in practice, these documents are archived and kept by the PEA for 6 months. The authorities stressed after the visit that in fact, all documents must be kept and archived by the PEA for a period of 30 years before submitting them afterwards to the National Archives according to art. 13 para. (1) from Law 16/1996 (Law of the National Archives). Publication requirements 74. The replies to the questionnaire were limited to the publication of declarations of assets and interests. Political parties 75. The GET noted that political parties are required to publish the following information in the Ofcial Journal, in accordance with the respective provisions of Law no. 334/2006 (which are summed up in article 40) and the corresponding precisions contained in Government Decision no. 749/2007: Type of information Total amount of income from membership fees and the list of members who pa id in one year fees whose total value exceeds 10 MGS (EUR 1400), incl. personal identication details (art. 4, Law no. 334/2006) List of natural and legal persons who made within one year donations whose total value exceeds 10 MGS (EUR 1400), incl. identication information, as well as the total amount of condential donations (art. 9, Law no. 334/2006) Donations from abroad, which are authorised as far as they are material used for p olitical activities (art. 11, Law no. 334/2006) Total amount of income from other sources (art. 12 Law no. 334/2006) Total amounts of nancial contributions deriving from associations with non -political formations (art. 13, Law no. 334/2006)
Within 15 days from the publication of the elections result
Deadline By 31 March of the following year
By 31 March of the following year
By 31 March of the following year
By 31 March of the following year By 31 March of the following year
76. Parties are required to send the above information to the PEA and the latter to subsequently publish it on its own website (art. 40 of Law no. 334/2006); in practice, the information is available the same day or the day after, as the PEA indicated. Election campaigns 77. The PEA also publishes in the Ofcial Journal, within 30 days following the proclamation of election results, the nancial reports pertaining to election campaigns after they have been received in electronic format from the nancial managers; besides, the PEA also publishes on-line the lists of all donors who must be reported (within 5 days of the donation) to the PEA after the opening of the ofcial election campaign (article 40 combined with art. 38 para.2 and 23 of Law no. 334/2006). Other publication requirements 78. Moreover, the PEA is required to publish an annual report of activity related to the supervision of political nancing in the Romania's Ofcial Journal as well as on the PEA's webpage before 31 March of the following year (art. 26 of Law no. 334/2006). In addition, as regards all ad hoc controls carried out besides the general examination of nancial reports, the results of each of these controls are to be published within the Romania's Ofcial Journal as well as on the Permanent Electoral Authority webpage in a term of 15 days from that control (article 36 of Law no. 334/2006).
(ii) Supervision (Article 14 of Recommendation Rec(2003)4)

Auditing 79. Law no. 334/2006 does not impose any internal or external auditing requirement upon parties or coalitions (or campaign participants). It is left up to them to have such audits carried out in the context of their internal policies. Monitoring 80. In accordance with Law no. 334/2006, the Permanent Electoral Authority (PEA) has overall responsibility for controlling the compliance of political parties, political and electoral alliances, independent candidates and election campaigns with the Law. The Court of Account retains simultaneous competence in this area as regards the use of the state subsidy possibly allocated (article 35 paragraph 2). The present situation is the result of a compromise since the overall supervision over the implementation of the Law was the responsibility of the Court of Accounts (COA) until January 2008. The Permanent Electoral Authority (PEA)4 81. The PEA is an autonomous administrative institution with legal personality and with general competence that ensures unitary application, in between two electoral periods, of the legal dispositions regarding the organisation and the conduct of elections or consultations of national or local character. 82. The PEA is headed by a president (with the rank of minister). The president is appointed by a joint decision (majority vote) of the Chamber of Deputies and the Senate, upon the proposal of parliamentary groups, from among the personalities with a legal or administrative background or experience. The candidate who meets the Deputies and Senators' majority of votes shall be appointed president. The president is seconded by two vice-presidents (with the rank of state secretary), one is appointed by the President of Romania and the other by the Prime Minister. The president and vice-presidents cannot be members of a political party and their 8-year term may be renewed only once. Article 63 paragraph 8 of Law no. 35/2008 provides for the modalities of termination of their mandates (expiry of mandate, resignation, dismissal for serious grounds). 83. The PEA approves the draft of its own budget (before the general debate of the State budget), and submits it to the Government with the view to include it in the state budget. The President of PEA is a main credit manager. The Decision no. 3/2008 amending and completing the Regulation on organization and functioning of PEA, published in the Ofcial Journal no. 673/2008, provides that the maximum number of positions (excluding ofcials and the ofce of President and Vice-president) is 250; currently, 126 of these are lled. The Authority has, at central level, 12 main departments and services. According to the law, the PEA has 8 territorial branches without legal personality; these are subordinated to the PEA and coordinated by one of the Vice-presidents. 84. Within the PEA, the Department of control of nancing political parties and electoral campaigns is one of the 12 main departments; it was created in June 2007, by supplying the personnel structure; currently, the Department has
4
www.roaep.ro/en
20 positions (including those in the territorial branches), of which 17 are currently lled. Public authorities have the obligation to support the PEA in controlling the political parties funding. The PEA controls the compliance with the legal provisions on party funding annually and upon notication (art. 36 para. 1, Law no. 334/2006), or following a complaint from any person that provides evidence concerning the breach of the law regarding party funding (art. 36 para. 2, Law no. 334/2006). The PEA can also act ex ofcio when it suspects an infringement of Law no. 334/2006. 85. The results of each control are published in the Ofcial Journal of Romania, Part I, and also on the internet page of the PEA within 15 days from the control; the annual report concerning the results of controls is published in the Ofcial Journal of Romania, Part I, and also on the website of the PEA by 31 March of the following year. 86. The GET noted that Government Decision no. 749/2007 (articles 27-30) provides in detail for the powers, access to information and scope of control of the PEA: In particular: a) the PEA must notify 15 days in advance the entities that will be controlled; b) controls may be carried out on-site in some cases (the above deadline does not apply); c) additional information may be asked from the parties at their premises; c) the PEA may check again, after a deadline of up to 15 days, whether the detected gaps have been led etc. The scope of control is dened at art. 30 of Government Decision 749/2007; it does not include the control over the correctness of information on expenditure. The Court of Accounts (COA) 87. The Court of Accounts (COA) has general responsibility for the control of the management and use of the state's and public sector nancial resources. In the context of political nancing supervision, the COA still monitors despite the transfer of competences to the PEA -- how political parties spend the public subsidy (article 35 paragraph 2). Law no. 94/1992, as subsequently amended, regulates the functioning of the institution. It is led by a plenum consisting of 18 counsellors of accounts, appointed for 9 years appointed by the Parliament, upon the proposal of the permanent commissions for budget, nance and banks of the two chambers. During their mandate, they are independent and irremovable. The executive management of the institution is exercised by a president, assisted by two vice-presidents, who are counsellors of accounts. The COA comprises 12 departments. Each is led by a counsellor of accounts, appointed by the plenum of COA. Out of these, 11 are specialised departments for audit and control and one is the legal department. At local level, the competence of COA is performed through the 42 territorial Chambers of Accounts, structures without legal personality. They are led by a director and a deputy director. 88. The president and the other members of COA are independent in the exercise of their functions and in the decision making process. The specialised personnel of COA (the external public auditors), enjoy stability and independence in the exercise of their prerogatives. The COA may not be inuenced by the Parliament, the Government and other public authorities with regard to internal organization and functioning; their activity schedule, except the actions ordered by the Parliament; the planning, reporting and follow-up of the results of their controls. Related to its specic activities, COA decides autonomously on the timetable to be followed. 89. The controls of COA are initiated ex ofcio. The sole institution able to stop the controls is the Parliament, only when the competences provided by the law are exceeded. The decisions of the Chamber of Deputies and the Senate, requesting COA to perform controls, within their prerogatives, are mandatory. With regard to the cooperation with other institutions, COA cooperates with the Parliament, the Government, ministries as well as all the other public institutions. Other authorities (police and prosecution services, National Integrity Agency) 90. As indicated earlier, in its specic activity the Authority can cooperate with various other agencies. 91. According to Law no 176/2010 on enhancing integrity in the exercise of public positions and dignities (which amends and complements Law no. 144/2007 on setting up the National Integrity Agency, which was the one applicable at the time of the visit), the persons running for the position of president of Romania, deputy, senator, county councillor, president of the county council, local councillor or mayor have the obligation to disclose their assets and interests. Disclosures of assets and interests will be submitted to the Central Electoral Ofce or, as applicable, to the constituency electoral ofce, together with the candidacy acceptance statement, in two copies. The Central Electoral Ofce and the constituency electoral ofce will send a copy of the disclosure of assets and interests to the National Integrity Agency, within maximum 48 hours from its submission. Disclosures of assets and interests of the candidates to the position of President of Romania shall be published in the Ofcial Journal, Part III, as well as posted on the Agency's website, within 10 days from the date of their submission or reception, as applicable and it shall be maintained as such. Disclosures of assets and interests of the candidates to positions of deputy, senator, county councillor, president of the county council, local councillor or mayor will be published on the Agency's website, within 10 days from the date of their reception and shall be maintained as such.
92. According to Law 176/2010, the declarations of assets and interests will be submitted within 30 days from the nomination or election in the public function or from the start of the activity. Such persons as provided in the law are obliged to annually submit or update declarations of assets and of interests, no later than 15 June for the previous scal year. Within 15 days from ending the mandate or activity, the persons provided in present law have the obligation to submit a new declaration of assets and interests. Statistics 93. As indicated earlier, until 31 December 2007 the implementation of Law no. 334/2006 was monitored by the COA; this responsibility was then taken over by PEA, the COA monitoring how political parties spend the public subsidy. 94. During the controls undertaken in 2008, 19 political organisations representing 9 political parties of which 3 non parliamentary were veried. In the context of the June 2008 local elections, 46.388 political parties' income and expenditure reports, electoral/political alliances, and independent candidates were veried. On the occasion of the November 2008 elections for the Chamber of Deputies and the Senate, 3.644 political parties, electoral/political alliances and independent candidates' income and expenditure reports that participated in the by-elections were veried. 95. During the controls undertaken in 2009, 31 political organisations representing 8 political parties were subject to controls. For the June 2009 elections for the European Parliament, 9 political parties, electoral/political alliances and independent candidates' income and expenditure reports were veried. For November 2008 Presidential elections, 12 political parties' income and expenditure reports, electoral/political alliances, and independent candidates were veried. Also, income and expenditure reports of political parties, political/electoral alliances and independent candidates that participated in the by-elections between 2008-2009 were veried. To date, the PEA has sent no complaints to the police or the prosecutor's ofce as a result of controls on political party nancing undertaken. 96. In 2009, the Court of Accounts performed controls to 6 political parties on the subsidies received from the 2008 state budget. The controls ascertained that the expenditure from the subsidies were carried out by observing the legal provisions. By the end of December 2008, the COA has never had an opportunity to notify the police or the prosecutor's ofce on possible breaches of the criminal law.
(iii) Sanctions
97. The replies to the questionnaire only refer to the provisions contained in Law no. 334/2006 and the possible consequences of the control work of the PEA. Sanctions and measures applicable by the PEA 98. If during their controls, PEA staff come across breaches of Law no. 334/2006 that are misdemeanours, they le a report containing the proposal to apply a sanction; the decision is then taken by a collegial decision of the PEA (art. 29, Government Decision no. 749/2007). 99. Law no. 334/2006 provides for two categories of sanctions: a) a ne of 5000 to 25.000 RON [1200 to 6000 Euros] in the cases provided in article 41 paragraph (1), which lists a series of infringements to the law5; b) conscation of the amounts of money and/or the value of the goods and services that were the object of the misdemeanour if the
5 1) nancing the political party from sources other than the ones explicitly and limitatively provided by the law (art. 3 para.2); 2) not keeping individual accounting records in accordance with general accounting regulations (art.3 para.3); 3) the amount of the membership fees of a single member is exceeding 48 minimum gross salaries (art.4 para 3); 4) non-compliance with the obligation to publish in the Ofcial Journal the total amount of revenues from the membership fees until the 31st of March of the following year and the list of the party members who have contributed within one year time fees exceeding 10 minimum gross salaries (art.4 para.4); 5) non compliance with the mandatory provisions regarding the donations such as: the total donations which can be received by a political party during a scal year, the maximum donation which a political party can receive from a natural or legal person etc (the rules on donations of art.5 as a whole); 6) non-registering distinctively of the price sales exceeding 20% of the value of the goods or services provided to political parties or independent candidates (representing donations under the law) (art.6 as a whole); 7) non-registering or non-conrming the donor's identity (art.7 as a whole); 8) inaccurate registration of all donations within the accounting records (art.8 as a whole); 9) non compliance with the obligation of publishing within the Ofcial Journal the list of the natural and legal persons who made donations exceeding 10 minimum gross salaries and the total amount of the anonymous donations (art.9 as a whole); 10) accepting donations or free services from public authorities or institutions or companies to which the state is the shareholder or the main shareholder (art. 10 para.2); 11) accepting donations from a trade union or religious groups (art.10 para.3); 12) accepting donations from a foreign country or organisation or foreign natural or legal persons (with the exceptions of the materials needed by political activities) (art.11 para.1); 13) non compliance with the obligation of publishing within the Ofcial Journal the list of the materials received from foreign country or organisation or foreign natural or legal persons (those allowed by Law) (art.11 para.3); 14) exceeding the threshold provided for the nancial contributions of an non-political organisation (if this organisation is linked to the party (art. 12 para.1); 15) exceeding the total threshold of the nancial contribution under different types of association with non-political organisations (art. 13 para.1 and 2); 16) performing activities specic to private commercial companies (art.12 para.1); 17) non compliance with the obligation of publishing within the Ofcial Journal and by 31 March the total amount of revenues from other sources (art.12 para.3); 18) changing the destination of the state subsidy received (art. 20 para. 2); 19) not declaring the donations and legacies received after the beginning of the electoral campaigns (art.23); 20) nancing directly or indirectly the electoral campaign by foreign natural or legal persons (art. 24 para.1); 21) nancing the electoral campaign of a political party or a political alliance or an independent candidate by public authorities or institutions or companies to which the state is the main shareholder or by companies using public funds
thresholds of contributions is exceeded; any such possible amounts are then transferred to the general state budget. 100. The sanctions are applicable to the political party, the independent candidate, the nancial agent and/or the donor who has breached the provision, depending on the case (art. 41 para. 2, Law no. 334/2006). 101. Moreover, if by nal court decision, one or more candidates who have been elected are convicted of an offence in connection with the nancing of political party or the election campaign, their mandate of parliamentarian or as local elected ofcial can be cancelled by the judge (art. 46 para. 1, Law no. 334/2006). There are no similar rules for holders of an Euro-MP mandate, nor for a presidential mandate. 102. The above decisions can be appealed in court. 103. As indicated in the general part, Law no. 334/2006 makes the state subsidy conditional to certain requirements. It can be suspended in case of certain infringements (to art. 3 para (3); art. 4 para. (4); art. 9, art. 11 para. (3); art. 12 para. (1); art. 13 para. (4); art. 39 and art. 40 para. (2)) in order to force offenders to rectify an illegal situation. The PEA shall, rst of all, notify the political party about the deciencies ascertained and their remediation time. The time allowed political parties to address deciencies cannot exceed 15 days. The decision to temporary suspend granting monthly instalments from the state budget can be challenged within 15 days from the communication before the competent administrative court, which has to decide within 15 days from the notication. The court decision is nal and irrevocable. Sanctions applicable by the Court of Accounts (COA) 104. Since the COA controls the use of public grants by the parties, the GET assumed that certain sanctions would be applicable by the COA as well as that the later would transmit a case to the PEA. As the GET was told on-site, the COA has lost the power to impose sanctions in its area of competence and it has to le a case with the administrative court for such purposes; the sanctions applicable are those contained in the general legislation on misdemeanours. To date, the PEA has not received any case from the COA. Statistics 105. Between 2008 and 2009, the PEA's Department for political parties nancing control undertook several verications, and many breaches of the law concerning party funding were sanctioned with nes of 5.000 to 25.000 RON, and in some cases, the conscation of different sums of money or goods was decided. For instance: a) the Great Romania Party was sanctioned with a warning and the conscation of 3.000 RON (EUR 700); b) the ChristianDemocrat New Generation Party was sanctioned with a ne of 5.000 RON (EUR 1200) and the conscation of 78.000 RON [EUR 18 000]; c) the Romanian Socialist Party received a ne of 5.000 RON (EUR 1200); d) one independent candidate received a ne of 5.000RON (EUR 1200) ; e) the National Liberal Party has been sanctioned with both a ne of 5.000RON and also conscation of 70.346RON [EUR 17 000]. In cases when no serious breaches of the law were ascertained, the PEA applied only warnings. Immunities 106. These aspects are not regulated in legislation and they contain no further information. The GET recalls that Romanian legislation provides for a general system of immunities from prosecution6. Leaving aside the immunity of judges and prosecutors, the scope of persons enjoying immunities is now limited to: a) members of the Romanian Parliament (deputies and senators), who enjoy immunity from arrest, detainment or search except in case of agrante delicto (when they can be detained and searched and when the minister of justice shall inform without delay the
(art. 25 para.1); 22) nancing of the electoral campaign of a political party, a political alliance or an independent candidate by trade unions or religious groups or foreign NGOs (art. 25 para.2); 23) receiving donations or legacies from natural or legal persons through another person other than the nancial representative (who is specially appointed by the political party for this purpose) (art. 26 para.1); 24) keeping the nancial records by other means than the ones explicitly and limitedly provided by the law (by the nancial representative) (art. 26 para.2); 25) using a single nancial representative for more than one political party (apart from situations of single political or electoral alliance) (art. 26 para.7); 26) nominating the nancial representative as a candidate (art. 26 para.9); 27) not printing on all electoral propaganda materials the mandatory identication information (names of the independent candidate, political party or political or electoral alliance, and of the economic agent producing the materials) (art. 29 para 2); 28) bearing of propaganda material- related expenditure by persons other than the beneciary of the propaganda (independent candidate, political parties, political or electoral alliance) (art. 29 para 3); 29) non-declaring to the Permanent Electoral Authority, through the nancial representative, of the number of propaganda materials under each distinct category (art. 29 para 4); 30) using the propaganda materials of the election of the party's leadership for other purposes or in other situations than those provided by the law (art. 29 para 6); 31) nonobserving the legal provisions related to the maximum amounts allowed by Law to be spent for each candidate or independent candidate (art. 30 para.2); 32) nancing electoral propaganda activities by a candidate proposed by a political party by other means than through the respective political party (art. 31); 33) non submission, to the PEA, of a detailed report on the electoral revenues and expenses of each political party and independent candidate, by the nancial representative, within 15 days from the publishing of the electoral results (art. 38); 34) non-submission to the PEA of the documents that the Authority requested from the political party (art. 39 para.2). 6 In the First Evaluation Round Report (link), paragraphs 67-76 and 101-104, and since improvements were necessary, follow-up given to the recommendations was examined in the Compliance Report (link), paragraphs 56 to 63, and the later Addendum to it (link), paragraphs 5 to 9.
president of the Chamber in question on the detainment and search), as provided by art. 72 of the Constitution; this immunity may be lifted by Parliament in accordance with the procedure governed by the Rules of Procedure for the two Chambers of Parliament7; b) the President of the Republic, whose scope of immunity is indirectly dened by the Constitution which provides for a prosecution procedure only for the offence of high treason (Art. 84 of the Constitution); c) the Prime Minister and ministers, who may be subject to criminal investigation according to Law no. 115/1999 on the liability of ministers. Their immunity, granted by Law no. 115/1999, is in fact broader than the immunity granted to MPs. As a result of GRECO's First Evaluation Round report, the Law was amended as it applied also to former members of government; however, the GET has conrmed that following a Constitutional Court's Decision in 2007, Law no. 115/1999 was amended again and the current situation is the same as before GRECO's recommendation. Statutes of limitation 107. All the deeds dened and sanctioned in Law no. 334/2006 are administrative misdemeanours (contraventions) in accordance with art. 44 of the Law, which provides for the additional application of Government Ordinance no. 2/2001 on the juridical regime of contraventions8, as amended through Law no. 180/2002. Therefore, the statute of limitation for the application of the contraventional ne for such misdemeanours is 6 months starting from the date of commission of the deed, the enforcement of the sanction being prescribed after a period of one month, if the minute on nding the contravention has not been communicated to the contravening person (articles 13 and 14 of GO no. 2/2001).
IV. ANALYSIS
General considerations 108. Law no. 334/2006 on nancing the activity of political parties and election campaigns (hereafter: Law no. 334/2006) is a ne piece of legislation which provides for a variety of measures aimed at increasing the overall transparency of political nancing as regards the regular activity of political parties as well as election campaigns. It is at times over-ambitious and imposes many limitations that are probably difcult to enforce in practice, including a complex system of overall limits on campaign income and expenditure and on permissible amounts of anonymous donations calculated in proportion to the income provided in the state budget, a prohibition of donations aimed at obtaining public contracts etc. The Romanian authorities indicated that Law no. 334/2006 was republished after the on-site visit, with a different numbering of articles but no substantive changes were made; the present report has, however, kept the references and numbering applicable at the time of the on-site visit. Important implementing regulations are contained in Government Decision no. 749 of 11 July 2007 on approving the Methodological Norms for applying Law no. 334/2006 (hereafter: Government Decision no. 749/2007), which thus provides useful guidance to the subjects of the Law. Law no. 334/2006 also provides for a supervisory mechanism under the joint responsibility of the Permanent Electoral Authority (PEA) and the Court of Accounts (COA), which is potentially powerful, and for a broad set of sanctions in case of non-compliance with the law. Despite the fact that more political parties were invited, only three of them accepted to meet the GET, one of which submitted information after the visit. What is particularly striking is the difference between the rather strict requirements of the law and the situation in practice, as described by political parties, media representatives and civil society. Transparency 109. The on-site discussions showed that political nancing is largely perceived as a particularly problematic and grey area in Romania; the GET was told repeatedly that the information available does not reect, by far, the reality of the situation of political parties both during and outside election periods. The signicant informal economy9 impacts also on political activities and parties and candidates spend notably more than what their ofcially declared resources allow. The same applies to donors; election observers have often noted in the last two or three elections that a number
7 For instance, deputies may be subject to investigation, and may be criminally prosecuted for actions that are not related to the vote they cast or the political opinions they expressed in the exercise of their mandate, but may not be searched, detained or arrested without the consent of the Chamber of Deputies, after having been heard. The investigation and criminal prosecution may be made only by the Prosecutor's Ofce attached to the High Court of Cassation and Justice. The High Court of Cassation and Justice shall have jurisdiction over this case (art. 193 of the Regulations of the Chamber of Deputies, http://www.cdep.ro/pls/dic/site.page?id=240). 8 Art. 13: (1) The application of the administrative ne sanction shall be prescribed in a term of 6 months since the date of committing the deed. (2) In the situation of the continuous contraventions the term stipulated at para (1) shall run since the date of nding the deed. The continuous contravention is the situation in which the breaching of the legal obligation is lasting in time. (3) When the deed was prosecuted as an offence and after that the legislator establishes that it is a contravention, the prescription of the application of the sanction shall not run during the period when the case was in front of the criminal investigation or prosecution bodies or in front of the court, if the le was lodged within the term stipulated at para (1) and (2). The prescription shall still operate if the sanction has not been applied in a term of one year since the date of committing, respectively of nding the deed, if the law doesn't stipulate otherwise. (4) Other prescription terms for the application of the administrative sanctions may be stipulated in special laws. Art. 14: (1) The enforcement of the administrative ne sanction shall be prescribed if the minute on nding the contravention has not been communicated to the contravening person in a term of one month since the date of the application of the sanction. 9 The representative of the Ministry of Public Finance had no precise or ofcial gure but he mentioned that it represented perhaps about 30% of the GDP.
of donors had provided support to parties and candidates in amounts that actually exceeded their ofcial income; all this suggests that the informal nancing could account for even more than 30% of the real nancial activity. The buying of votes also remains an important issue and the authorities are taking action in this respect10. The on-site discussions showed that many techniques are used in practice for illegally nancing political activities: creation of ctitious positions (including in the Parliament or town hall of the capital city), the buying of support from inuential and powerful supporters (in exchange for public responsibilities and future business contracts), public funding attributed directly to local party structures without these having applied for it, creation of related party-structures for instance to disguise the real origin of income or to raise extra funding, misuse of public facilities, blackmailing of major business entities etc. At the same time, it is clear that certain new factors constitute an additional challenge (concentration of the media in the hands of political parties or their executive members, increasing trend of economic entrepreneurs also being politicians who do sometimes use their position to nance their political activities in illegal or questionable ways). The GET was also informed that the requirements of Law no. 334/2006 are circumvented by various means, including the registration as membership fees of donations that would normally exceed the permitted ceiling or the threshold for disclosure, the splitting of donations to avoid disclosure of identity and ceilings on donations etc. The GET is convinced that some of the above issues can already be addressed under the current legislation on political nancing or the anti-corruption and anti-money laundering legislation, subject to real political and institutional will from the supervisory bodies (see below, paragraphs 121-123). For instance, Law no. 334/2006 clearly prohibits all forms of misuse of public facilities. 110. The situation is not entirely clear as to the entities which are subjected to Law no. 334/2006 since some political organisations are not considered ofcially or registered as political parties (this concerns for instance, but not only, some of the organisations of national minorities11). The GET could not discuss the situation of each individual organisation that would be involved in political and/or campaign activities and the Romanian authorities may wish to ensure that the Law applies equally to all relevant organisations. 111. It remained particularly unclear to what extent party accounts must be consolidated to take into account the various related structures such as youth/women/businessmen organisations, foundations (some are called institutes) and other entities that parties have created in practice. Foundations, for instance, are considered by some parties as totally independent entities (with their own legal personality); these foundations (one of the parties interviewed conrmed they had established several such structures) are involved in a variety of activities including charity, culture and education, printing and editing, event organising etc.; they can also generate additional income, for instance by subletting their premises. At the same time, the same representatives acknowledged that these foundations are involved in the parties' activity, especially during campaign periods. At the same time, foundations are not considered to be subject to any form of control in the context of Law no. 334/2006 (they are subject to the nancial/scal control of the Ministry of Finance depending on their nancial turnover). This is a crucial issue if party accounts are to reect faithfully the overall nancial situation, resources and expenditure; either they are to be included in the accounts of the party, or their support needs to be accounted for as third party contributions (during election campaigns) and as indicated in paragraph 70, the matter of third party support during elections is not regulated yet in Romania. The GET therefore recommends i) to clarify how the nancial activity of the various types of structures related to political parties is to be accounted for in the accounts of political parties; ii) to examine ways to increase the transparency of contributions by third parties (e.g. separate entities, interest groups) to political parties and candidates. 112. As regards the accounting obligations and format, there was often uncertainty during the on-site discussions as to the applicable standards although, as indicated in the descriptive part, Government Decision no. 749 (article 5) makes it clear, in principle, that political parties' accounts must comply with the accounting regulations for non-prot legal persons contained in the relevant rules issued by the Ministry of Public Finance. The GET understood that in accordance with article 1 of the Order no. 1969/2007 of the Ministry of Finance, all political parties and related entities which have legal personality are in principle required to keep a double entry accounting and to prepare annual nancial statements (for the purposes of the Ministry of Finance's general supervision). At the same time, Government Decision no. 749/2007 does require consolidation of accounts at central and county level of the parties and county level structures are keeping the accounts for all possible local structures since the latter have no nancial autonomy nor separate bookkeeping (and the headquarter at county level is the headquarter for all local chapters) except the local sections in the capital city districts. However, it sometimes happens that these structures only keep their accounts in a simplied form (or keep no accounts at all, in practice), as interlocutors of the GET underlined; the same goes for the other structures and organisations of the party. Given the need to introduce a global disclosure system that would give a faithful picture of the parties overall annual activity, the balance sheet format is not appropriate for county level branches and those located in the large cities where signicant nancial activity can be deployed during local elections. At the same time, it would appear that local sections seldom use a computerised book-keeping techniques that would facilitate for instance the vertical consolidation of annual accounts in a timely manner. This will need to be borne in mind
For instance, in 2009, 3 cases involving 3 defendants were sent to trial; in 2010, 8 cases involving 8 defendants were sent to trial. Such organisations do not receive public funding through the Permanent Electoral Authority but through the Department for Interethnic Relations which actually nances all the minorities represented in the Council of National Minorities
11 10
by the Romanian authorities when introducing the disclosure of general accounts recommended underneath (see paragraph 114). The GET recommends to ensure that all entities under the control of political parties and county branches (including the district sections in Bucharest) of political parties keep proper books and accounts. 113. Moreover, Romanian political life remains unstable; it is quite frequent for political gures to move from one party to another. The GET was sometimes told on site that when they do so, party executives sometimes take with them part or all of the accounting and nancial documentation although every political party is in principle required to ensure these documents are kept for a period of 10 years, according to the general accounting regulations described by the Romanian authorities; non-compliance with these requirements is subject to administrative and criminal liability (for instance in case of stealing of accounting documents). As indicated in the descriptive part (paragraph 73), the PEA itself is normally required to keep all les for a period of 30 years but in practice the staff do not keep nancial records for more than 6 months or so after their submission and they rely, as the GET was told, on the books and data kept by parties and candidates. Given the risks above, it appears imperative that the PEA itself actually retains information for a longer period, especially bearing in mind the extension of the statute of limitation referred to below (see paragraph 127). According to the information gathered by the GET, measures have never been taken against a party on grounds of missing accounting books. The Romanian authorities may wish to take additional measures to ensure the PEA abides by the legal retention requirements. 114. Law no. 334/2006Article 40 of Law no. 334/2006 imposes on political parties the requirement to publish by 31 March of each year, in the Ofcial Journal, separate declarations on donations, membership fees (a mid term report on membership fees is also required) and an overview of other sources of income (see descriptive part, paragraphs 66 et seq.). The PEA receives these les at the same time and has to publish them on its website. The on-site discussions conrmed that there is no requirement as such for political parties to present to the PEA their overall consolidated accounts and to publish at least a reasonably detailed summary of these (which would include in particular their expenditure). Only the nancial statements on the nancing of election campaigns are communicated with all income and expenditure elements (and published in the Ofcial Journal and on the website of the PEA). The overall annual accounts of political parties are presented to the Tax authorities (for their specic control purposes) but there is no interaction between the latter and the PEA. Furthermore, interviews with the parties showed that making their accounts available to the public is not a practice followed by them either (sometimes not even internally for transparency purposes in respect of their members). This situation is mostly unsatisfactory from the point of view of article 13 of Recommendation Rec(2003)4. The GET wishes to stress that the regular publication of party accounts is an essential element for the transparency of political life. In view of the above, the GET recommends to require political parties to present their consolidated accounts to the Permanent Electoral Authority and to make an adequate summary available to the public. 115. Law no. 334/2006 addresses gratuities, services provided free of charge, and discounts above 20%. At the same time, the implementing and accounting rules are not clear enough to address the various types of discounts, services provided free of charge and other material and non material advantages that are granted in practice to parties or candidates. Representatives of the parties conrmed that this matter is being discussed. Similarly, loans are not listed among the permissible sources of funding of political parties; interlocutors met on site interpreted the situation in different manners (for some of them the issue was viewed as not having been addressed; others considered loans are not permitted for political parties but still permissible for individuals). The Romanian authorities stressed that loans are not listed among the permissible sources of nancing of political parties and other campaign participants including candidates themselves and are thus prohibited without exception. The GET could not ascertain whether these divergences of interpretation concerned the concept of loan stricto sensu or other similar services (for instance credit lines or cash advances). The above aspects call for additional legal provisions and/or guidance, it being understood that voluntary work as a separate matter should not be affected. The GET therefore recommends to take appropriate measures i) to ensure that in-kind donations to parties and election campaign participants (other than voluntary work by non-professionals) are properly identied and accounted for at their market value, as donations; ii) to clarify the legal situation of loans. 116. Law 334 / 2006 does not exclude anonymous donations; it only limits the overall amount of such donations that a given beneciary is entitled to accept (up to 0,006% of the total amount of the state subsidy provided in the State budget for that year). More importantly, the GET was concerned by the way anonymous donations are regulated since article 6 of Government Decision no. 749/2007 sets a threshold for the distinction between hand gifts and donations which is currently 3 gross minimum wages [EUR 420]. This means that donations below this threshold do not have to comply with the various requirements of Law no. 334/2006 even as regards registration and accounting, whereas all donations above this threshold need to be registered and thus identied in the accounting documents. The GET takes the view that this goes clearly against the principles of article 12 of Recommendation Rec(2003)4 and that the threshold is not adapted to the economic situation of Romania. It wishes to remind that all donations, whatever the amount, should as a rule be registered and that only identication may be subject to a threshold; furthermore, funds should ideally be collected through modern techniques including bank accounts to increase transparency, to facilitate possible
subsequent controls and to avoid the manipulation of cash and the constitution of secret funds. The GET recommends i) to require that all donations be, as a rule, recorded and included in the accounts of political parties and campaign participants; ii) to introduce a requirement that all donations above a certain threshold be made through the banking system. 117. The GET could not obtain clarication on other forms of possible party income such as income from internal services (which is an authorised source of income) and collective donations (which were mentioned in the replies to the questionnaire as a prohibited source of funding at least in practice). As regards the latter, the GET noted that Law no. 334/2006 does in fact allow political parties to generate an income from the organisation of meetings and events (including recreational activities), and thus to possibly raise funds also in cash on those occasions. The above paragraph on the issue of hand gifts is a further illustration of the lack of adequate regulations in this area. The GET considers that clarication is needed in the Law and/or its implementing regulations. It recommends to provide clarication as to the permissible funding generated by internal services and the organisation of events, and as to how the income generated hereby is to be accounted for. 118. Law no. 334/2006 prohibits the nancing of political parties or election campaigns from foreign sources (both natural and legal persons). However, the provisions in this area (articles 11 and 24 of the Law) are not stand-alone provisions and the GET was informed that according to the legislation on foreigners, those from the EU are not foreigners for the purposes of Law no. 334/2006. In the GET's view, the rules need harmonisation in order to be clear for everyone and also for practical reasons (for instance to avoid that the prohibitions contained in Law no. 334/2006 be circumvented by using EU citizens or branches of foreign companies located in an EU country as intermediaries for funding from outside the EU territory or to hide the real origin of funds). These matters fall outside the scope of the present evaluation round but the Romanian authorities may wish to clarify the legal situation of foreign funding sources. 119. The campaign accounts submitted to the PEA often show that the overall nal balance is negative. Its representatives explained to the GET that the main reason for this phenomenon was that by the time nancial managers submit the overall, consolidated statements (within 15 days from the proclamation of election results), parties and candidates have often not managed to pay all the bills and expenses incurred during the campaign. Although in the GET's view, this is not a satisfactory explanation12, the current situation shows two shortcomings. Firstly, from the point of view of the transparency of political nancing, a requirement is clearly missing to the effect that all debts and liabilities need to be sorted out by the time the statements are addressed to the PEA (alternative solutions are also possible, e.g. postponing slightly the date for the presentation of statements etc.) or that the PEA follows-up on such situations also to avoid illegal sources of funding are used; the Romanian authorities advised that the rst solution would affect negatively the electoral process. Secondly, it would appear that (other) parties and candidates rely in practice on additional, undeclared resources since PEA representatives conrmed that in some cases, the debtors have simply no means to repay their debts. Given the importance of the above phenomenon (and the sometimes massive debts that appear in the statements13), the overall transparency of campaign nancing is severely undermined. The GET recommends to amend the rules on the presentation of nancial statements concerning election campaigns to the Permanent Electoral Authority (PEA) so that all legitimate claims and debts are adequately followed-up by the PEA. Supervision 120. The GET strongly believes that in the context of Romania and the weaknesses identied above, the intervention of a professional body checking compliance with the general applicable accounting standards as well as the rules which are specic to Law no. 334/2006 (and its implementing provisions) would be benecial. In particular, it would introduce more nancial discipline and general order in the party accounts and their consolidation; it would also contribute to progressively eliminate formal mistakes in those accounts, and it would facilitate the subsequent work of the control bodies in the context of the introduction of a disclosure of the overall nancial situation. Furthermore, the situation of other countries evaluated to date by GRECO has also shown how crucial appropriate measures are to ensure the independence of auditors from the political parties (professional standards on independence and integrity, reasonable rotation, four eyes auditing etc.). The GET recommends to require that the annual accounts of political parties to be presented to the Permanent Electoral Authority, as recommended earlier are subject to independent auditing prior to their submission. The GET acknowledges that audit requirements need to be combined with exibility in relation to the different means and needs of the various parties, in particular, to avoid overly cumbersome procedures in respect of small parties with little or no administrative means.
12 Election observers further provided another possible explanation, namely that to some extent, media advertising and other services are negotiated secretly to be provided at preferential prices or even for free, and that the corresponding expenditure are just shown in the accounts to preserve the credibility of the accounts. 13 For instance, the reports pertaining to the last elections showed that one political party has (had) a total debt of EUR 4 million with several legal entities.
121. The current sharing of responsibilities between the Court of Accounts (COA) and the Permanent Electoral Authority (PEA) is the result of the amendments brought in 2006 to the legal framework on nancing political parties, by the new law in this area, Law no. 334/2006. Thus, the PEA was set up in order to play a major (new) role in this area and to take over the central responsibility from the COA for monitoring compliance of parties, political organisations, election campaign participants and donors with Law no. 334/2006. The on-site discussions showed that the COA and PEA stick to a strict and narrow distribution of tasks in practice. The COA only checks whether political parties spend the public subsidy according to the list of expenditure authorised to that effect (article 35 paragraph 2 combined with article 20 paragraph 1 of Law no. 334/2006); the PEA only controls the private sources of funding of parties (but its control does extend both to the income and expenditure related to the nancing of election campaigns). For various reasons, the GET considers that the current situation is unsatisfactory: a) a clear separation of tasks between the COA and PEA is difcult to achieve since the COA is required in principle to also exert some form of control over the nancing of election campaigns14; b) none of the bodies has an overall overview of the actual activity, and overall income and expenditure of political parties, and none of them is thus in a position to exert a meaningful and effective supervision; c) although under such arrangements, a close cooperation between the two bodies is crucial, there is no interaction at all nor exchange of information in practice between the COA and the PEA; d) the COA is apparently not dealing with the possible misuse of general state resources in the context of Law no. 334/2006 despite the many allegations heard by the GET; the institution has been and still seems to be paralysed by political and other factors15. All interviews showed that none of the two institutions enjoys any real credibility because of the above circumstances and especially since the PEA's control does not extend to the expenditure of political parties. The explicit reference to the COA in Law no. 334/2006, with a scope of control which is narrower than it natural competence, ultimately constitutes a limitation. Under these specic circumstances, a better option would certainly be to give to another body than the COA, the clear leading role while the COA would retain outside the context of Law no. 334/2006, its natural competence to monitor the use of public funds. 122. Despite its limited experience in this new task (less than two years), the PEA and its special department for the monitoring of political nancing has already managed to substantiate a few insufciencies and infringements, and to impose a series of sanctions (see paragraph 105 in the descriptive part). The department's staff have an economics and accountancy background and some of whom are former employees of the COA. The PEA, whose Head has a status equivalent to that of a Minister, also has the reputation of being distant enough from the parties and political institutions of the country16. The PEA thus seems to meet the requirements on independence and specialisation of articles 14 and 15 of Recommendation Rec(2003)4. Under article 36 of Law no. 334/2006, the PEA is required to control annually whether each party complies with the Law. Until now, the PEA has focused its control work (including on-site controls since March 2010) on the 3 or 4 political parties represented in Parliament. For all the other registered parties, the supervision was limited to formal checks of the declarations submitted annually or on the occasion of elections. Representatives of the PEA consider that out the 47 registered parties, 15 in total are really active. There are no concrete plans to pay greater attention to parties other than those represented in parliament and it was indicated that this would depend on the time available in future. This came as a surprise to the GET given the number of issues to be dealt with urgently. Also, it is commonly acknowledged in Romania that parties and candidates spend much more than what is ofcially declared in the nancial statements pertaining to election campaigns. It would also appear that the major parties often exceed by far the expenditure ceilings contained in Law no. 334/2006. Neither the COA in recent years, nor the PEA in the last two years has ever brought such kind of cases to light; for the GET it is therefore clear that the supervision function needs to be made more effective also in respect of campaign nancing. At the moment, about half of the positions in the PEA structures have not been lled; moreover, the ability of the PEA to request and obtain additional information is strictly limited to political parties (and does not extend to candidates, nancial managers, foundations and other structures with legal personality which are possibly linked to parties, donors etc.). This needs to be addressed as soon as possible to enable the institution to play an effective role, including to carry out a proper monitoring of election campaign nancing. In the light of the above developments, the GET recommends i) to give the Permanent Electoral Authority (PEA), the full responsibility of monitoring compliance with the Law no. 334/200617 on the nancing of activities of the political parties and election campaigns; ii) to strengthen the effectiveness of the PEA's supervision over party and election campaign nancing, including endowing the PEA with additional control powers regarding party expenditure and entities other than political parties, and sufcient human and other resources to perform this task. 123. At the same time, cooperation with the COA, but also the tax administration and other pertinent bodies, especially the National Integrity Agency, needs to be strengthened. Under the Law no. 334/2006 the PEA may seek the assistance of any other state institution, but in the GET's view, every institution works in an isolated manner and there
14 Article 20 paragraph 1 of Law no. 334/2006 includes electoral campaign expenses in the list of authorised usages of the state subsidy and these fall therefore within the COA and the PEA's competence. 15 It lost in 2008 the ability to impose penalties and no overview whatsoever of the concrete relevant work carried out in the past or present in the area of party nancing supervision was available. 16 The GET was even told that nding persons willing to lead the PEA had been particularly difcult, especially given the difculty of the mission and the lack of subsequent career prospects. 17 According to election observers, this can be easily substantiated by doing basic estimates of the actual advertising activity during the ofcial election period (the number of billboards, the volume of propaganda gifts distributed by the parties etc.), using the common market prices.
are no spontaneous exchanges of information, regular inter-agency meetings or cooperation agreements. Given the extent of problems in the area of political nancing and the urgent need to develop the level of nancial discipline and of compliance with Law no. 334/2006, combined and concerted efforts need to be a priority. The GET recommends to strengthen the cooperation and coordination of efforts on an operational and executive level between the Permanent Electoral Authority, the Court of Accounts, the tax administration and the National Integrity Agency. Sanctions 124. Law no. 334/2006 lists a series of infringements and sanctions which apply in relation to most of the requirements of the Law. But there are some exceptions; for instance in case of misuse of public facilities and resources (article 10 paragraph 1 of Law no. 334/2006). The GET was advised by the Ministry of Justice that such acts are nevertheless prosecutable in accordance with the general criminal law provisions (for instance abuse of ofce, embezzlement of public resources etc.), since Law no. 334/2006 does not exclude the applicability of offences contained in the Criminal Code (CC); the same goes for special legislation, such as the anti-corruption law of 2000 presented in the other report on Theme I Incriminations which contains offences of particular relevance in the context of political nancing (for instance certain forms of misuse of his/her inuence by an elected ofcial to obtain an advantage for his/her political party or political activities). Law no. 334/2006 itself contains a specic criminal offence (article 36(3)) which punishes false nancial statements with imprisonment of 1 to 3 years. The GET was informed that this offence was likely to be removed once the New Criminal Code (NCC) is enforced because it already exists in the CC (and the future NCC). The GET welcomes this step in the direction of greater homogeneity of legislation, but it is concerned that it might not be clear enough for everyone that criminal legislation remains applicable: the removal of all criminal offences from Law no. 334/2006 could be interpreted in quite the opposite way; during the discussions, the PEA itself was unaware of their responsibilities in this regard18 and the replies to the questionnaire contained no reference at all to criminal sanctions. The GET recommends to provide in Law no. 334/2006 on the nancing of activities of the political parties and election campaigns that the Permanent Electoral Authority report suspicions of criminal offences to the competent criminal law bodies. 125. The GET noted that the maximum nes applicable by the PEA under Law no. 334/2006, which are the equivalent of EUR 6000, are not effective, proportionate and dissuasive nor adapted to the gravity of the possible infringements (especially where a party does not receive public nancial support. In case a nancial manager, party or candidate does not submit a nancial statement at all or refuses to provide documents requested by the PEA, a ne of EUR 6000, would be almost negligible if this was done to hide important sources of illegal nancing. The current offences are thus only administrative misdemeanours, which gives a wrong signal to the public about the importance of party and campaign nancing regulations. The GET therefore recommends to increase the penalties applicable in accordance with Law no. 334/2006 on the nancing of activities of the political parties and election campaigns and thus to ensure that all infringements are punishable by effective, proportionate and dissuasive sanctions. 126. The GET received conrmation during the on-site discussions that the immunity of former members of government against criminal investigation was restored in 2007 in the situation that prevailed before Romania agreed to change it in 2005 following a GRECO recommendation from the First Evaluation Round19. Therefore, both the members and the former members of government benet again from the protection granted under Law 115/1999 on ministerial responsibility, which is described as broader than the immunity regime applicable to parliamentarians (as it prevents any step in the criminal proceedings). The GET understood that objective reasons led to this situation and took note of the Constitutional Court decision, which led to amendments to the legal framework that is to protect former members of government against criminal proceedings and to grant them the same immunity as for serving members. Representatives of the prosecution authorities conrmed that this form of immunity had hindered or delayed the prosecution and any investigative step in various cases involving different forms of corruption (also in connection with political nancing). Various interlocutors claimed that members of the political class strongly protect themselves and do use the institutions for such purposes, including the Constitutional Court itself. As far as the Parliament is concerned, it still lacks a set of rules and principles that would clarify the conditions for the lifting of the immunity and establish that it should not be used to guarantee impunity to all forms of criminal misbehaviour: in comparable situations involving members prosecuted for corruption-related offences (sometimes connected with political nancing), the Parliament has sometimes authorised the lifting of immunity and sometimes not, following an in-depth discussion of the merits of the case rather than a formal discussion of the prosecutors' conclusions. This conveys a wrong message about the anticorruption efforts of Romania. GRECO refrains from issuing a recommendation because these issues are outside the scope of the current evaluation, but it wishes to stress that it is of the highest importance that the Romanian authorities abolish the immunity granted to former members of government and make the necessary amendments to guarantee that the decisions concerning, on one side, the initiation of criminal proceedings against members of government and, on the other side, the withdrawal of parliamentary immunity, are based on the prosecutors' conclusions.
18 The Ministry of Justice takes the view that the PEA and other state institutions are subject to the general duty for all public authorities to report criminal offences 19 This followed a constitutional challenge initiated during criminal proceedings against a high-level political ofcial (for various corruption offences)..
Other matters 127. In accordance with the general administrative regulations on misdemeanours, the limitation period for proceedings in case of an infringement of Law no. 334/2006 is 6 months starting from the date of commission of the misdemeanour. Having a system of administrative offences is not a bad approach compared to criminal law sanctions since the latter imply other constraints including a standard of evidence which is less stringent for the purposes of party nancing supervision. But the above 6 months period is clearly too short, bearing in mind that the deadline for the submission of nancial reports to the PEA is 31 March of the following year. Representatives of the PEA themselves conrmed the inadequacy in the context of their responsibilities and activities of this limitation period. Other GRECO countries evaluated to date are confronted with the same issue even though the statute of limitation is one year; Romania thus needs to extend signicantly its time limit. Consequently, the GET recommends to extend the statute of limitation applicable to violations of Law no. 334/2006 on the nancing of activities of the political parties and election campaigns.
V. CONCLUSIONS
128. Law no. 334/2006 on nancing the activity of political parties and election campaigns, republished in 2010 is a ne piece of legislation which provides for a variety of measures aimed at increasing the overall transparency of political life. It is at times over-ambitious and imposes many limitations that are probably difcult to enforce in practice, including a complex system of overall limits on campaign income and expenditure etc. Important implementing regulations are contained in Government Decision no. 749 of 11 July 2007 on approving the Methodological Norms for applying Law no. 334/2006, which thus provides useful guidance to the subjects of the Law. Accounting, reporting and disclosure measures are in place and sources of income are regulated to ensure a certain level of transparency but some important loopholes affect the effectiveness of these measures: for instance, all donations up to the equivalent of EUR 420 fall outside the scope of the regulations and need not to be registered. In-kind donations, loans and movements of assets within political parties need to be (re-)addressed, as well as (re)dening the nancial perimeter of political parties. Law no. 334/2006 also provides for a supervisory mechanism under the joint responsibility of the Permanent Electoral Authority (PEA) and the Court of Accounts (COA); however, these supervisory arrangements including the way responsibilities are distributed, are not satisfactory and under the present circumstances, the PEA should take over the lead responsibility in this area and be given the means to comply with this task. The legislation also provides for a broad set of sanctions in case of non-compliance with the law, including a set of nes, but the maximum penalties (EUR 6000) are not adequate enough. It is important that improvements be rapidly implemented since political nancing in Romania has been for many years now a particularly problematic area characterised by many allegations of underground nancing. 129. In view of the above, GRECO addresses the following recommendations to Romania: I. i) to clarify how the nancial activity of the various types of structures related to political parties is to be accounted for in the accounts of political parties; ii) to examine ways to increase the transparency of contributions by third parties (e.g. separate entities, interest groups) to political parties and candidates (paragraph 111); Ii. to ensure that all entities under the control of political parties and county branches (including the district sections in Bucharest) of political parties keep proper books and accounts (paragraph 112); iii. to require political parties to present their consolidated accounts to the Permanent Electoral Authority and to make an adequate summary available to the public (paragraph 114); iv. to take appropriate measures i) to ensure that in-kind donations to parties and election campaign participants (other than voluntary work by non-professionals) are properly identied and accounted for at their market value, as donations; ii) to clarify the legal situation of loans (paragraph 115); v. i) to require that all donations be, as a rule, recorded and included in the accounts of political parties and campaign participants; ii) to introduce a requirement that all donations above a certain threshold be made through the banking system (paragraph 116); vi. to provide clarication as to the permissible funding generated by internal services and the organisation of events, and as to how the income generated hereby is to be accounted for (paragraph 117); vii. to amend the rules on the presentation of nancial statements concerning election campaigns to the Permanent Electoral Authority (PEA) so that all legitimate claims and debts are adequately followed-up by
the PEA (paragraph 119); viii. to require that the annual accounts of political parties to be presented to the Permanent Electoral Authority, as recommended earlier are subject to independent auditing prior to their submission (paragraph 120); ix. i) to give the Permanent Electoral Authority (PEA), the full responsibility of monitoring compliance with the Law no. 334/2006 on the nancing of activities of the political parties and election campaigns; ii) to strengthen the effectiveness of the PEA's supervision over party and election campaign nancing, including endowing the PEA with additional control powers regarding party expenditure and entities other than political parties, and sufcient human and other resources to perform this task (paragraph 122); x. to strengthen the cooperation and coordination of efforts on an operational and executive level between the Permanent Electoral Authority, the Court of Accounts, the tax administration and the National Integrity Agency (paragraph 123); xi. to provide in Law no. 334/2006 on the nancing of activities of the political parties and election campaigns that the Permanent Electoral Authority report suspicions of criminal offences to the competent criminal law bodies (paragraph 124); xii. to increase the penalties applicable in accordance with Law no. 334/2006 on the nancing of activities of the political parties and election campaigns and thus to ensure that all infringements are punishable by effective, proportionate and dissuasive sanctions (paragraph 125); xiii. to extend the statute of limitation applicable to violations of Law no. 334/2006 on the nancing of activities of the political parties and election campaigns (paragraph 127). 130. In conformity with Rule 30.2 of the Rules of Procedure, GRECO invites the Romanian authorities to present a report on the implementation of the above-mentioned recommendations by 30 June 2012. 131. Finally, GRECO invites the authorities of Romania to authorise, as soon as possible, the publication of the report, to translate it into the national language and to make this translation public.
An assessment of international organizations' recommendations addressed to Romanian authorities on the area of political parties registration, nancing of political parties and electoral campaigns
Lead expert Jurij Toplak Cristian-Alexandru Leahu Octavian Onogea
Executive summary
In order to implement recommendations received by Romania from international organizations such as OSCE/ODIHR and GRECO, consideration could be given to some of the following: Public funding for more political parties than parliamentary parties and those non-parliamentary parties with substantial local government representation; Reporting to Permanent Electoral Authority (PEA) on ongoing political expenditure that includes the nancial activity of all components of a political party (e.g. women organizations, youth organizations) as well as of entities directly or indirectly linked to them; Including nancial activity of all entities directly or indirectly linked to political parties in election income and expenditure reports; Restricting the involvement of political parties in other structures such as NGO's and companies; Holding party headquarters or certain responsible person (party accountant, for example) liable for bookkeeping violations both on national and local level; Requiring political parties to submit consolidated accounts to the tax authorities, and then sending a copy to the PEA. Publishing political parties' accounts online; Contributions received in forms other than money are to be estimated by evaluators and the contributions reported to their monetary value. Prohibiting all loans to political parties and candidates; if this option is chosen, it could also prohibit donors to donate from the loans they or others took or allowing loans for political parties under certain conditions. Registering all donations, whatever the amount, in the accounts of political parties and campaign participants by specifying the nature and value of donations and obligating political parties to designate persons in charge of the registration of all donations; Prohibiting all cash donations and anonymous donations and require that all the donations are paid through the banking system or allowing cash donations up to certain level (40.00 or 80.00 Eur, for instance), but these donations should be recorded and the party should keep information on the donors; all the donations over this threshold have to be paid through the banking system; Amending legislation with the provisions saying that all debts have to be paid within 8 days of the elections and the nancial statements need to be submitted to the PEA within 15 days of the elections or that, when the nancial statement shows outstanding debts (negative balance), the party needs to report monthly to the PEA on the current status of these debts. Requiring that, large political parties or that all those parties which receive state funding have their accounts audited; PEA, the Court of Accounts, the tax administration, and the National Integrity Agency would meet frequently, exchange the information, discuss possible improvements of legislation and regulation, and keep record of the meetings. Enlisting explicitly in the Criminal Code political nance related crimes and providing for prison sentences; Setting monetary sanctions for parties at around 20 000 Eur for minor offenses and at around 100 000 Eur for serious offenses; Designating one or more specic persons (treasurers) to be in charge of the registration of all income and expenditures, and keeping the accounts; Extending the statute of limitation for administrative violations to at least one year after the nancial statements become public or to at least two or three years after the date of the commission of the misdemeanor; Registering political parties at the Permanent Electoral Authority.
I. OSCE/ODIHR Limited Election Observation Mission Final Report: Romania -Presidential Election, 22 November and 6 December 2009:
I. Explicit Recommendation by OSCE/ODIHR In order to enhance the accountability of political parties and the overall transparency of the election process, consideration could be given to revising the Law on the Funding of Political Parties' Activities and Election Campaigns so as to include a requirement of periodic reporting on campaign expenditures during the campaign and before Election Day. (p. 25) Periodic reporting on campaign expenditures during the campaign and before Election Day is greatly important for high level of accountability of political parties and the transparency of the electoral process. Democracies, in which parties do report on their expenses before the Election Day, use one of the two reporting mechanisms or the combination of both: - Parties report on their expenditures one or more times during the campaign on certain days: for instance, the monthly expenditure reports are led 90 days before the election, 60 days before the election, 30 days before the election, and 5 days before the election.
It should be noted that it would be extremely hard for parties to report on the expenditures immediately, i.e. on the day of the expense. Therefore it is advised that reports include all the expenditures made up to certain number of days before the report is led (for instance, up to 5 or 7 days before the report is led). - Parties report on their expenditures within certain time of each expenditure (for instance, within 5 or 15 days of each expenditure). While some democracies still le these reports on paper, it is recently more common to le these reports through web-based interface (Finland, United States, etc.). - Some countries use the combination of both reporting systems. During the non-election period reporting is less frequent and the rst of the above-described reporting methods is used, while during the last weeks of the campaign the second of the two methods is used. In United States, for example, both fundraising and spending in election campaign is highly transparent. The candidates, the party committees and the PACs le quarterly reports (and daily reports in the nal weeks before the election) with the Federal Election Commission and the reports are published on the FEC website. The reports are very detailed. In addition to the information on how much was raised and spent, the report contains a list of all expenditures and all donors over $200. - In Romania, during the campaign period, each donation needs to be reported within ve days. Same rule could apply for the expenditures during the campaign period. Since the line between regular party activities and election campaign activities is often not clear, parties might also be required to report regularly on the expenditures for their regular activities. During the non-campaign period parties could report on their expenditures less frequently, e.g. yearly.
ii. International Electoral Standard mentioned in the OSCE/ODIHR report on Romania 2009 elections and in several reports on other countries: Which parties receive state funding?
In Romania only parliamentary parties and those non-parliamentary parties with substantial local government representation receive state budget funding: "According to the Law on the Funding of the Activities of Political Parties and Electoral Campaigns, political parties are entitled to funding from the state budget based on their results received in parliamentary and local elections. Seventy-ve per cent of the money set aside for funding political parties goes to parties, which passed the electoral threshold in the parliamentary elections and is divided among them based on the number of votes received by each of these parties. The remaining 25 per cent is divided proportionally among parties who obtained at least 50 mandates (nationwide) in county councils and the Bucharest Municipal Council." (ODIHR report, p. 11) Currently only the parliamentary parties and alliances receive state budget funding. None of the nonparliamentary parties obtained at least 50 mandates in county councils nationwide. OSCE/ODIHR report on 2009 Presidential elections in Romania notes that this issue raises concerns among the Romanian non-parliamentary parties: "Candidates from non-parliamentary parties complained during their meetings with the OSCE/ODIHR LEOM that existing legislation favors the parties represented in the parliament, e.g. with regard to party and campaign nancing provisions26 and representation on election- administration bodies. Candidates of non-parliamentary parties and independent candidates also said that they were at a disadvantage in terms of media access and media coverage, as well as due to most local administrations being loyal to major political parties." (ODIHR report, p. 11) International organizations and national courts have often argued that funding only parliamentary parties disadvantages non-parliamentary parties and reduces opportunity for plurality and debate. Various national courts in Europe have ruled against state funding being limited to parliamentary parties20. It is the competition and different views that deserve nancial support, not the representation. For same reasons in some countries OSCE/ODIHR recommended expansion of state funding also to smaller parties. See for example the recommendation made to Finland: In the interests of promoting a vibrant democracy, consideration could be given to providing limited state subsidies to certain categories of non-parliamentary parties (for example, those with representation at the municipal level).21 While some countries limit funding only to parliamentary parties, others fund also non-parliamentary ones. Usually non-parliamentary parties, which pass certain threshold in parliamentary elections, are funded, and this threshold is lower than the threshold for obtaining parliamentary seats. This solution is used, for example, in Germany and Slovenia. In Germany, after the Constitutional Court ruled that funding only parliamentary parties was unconstitutional, all parties receiving at least 0.5 percent of votes are funded. In Slovenia, after a similar Constitutional Court decision, all parties receiving at least one percent of votes are funded. Some other countries fund parties that receive certain number of mandates on local level. It seems that the currently required number of seats on local level (50 seats) seems too high for non-parliamentary parties. Romania would follow other democracies' good practice if: parties with certain share of votes (at least one percent, for example) at the last parliamentary election would receive some public funding or parties who obtained a lower number of mandates nationwide in county councils and the Bucharest Municipal Council (20 mandates, for example), would receive some public funding.
II. Council of Europe / Group of states against corruption Evaluation Report on Romania on Transparency of Party Funding, Adopted by GRECO at its 49th Plenary Meeting (Strasbourg, 29 November - 3 December 2010).
i. i) to clarify how the nancial activity of the various types of structures related to political parties is to be accounted for in the accounts of political parties; Under French law, parties' nancial records must also include the accounts of all the organizations, companies or businesses in which the party or group holds half of the share capital or half of the seats on the management board or exercises preponderant decision making or managerial authority3. In Estonia, entities connected to a political party (which may be, for example, interest groups, political education foundations, trade unions, research institutions which are closely related to or come under the inuence of a party) are under an obligation to keep accountancy records, just as political parties themselves, if they are to be regarded as accounting entities (i.e. a legal person in private or public law registered in Estonia, a sole proprietor or a branch of a foreign company registered in Estonia). By contrast, political parties are not obliged to include the accounts of connected entities in their own accounts and records, with the only - limited - exception of the election funding reports which must include expenses incurred and funds used by non-prot associations of which the political party is a member. GRECO recommended to broaden the denition of entities related, directly or indirectly, to political parties or otherwise under their control, and to oblige political parties to include such entities both in their annual reports and in their reports on election campaign nancing. In Iceland, GRECO noted with satisfaction that Article 11 of Recommendation Rec(2003)4 is observed. The notes attached to the consolidated nancial report are to provide overall totals of the donations received from individuals (whether in cash, discounts or any other form). With respect the donations received from legal persons, their names are to be disclosed in the notes to the annual nancial report or in a separate attachment, together with the amount and type (in cash, discounts or any other form) of the donation. Furthermore, the notes are to include details on the consolidation of accounts, namely by providing information (name of entity, share, nature of operation) concerning the entities/units falling within the scope of the political party. As political parties are legal persons, they have been and continued to be required by Icelandic law to keep proper books and accounts. In addition, under Law No. 162/2006 the accounts of political parties are to be consolidated to include, in a clear and comprehensive manner, the accounts of all units/entities falling within their scope (e.g. associations, district councils, holding companies and related foundations, whether they are registered or not); only party units whose income is below 300,000 ISK(2,488 EUR) are excluded from the consolidated accounts22. In Netherlands, article 29 of the draft Financing of Political Parties Act also requires subsidiary institutions of a political party (i.e. the party's scientic institute, youth organisation and legal entities, which structurally carry out work or activities for on behalf of the party to the benet of the party) to submit a summary report of contributions received of more than 3000 (per contribution) in the preceding calendar year to the Electoral Council by 1 July of each calendar year. This summary report is also to contain information on contributors' names and addresses, the amount and value of the contributions and the date they have been donated in as far as they amount to more than 150 (monetary contributions) or have a value of more than 750 (in-kind contributions)23. In Bulgaria, parties are required to designate one or more specic persons (treasurers) to be in charge of the registration of all income and expenditures, and keeping the accounts. The names of such persons, as well as other information (should the party concerned benet from state subsidies) including their own income and expenditures and their nancial interests, are to be communicated to the National Audit Ofce. Also.restrictions were made in recent years as to the structures that political parties are allowed to establish and in principle, they may not conduct business activities apart from publishing work and the selling of copyright work. The introduction of limitations, under the Political Parties Act, to the involvement of parties in other structures and activities has reportedly improved the situation although there is still room for increasing transparency in the nebula of entities (business entities, sociological institutes, non-prot organisations) which surrounds certain parties. The Bulgarian authorities may thus wish to keep the matter of these links under scrutiny24. According to the Finnish Political Parties Act an entity afliated with a political party (an afliated entity) means such a corporation or foundation as well as such a trust of a corporation or a foundation that a political party, with the consent of the corporation or foundation in question, reports to the National Audit Ofce of Finland to be an entity afliated with the political party25. Romania would follow other democracies' good practice if: All political parties would report to Permanent Electoral Authority on ongoing political expenditure that includes the nancial activity of all components of a political party (e.g. women organizations, youth organizations) as well as of entities directly or indirectly linked to them;
20 For example, see the Federal Constitutional Court of Germany 20 B VerfG 56 of 19 July 1966, the Federal Constitutional Court of Germany of 1968, or Constitutional Court of Slovenia U-l- 367/96 of 11 March 1999. 21 Republic of Finland Parliamentary elections, 17 April 2011 OSCE/ODIHR Election Assessment Mission Final Report, p. 11. 22 Greco report on transparency of party funding in Iceland;
Election income and expenditure reports drawn up by political parties include the nancial activity of all entities directly or indirectly linked to them. Romania has the option of explicitly restricting the involvement of political parties in other structures such as NGO's and companies. i) ii) to examine ways to increase the transparency of contributions by "third parties" (e.g. separate entities, interest groups) to political parties and candidates (paragraph 111); In Germany, there are no rules on third parties and the way their possible election campaign activity and contributions should be taken into account in the context of party nancing regulations; there is no need for campaign activities of third parties in Germany because of the central role and power of political parties, and the fact that these are already required to take into account all related entities in their consolidated accounts. Besides, given the absence of limits on campaign expenditures, parties are not incited to "externalise" part of the campaign activity in order to circumvent such limits. The Uk legislation denes any person or organisation which campaigns on behalf of one or more registered political parties or a particular category of candidates (for example those who hold or advocate a particular policy or opinion) as a 'Third Party'. The PPERA restricts the amount that a third party can spend on campaigning for registered parties or candidates during the same time periods for which there are controls on campaign spending by political parties. Being registered as a third party with the Electoral Commission increases a third party's spending limits. Spending in support of, or to disparage, an individual candidate is subject to controls set out in the Representation of the People Act 1983 and is limited to 500 (671 Euros). At any relevant election any third party which spends more than 10,000 (13,425 Euros) in England and 5,000 (6,712 Euros) in each of Scotland, Wales and Northern Ireland is required to register with the Commission. A registered third party is subject to the same rules for receiving donations, declaring donations and providing accounts as political parties and is prevented from spending over the prescribed amount. A third party must fall within the denition of a "permissible donor", which limits the involvement of foreign third parties in the United Kingdom. The aim is therefore not only to increase the transparency of nancial support donated by these entities to a political party but also in respect of the nancial support received by these entities themselves. According to Latvian legislation, a person engaging in campaigning is to be either considered as linked to a political party - in which case his/her related expenses are considered as party's expenditure - or as an independent subject in campaigning. In the latter case, this person is subject to the new chapter of the law, which sets out the principle that third parties paying for campaign activities must be identied8. Romania would follow other democracies' good practice if: Third parties which are not under the control of a political party would be registered and would report election income and expenditure to Permanent Electoral Authority; In this case Romania should sanction any undeclared ties between political parties and third parties. Third parties under the control of a political party campaigning for a political party would be included in the expenditure of that political party or be treated as in-kind donation unless the political party declares that they are not related and requests them to stop. ii. to ensure that all entities under the control of political parties and county branches (including the district sections in Bucharest) of political parties keep proper books and accounts (paragraph 112); The recommendation can be achieved by holding party headquarters or the responsible persons (either party leaders or party accountants) responsible in case of bookkeeping violations even when these occur on local level. Since it is often hard to establish which individual is responsible for the offense, legislation in some countries requires that each political party specify the responsible person, who is responsible for party's bookkeeping. In the UK, for instance, party's registered treasurer is liable for such violations. By holding party headquarters liable, parties are forced to instruct their internal structures and local branches on proper bookkeeping. Proper bookkeeping on local level can be achieved only when internal structures and local branches are instructed on proper bookkeeping. However, explicit amendment requiring instruction does not seem necessary. Centralized computerized system of accounting is one of the options, which would be benecial in the future. It is not an international requirement, but a good example to follow. It requires, however, certain knowledge and equipment. Romania therefore has following options: - Legislation would benet by a provision explicitly holding party headquarters or certain responsible person (party accountant, for example) liable for bookkeeping violations both on national and local level. - In addition to that, legislation may or may not explicitly require that all county branches of political parties should keep proper books and that they should be instructed on bookkeeping.
23 24 25
Greco report on transparency of party funding in Netherlands; Greco report on transparency of party funding in Bulgaria; Greco report on transparency of party funding in Finland;
iii. to require political parties to present their consolidated accounts to the Permanent Electoral Authority and to make an adequate summary available to the public (paragraph 114); Currently Romanian parties need to le several different reports to different authorities. There is, however, no requirement for political parties to present to the PEA their overall consolidated accounts and to make them (or at least a reasonably detailed summaries) available to public. According to the current Romanian legislation, the accounts are sent to the tax authorities, but not to the PEA. Article 13 of the Recommendation Rec(2003)426 requires that states "require political parties to present the accounts ... regularly, and at least annually, to the independent authority..." and that states should "require political parties regularly, and at least annually, to make public the accounts ... or as a minimum a summary of those accounts..." According to this recommendation, the published summary should contain at least records of all expenditure, direct and indirect, on electoral campaigns in respect of each political party, each list of candidates and each candidate27. It should also include identiable data on donors in case of donations over a certain value28. Romania would implement the recommendation if the legislation would require the parties to submit the consolidated accounts to the tax authorities, and then either parties or tax authorities would send a copy to the PEA. Either PEA or the parties could be required to publish the accounts online. In case that PEA is required to publish them, that seems sufcient and there is no need to require the parties to publish them as well. iv. to take appropriate measures i) to ensure that in-kind donations to parties and election campaign participants (other than voluntary work by non-professionals) are properly identied and accounted for at their market value, as donations; Romania could implement this reccommendation by ensuring that contributions received in forms other than money are to be estimated by evaluators and the contributions reported to their monetary value. ii) to clarify the legal situation of loans (paragraph 115); Any debtor-creditor relationship means dependency and having legislators or other ofce-holders dependant on corporations or individuals can be dangerous. Moreover, when donation ceilings limit the maximum size of donation, donors (and parties) often avoid these ceilings by giving a loan instead of a donation to a party and later they never request the loan to be returned. Moreover, donors sometimes give loans rather than donations in order to use it as a pressure on political parties and ofceholders in the future: in case the donor does not receive something in exchange for the money given, he or she requests the return of the loan; if he or she receives some favor, the loan is written off. For these reasons loans, given to parties and candidates, have to be regulated by the legislation. Most importantly, they have to be transparent. In some countries, parties and candidates are not allowed to take loans to cover election expenses (Latvia, for example). Moreover, in some countries (Latvia), it is also forbidden to take a loan to donate to a party or to donate from loans of other persons. In United States, where candidates are allowed to spend as much of their own money as they wish, bank loans are permitted in order to equalize the chances of all the candidates regardless of their wealth. In most of the U.S. states only bank loans and credit card debts are permitted but not loans from other corporations or from individuals. All bank loans, and loan details, however, have to be reported and disclosed. The current status of the loan as well has to be regularly reported and disclosed until the loan is completely returned. In Spain, similarly, bank loans are permitted and they form an important source of political parties' income. When party takes a loan, it has to disclose detailed information on the loan: identity of the lender, total amount of loan, interest rate, repayment period, debt overhang and any relevant contingency which may impact the initial conditions agreed for the loan in question. These documents are to be submitted to the Spanish Court of Audit yearly. Those nancing the loans, i.e. credit institutions also have to report loans exceeding 6000 Eur to the Spanish Court of Audit. Greco, however, criticized Spanish legislation on loans to political parties and candidates. Based on the incidents in the past, where large loans to political parties were written off or they were granted on extremely generous preferential terms, it suggested that the terms and conditions for granting loans (such as the maximum value of loans, permissible lenders, terms of repayment, etc.) should be specically regulated by law and that Spain should take appropriate measures to ensure that loans granted to political parties are not used to circumvent political nancing regulations.29 When Greco issued recommendations on loans to other countries, similarly, it stressed that loans should be fully transparent30. In United Kingdom loans over 200 pounds are allowed only from so-called permissible lenders (banks, credit card companies). They need to be reported quarterly in non-election period and weekly during the election period31. Those that are not permissible lenders can lend up to 200 pounds and when the loans and donations are from the same source, they are aggregated. In Poland loans may be paid off only from means originating from earmarked subsidies or by natural persons guaranteeing the loan within the limit of the maximum amounts stipulated in the draft regarding donations. In the event
26 Recommendation Rec(2003)4 of the Committee of Ministers to member states on common rules against corruption in the funding of political parties and electoral campaigns (Adopted by the Committee of Ministers on 8 April 2003 at the 835th meeting of the Ministers' Deputies) 27 See Article 10 in connection with article 13 of the Recommendation. 28 See Article 12 in connection with article 13 of the Recommendation.
that the loan has not been reimbursed by the date of presentation of the nancial report on election campaigns, subsequent dates have to be set for the ling of subsequent reports, as appropriate, on the full repayment of the loan. Also, the writing off of a loan is regarded as a payment in the amount of the sum being written off. After the dissolution of election committees, loan guarantees are inalienable, in order to avoid that such guarantees are taken over by persons - foreigners and legal persons - whose donations to political parties are not allowed15. Romania therefore has three basic options: - to prohibit all loans to political parties and candidates; if this option is chosen, it could also prohibit donors to donate from the loans they or others took - to allow loans from nancial institutions (banks, credit card companies); if this option is chosen, legislation should provide certain rules and limitations (such as the maximum value of loans, maximum repayment period, permissible lenders, terms of repayment, etc), and parties as well as banks should report and disclose regularly (at least quarterly) the details of the loans (identity of the lender, total amount of loan, interest rate, repayment period, debt overhang and any relevant contingency which may impact the initial conditions agreed for the loan in question). - to allow loans also from sources other than nancial institutions, but then these loans should be fully transparent and should count against the donation ceiling. v. i) to require that all donations be, as a rule, recorded and included in the accounts of political parties and campaign participants; Romania could implement this recommendation by requiring that all donations, whatever the amount, will be registered in the accounts of political parties and campaign participants by specifying the nature and value of donations. Moreover, Romania could obligate political parties to designate persons in charge of the registration of all donations. ii) to introduce a requirement that all donations above a certain threshold be made through the banking system (paragraph 116); Democracies use three basic models of dealing with donations: - In some of them, all donations must be made through the banking system and with each donation the donor has to be identied (Latvia). Cash donations are not allowed. If a political party receives a donation but cannot identify the donor, the donation has to be transferred to the budget or returned or given to humanitarian organizations. - Some countries allow small cash donations and only donations above a certain threshold need to be made through the banking system. However, small donations have to be recorded as well and the party needs to know who the donor is. In case the party cannot identify the donor, the donation has to be transferred to the budget or returned or given to humanitarian organizations. In United States, for example, cash donations of up to $100.00 are allowed. The recipient is not allowed to accept the donation given by a corporation or a foreigner. - Some other countries do not worry about small donations. In United Kingdom, donations below 200.00 pounds can be given in cash, they can be given by a foreigner or they can be anonymously. Only donations above 200.00 pounds need to be recorded. There are several options on how party should deal with donations it receives when the donor is not identiable: - The recipient (political party) should nd out who is the donor or it should transfer the donation to the budget. - Legislation should state that each donor, who transfers the donation to the party's bank account, should inform the recipient of the donation and of his exact data (ID number and other data) immediately or within few days. Usually this is done on a pre-prepared form. In case the donor does not ll out the form and does not give his data and the data on the donation, this donation is considered anonymous and it should be returned or transferred to the budget. There are also several options on who should the party transfer the anonymous and illegal donations to: - Return to the donor - Transfer to the budget - Transfer to a humanitarian organization of party's choice Romania would implement the recommendation and follow other democracies' good practice if it would choose one of the following options: - Romania could prohibit all cash donations and anonymous donations and require that all the donations are paid through the banking system or - Romania could allow cash donations up to certain level (40.00 or 80.00 Eur, for instance), but these donations should be recorded and the party should keep information on the donors; all the donations over this threshold have to be paid through the banking system. vi. to provide clarication as to the permissible funding generated by "internal services" and the organisation of events, and as to how the income generated hereby is to be accounted for (paragraph 117)
29 30 31
Greco report on transparency of party funding in Spain, p. 17. See for example Greco report on transparency of party funding in UK. Greco report on transparency of party funding in UK, pp. 14-15.
Parties worldwide often collect income from selling goods above the market value. For instance, they host fundraising dinners, organize auctions, or sell cakes or drinks or small items at a higher price and party's sympathizers pay this higher price to a partly both to obtain goods and to give a donation. It is often hard to determine how this income should be accounted for, i.e. whether such an income is a donation or an income made by selling goods. United Kingdom has quite detailed and well developed legislation on such income. Any business transactions conducted by a political party at commercial rates would be treated under the same regulations that apply to any person conducting business. Transactions not conducted at commercial rates and resulting in income to the party would be considered donations. Moreover, in respect of different fundraising activities that a political party could organize (e.g. dinner parties for which an admission fee is charged, auctioning of artifacts, cake-selling etc) the test as to whether the income raised would be considered a donation is whether or not a fundraising transaction is conducted on commercial terms. If it is, it would not be considered a donation. For example, in the case of a fundraising dinner party where an admission charge applies, the UK Electoral Commission would take the view that, any charge in excess of the actual cost of the plate itself represents a donation to the party. Therefore, if an organization or individual purchases a table at a dinner, the value of the donation would be the cost of booking the table, less the actual value of the meal itself.16 It should be noted that in UK minor donations below 200 pounds do not need to be reported and therefore, party would only be obliged to report the donation when the difference between the market value of the dinner and the price paid for it would exceed 200 pounds. There are several options how to deal with this kind of income: - party may be required to report them as donations - party may be required to report them as donations only above the actual market value of the item received by the donor - party may be required to report the income, but it is irrelevant whether it is a donation or business-related income - party may be required to report the income only when the donation exceeds certain amount (such as 200 pounds in UK) - when a party receives a large number of small donations below certain amount, it may be required to report it as one amount, being a collection of small donations. Under this system, when a party for example sells 100 candies to 100 people for 2 Eur each, but each candy is actually worth 0.10 Eur, it would report the whole amount of collected donations as one "collective donation" in the total of 200 Eur without stating the name and other details of the donors. vii. to amend the rules on the presentation of nancial statements concerning election campaigns to the Permanent Electoral Authority (PEA) so that all legitimate claims and debts are adequately followed-up by the PEA (paragraph 119); Romanian parties need to submit overall, consolidated nancial statements within 15 days from the day of proclamation of election results. The nal balance of the parties is often negative. Greco mentions these possible options: - introduction of a legislative provision, which would require that all debts and liabilities need to be sorted out by the time the statements are submitted to the PEA - introduction of a legislative provision, which would require that all debts and liabilities need to be sorted out by the time the statements are submitted with some postponement of the date for the presentation of nancial statements - introduction of a legislative provision, which allows negative balances of parties' accounts but PEA follows-up on the negative balances and unpaid bills later Any debtor-creditor relationship means dependency and having legislators dependant on businesses corporations is to be avoided. Moreover, unpaid bills may be a way of avoiding donation limits. Based on the experience from other democracies, parties should be able to pay all the debts immediately or within a week of the expense. Consequently, they should be able to fulll the requirement that all debts are paid within a week after the elections and there would be no unpaid costs at the time of the report submission. The postponement of the date for the submission of the nancial statement would mean that the current legislative provision, under which mandates of the parliamentarians are not conrmed if the nancial statements are not submitted, would need to be removed. This provision is highly benecial and if possible, it should stay. Romania could therefore implement the recommendation by choosing one of the following two options: - Legislation would be amended with the provisions saying that all debts have to be paid within 8 days of the elections and the nancial statements need to be submitted to the PEA within 15 days of the elections. In case that not all debts were paid on time, sanction would take place. Most severe sanction could be non-conrmation of the parliamentary mandates; a less severe sanction would be a monetary sanction, and in addition to that, cessation of or only partial state funding until party pays all the debts. - Legislation would be amended with the provision saying that, when the nancial statement shows outstanding debts (negative balance), the party needs to report monthly to the PEA on the current status of these debts. When these debts are not paid within certain time (three months, for instance), a monetary sanction would be imposed on the party or party would stop receiving state funding until the debts are paid.
viii. to require that the annual accounts of political parties - to be presented to the Permanent Electoral Authority, as recommended earlier - are subject to independent auditing prior to their submission (paragraph 120); In most of the democracies with developed political nance regulation at least large political parties' accounts need to be audited by external auditors. In some of them also internal auditing is required. Germany, Belgium, and UK are good examples to follow. All German parties with yearly income or assets over 5,000 Euro must have their statement of accounts audited by an external auditor. The statement of accounts of parties not eligible for state funding need not be audited by a certied auditor or an auditing rm but merely by a sworn accountant or an accountancy rm. The external audit applies to the federal and Lander-level structures and to a limited extent to a local level. The duty of the auditor is to ascertain whether the party's nancial statement reects correctly the nancialsituation of the party on the basis of the information available. Parties must provide the certied auditor, or the auditing rm, with all clarifying information and documentary proof required for careful performance of the audit. Law in detail species the role and scope of the external audit. Legislation also enumerates various measures to ensure the independence of auditors and sworn accountants from the political parties.32 German political parties are also required to carry out an internal audit to be presented to the members' assembly (party convention)33; in this case, auditors are elected by the party convention. In Belgium, as well, parties nancial reports need to be audited the auditor's report is attached to the party's nancial report. Auditors' reports must a) conrm that the consolidated accounts comply with the statutory regulations (thus attesting that they meet the general standards laid down by the institute of company auditors); b. conrm that the administrative and accounting arrangements in the party and its components are sufcient to permit the preparation of consolidated accounts; c. analyze the consolidated accounts, highlighting aspects that clarify the nancial situation and outcome and permit comparisons. Parties are free to appoint their own auditor. They are appointed for a three-year term that can be renewed without limit. Some parties appoint several auditors or occasionally impose the same one on all their components. Auditors, who sometimes also act as accountants, only work on the documents supplied by the parties that appoint them. In the UK, political parties as well as their internal units must have their annual accounts and campaign spending returns externally audited if the value of the income or expenditure in the accounts or the spending in the return exceeds 250,000 (335,625 Euros). Auditors must be suitably qualied with the same qualications that would be required for a company auditor. In particular auditors must be independent from the audited body. The audit report must accompany the return when it is submitted. According to the law, a person is not a qualied auditor in relation to any registered party or any other body or individual if s/he is a member of the party or body or the individual himself, or an ofcer or employee of the party, body or individual. The Election Commission may make additional regulations about the selection of political parties' auditors. Similar requirements on auditors apply to campaign groups and referendum campaigners in respect of their spending returns when such returns exceed 250,000 (335,625 Euros) in value. There are no audit requirements for candidates. Romania would implement the recommendation and follow other democracies' good practice if: - legislation would require that at least large political parties accompany their nancial statements - when they are presented to the PEA - with the report by a chartered external auditor - all those parties that receive state funding are required to have accounts audited and/or the threshold for required external auditing is set at certain amount of expenditure or income (1 million lei, for example) - the auditor may at the time of the audit or within certain time before the audit (three years, for example) not be a party member, candidate, or employee x. to strengthen the cooperation and coordination of efforts on an operational and executive level between the Permanent Electoral Authority, the Court of Accounts, the tax administration and the National Integrity Agency (paragraph 123); This recommendation does not require legislative amendments. It requires actual cooperation of different government bodies, which hold different powers and responsibilities in the area of political nance. This can be done by one of the following ways: - the cooperation of PEA, the Court of Accounts, the tax administration, and the National Integrity Agency can be formalized by a written agreement, in which they express intent to strengthen the cooperation, agree to meet regularly and to exchange information. - the cooperation of these bodies can be done by holding of regular meetings, exchange of information, discussion of possible improvements of the legislation and regulation, etc. Romania would implement the recommendation and follow other democracies' good practice if the Permanent Electoral Authority, the Court of Accounts, the tax administration, and the National Integrity Agency would meet frequently, exchange the information, discuss possible improvements of legislation and regulation, and keep record of
32 33
Sections 29 to 31 of the Political Parties Act of Germany. Section 9 para. 5 of Political Parties Act of Germany.
the meetings. xi. to provide in Law no. 334/2006 on the nancing of activities of the political parties and election campaigns that the Permanent Electoral Authority report suspicions of criminal offences to the competent criminal law bodies (paragraph 124); Romania could implement this recommendation by adding a simple provision to the Law no. 334/2006, which would read, for example: "Permanent Electoral Authority reports suspicions of criminal offences to the competent criminal law bodies. xii. to increase the penalties applicable in accordance with Law no. 334/2006 on the nancing of activities of the political parties and election campaigns and thus to ensure that all infringements are punishable by effective, proportionate and dissuasive sanctions (paragraph 125); In numerous reports, GRECO recommended that countries should introduce both administrative and criminal sanctions and that sanctions should apply to both political parties and responsible individuals. It is recommended that legislation should explicitly state that criminal code applies also to party funding and campaign nance violations. According to the experience of numerous European democracies, when political nance violations are only implicitly included in the crime descriptions, violation prosecutions are often not successful. It is often hard to establish which individual is responsible for the offense. In order to avoid this issue, legislation in some countries requires that each political party specify the responsible person, who is potentially liable in case that rules are breached. In the UK, for instance, party's registered treasurer is liable for political nance violations. In case of candidate campaign nance violations, the candidate himself is liable. And the third parties, at the time of registration, must specify a responsible person. In the UK, legislation lists 88 different criminal political nance offences. Criminal sanctions can vary from a minimum of 5000 pounds to one year of imprisonment for the responsible individual and an additional civil penalty is imposed on the organization. In Belgium minor violations are publishable by 275 to 2750 Eur or 8 days in prison for an individual and loss of public funds for political party, while more serious violations can be punished by up to 100.000 Eur or longer prison sentences for the individual and loss of public funds for the party. In Germany certain crimes, such as division of the donation into partial amounts or submission of inaccurate accounts, is punishable with up to three years in prison. In Spain legislation provides for prison times up to eight years and large monetary sanctions for political nance violations. In 2007 Spanish elections, for example, 35 sanction were imposed on wrongdoers with the total sum of 627 000 Eur (the average sanction was 17 900 Eur). In Latvia up to six years in prison is foreseen for various breaches of political nancing regulations, including Illegal party nancing, Intermediation in illegal nancing, and the Acceptance or extortion of illegal party nancing.19 In order to get the picture what Greco understands as a proper monetary sanction for a political party, its report on Slovenia is informative. In a country with a population of 2 million, legislation sets the maximum penalty at 20 850 EUR and according to the Greco report this sanction should be increased. In addition to monetary administrative and criminal sanctions, some additional sanctions are frequently mentioned as good examples to follow: - the cessation of public funding (Belgium, Germany, Slovenia). The cessation of public funding can last for few months (between one and four months in Belgium) or up to one year (Germany) or until the violation takes place (Slovenia) or it can be only partial (for certain violations, Slovenian parties lose 30 or 50 percent of public funds). - the removal of the candidate from the ballot or from the ofce (UK, Belgium, India). In Belgium, the administrative court can disqualify the candidate or remove the elected ofcial from the ofce. In 2006 local elections two candidates were removed from ofce after the election. In Azerbaijan, the candidacy is cancelled if the initial campaign nance report is not lled, or if party or candidate uses illegal funds for the campaign, or if party or candidate spends funds not through the special bank account in the amount over 5% of the expenditure ceiling. - he prohibition of further campaigning (in Latvia, the KNAB can prohibit the political party or an independent spender (so-called third party) from further campaigning when it determines that the expenditure ceiling has been reached.) - the return of the nancial gain or illegal donation, often multiplied by two or three or more (Germany). It is recommended that donors would also be subject to criminal prosecution when they violate the law. In Belgium, for instance, donors are explicitly mentioned in criminal legislation and can be ned by up to 100.000 Eur. Romania would implement the recommendation and follow other democracies' good practice if: - the Criminal Code would explicitly enlist several political nance related crimes and would provide for prison sentences monetary sanctions for parties would be set at around 20 000 Eur for minor offenses and at around 100 000 Eur for serious offenses - both parties and responsible individuals as well as donors would be liable - for each party's violation certain in advance specied person, such as party's treasurer for example, would be held liable
- parties would cease to receive public funding for certain period when the law is breached - the removal of the candidate from the ofce is not an international requirement but it is surely a good practice to follow in case of severe violations. xiii. to extend the statute of limitation applicable to violations of Law no. 334/2006 on the nancing of activities of the political parties and election campaigns (paragraph 127). It is usual that the statute of limitations for political nance violations is longer than for regular misdemeanors. In Belgium, for example, the general statute of limitations for misdemeanors is 6 months, but for political nance violations it is 200 days after the nancial statement is published. In the UK, there are no statutes of limitations for certain crimes, while for other crimes and misdemeanors in the political nance area it is two or three years, which is longer than with other misdemeanors (6 months). In Germany, public funds can be recovered or penalties collected for inaccurate statements or accounts ten years following the respective accounting year. In Slovenia, statute of limitations for administrative misdemeanors is four years. Romania would implement the recommendation and follow other democracies' good practice if, for example: - the statute of limitations for administrative violations would be extended to at least one year after the nancial statements become public or - the statute of limitations would be extended to at least two or three years after the date of the commission of the misdemeanor or - PEA could punish the violations that occurred at most three years before the investigation takes place and - PEA would be empowered to check last ve years of party's nancial activity Registering political parties at the Permanent Electoral Authority of Romania In most of the democracies, political parties need to register with a specied authority. The most frequent registration authorities are: - election management body (EMB) (United Kingdom, Finland, Cyprus, Czech Republic, Australia34, New Zealand35, Canada36, etc.)37 - one of the ministries, which does not act as an EMB (Croatia, Azerbaijan, Georgia, Slovenia) - one or more of the courts (Bosnia and Herzegovina, Bulgaria, Estonia, Greece, Hungary). In some countries parties do not need to be registered as parties, but regular NGOs or associations can act as political parties (Belgium, France, Iceland). These NGOs are usually registered with one of the ministries. In Germany parties are founded without any government approval or registration, but founding documents need to be sent to the Federal Returning Ofcer, who keeps copies of documents of all political parties. In Denmark only non-parliamentary parties need to register before each election. They register with the Ministry, but Election Board approves party names (checks that the names are distinguishable from all the existing party names) and checks that the founding members are Danish voters. In Ireland and some former British colonies (Kenya, Tanzania) parties register with special body, usually called Ofce of the Register of Political Parties. Romania, based on the experience of other countries, therefore has the following options: - registration of parties with one of the courts - registration of parties with the election authority (Permanent Electoral Authority) - registration of parties with one of the ministries - establishment of special body, which keeps the registry of the parties - the system where parties register as associations of individuals or NGOs - the system where parties are not registered at all Election Management Bodies seem to be most competent registration bodies since they work with parties daily and have most knowledge on the subject. Contrary to the ministries, EMBs are usually not political or lead by a politician. Courts, on the other hand, are impartial, but not experts on the subject and often not as fast in decisionmaking as EMBs. Moreover, courts are dispute solvers, and registration of the organization is not a dispute but rather an executive decision. Registration of organizations therefore seems incompatible with the usual tasks and goals of judiciary. In case of a dispute, which may arise from the party registration, naturally, court decision is needed. It therefore seems most proper that a different body performs the registration, and in case of the dispute the court resolves it. It would be advantageous and comparable to developed democracies if political parties are registered with the Permanent Electoral Authority. Electoral management bodies are party registration bodies in some of the oldest and most developed democracies as well as new democracies. Examples of countries where parties are registered at EMBs include United Kingdom, Finland, Australia, Canada, New Zealand, Cyprus, and Czech Republic.
Australian Electoral Commission. Political Party Registration. Available at: http://www.aec.gov.au/Parties_and_Representatives/Party_Registration/ Electoral Commission of New Zealand. How to apply to register a party. Available at: http://www.elections. org.nz/rules/parties/registration/how-registerparty.html 36 Elections Canada. Registration of Federal Political Parties. Available at: http://www.elections.ca/content.aspx?section=pol&dir=pol/bck&document =index&lang=e 37 In some of these countries (Cyprus, Czech Republic, and Finland) EMB is also one of the ministries.
35 34
ASSESSMENT OF THE POLITICAL PARTY ACCOUNTING MONITORING PROCEDURES IN ROMANIA PROVIDED BY LAW NO 334/2006 AND GOVERNMENT DECISION NO 749/2007
Lead expert Constantine Palicarsky Cristian-Alexandru Leahu Octavian Onogea
Executive summary Romania has detailed, high quality legislation in relation to the parties and elections campaigns nancing. There are some isolated issues to be solved that do not necessarily have impact on political corruption in the country, like: The level of company donations; The number of controls/checks to be initiated; Conduction or annual audits; Existent accounting standards; Regulations, transparency and compliance Romania should consider: - limiting the participation of donors in further public procurement or enhancing transparency regime; - restricting third parties spending during election campaigns, so that these organizations do not swamp spending by legally restricted political parties; - establishing criteria for evaluating donations in order to determine if they are limiting the independence of political parties in Romania; - giving PEA responsibility for checking on the accountancy law with view of clarifying nancial activities of political parties and their structures; - eliminating references to the Civil law from Law no. 334/2006 in order to delimitate from the common legal provisions on donations; - obligating political parties to pay all their bills in brief period of time after the end of the campaign; - reducing the administrative burden on political parties by: I) outlining clear and direct responsibilities of the PEA, as a supervision body of political parties nancing; ii) simplifying reporting obligations of the political parties funding; iii) easing the paper work of political parties, when reporting the sources of their funding; iv) setting clear responsibilities to political parties funding, as well as proposing strict sanctions in order to avoid circumvention of the law and corruption dissemination; v) removing unnecessary requirements and provisions from Law no 334/2005 and Government Decision no 749/2007 in order to achieve simplied, acceptable and achievable results. 1. Fight against corruption in Romania. Current state of affairs and political environment Fight against corruption is high on the political agenda in Romania. It is a pressing issue, both because of the EU (through the CVM) and because of internal demand for integrity. In the recent years the Romanian Government has shown determination and commitment in ghting corruption. This is visible at policy level (through the implementation of the last two anti-corruption strategies); at institutional level (by establishing institutions such as the National Integrity Agency, the Special Prosecution service and the National Anti-corruption Directorate) and at legislative level, by adopting a number of legislative amendments that aimed at strengthening legal framework of the anti-corruption activities. The common perception however is that despite the progress made, consistency and results in a number of areas remain a challenge. The track record of the National AntiCorruption Directorate (DNA) in investigating and prosecuting high-level corruption cases including against current Members of Parliament or Government, has remained convincing and an increase in the number of convictions could be observed. However, the results by courts continue to show a mixed picture. Although the majority of high- level corruption trials are decided within a period of three years, a signicant number of important cases involving dignitaries are currently pending before courts for more than three years38. With view of political parties and electoral campaigns funding in Romania has the necessary legal and institutional framework in order to achieve strict control over this process. Party nancing in Romania gradually evolved from very general provisions valid for the rst post -communist elections in 1990 to very specic regulations in 2008 parliamentary elections39. The current regime on nancing political parties is very strict and is characterized by ample public funding of the leading (parliamentary represented) parties, by strict control over the public subsidy (released on monthly basis) and on frequent control activities and strict reporting regime. This, however seems to have the additional undesired effect of pushing certain party funding practices deep underground. This makes the political funding process rather opaque -a problem that has nothing to do with the quality of legislation, but rather with law enforcement. While the current statistics show that the PEA Control Department is effective in establishing minor violations of the law, there are few results with regard to the illicit funding happening "under the table". It must be noted that PEA is not a law enforcement agency and is not - and should not - be supposed to investigate illicit activities; however this effect needs to be noted with regard to the need for further cooperation by all bodies to ensure that there is no illicit party funding in Romania.
38 39
Report from the Commission to the European Parliament and the Council on the progress of Romania under the Co-operation and Verication Mechanism. State Resources and Pocket Money: Shortcuts for Party Funding in Romania.
2. Political and election system in Romania Romania has a mixed Parliamentary/Presidential system in which President is chosen by direct vote by citizens. The government is accountable to both the President and the Parliament. Candidates for local, parliamentary or presidential elections may run in elections both as political parties or individual candidates. National elections are organized for President and Parliament. The president is elected for a ve year term (after a change from four-year terms after the 2004 elections). Romanian Parliament is bi-cameral; special arrangements exist for the election of representatives of national minorities. The Chamber of Deputies has 334 members, elected for a four year term by uninominal vote according to the principle of proportional representation, in uninominal precincts. The Senate has 137 members, elected for a four year term. Since November 2007, Romania also holds national elections for the European Parliament. Elections are also held at local level, for local councils and mayors, as well as the county councils and their presidents. Each political party, political, political alliance, electoral alliance, organization or national minority citizens, independent candidate has to provide a deposit in the account of the Permanent Electoral Authority (PEA). Independent political candidates must be supported by at least 4% of the total number of voters listed on the permanent electoral lists from the uninominal college they run for. The electoral threshold to be reached to be reached in order to be eligible in the national parliament is: For the Chamber of Deputies, 5% of the valid votes cast in all constituencies, for all political parties, political alliances, electoral alliances and organizations of the national minority's citizens; For the Senate, 5% of the valid votes cast in all constituencies, for all political parties, political alliances, electoral alliances and organizations of the national minority's citizens; For the Chamber of Deputies and Senate, by cumulative fullling the condition of obtaining 6 uninominal colleges for the Chamber of Deputies and of 3 uninominal colleges for the Senate, in which candidates of political parties, in which candidates of political parties, political or electoral alliances and organizations of the national minority's citizens come rst, according to the number of valid votes, even if the conditions mentioned in let. In the case of political and electoral alliances, to the 5% threshold, a 3% of the valid votes cast in all electoral constituencies is added, for the second member of the alliance, and for each member of the alliance, starting with the third, a 1% of the total number of valid votes cast in all electoral constituencies is added, without 10% of these votes40. In the last parliamentary elections in Romania, the participation of political parties, coalitions of parties and independent candidates was as follows: Five parliamentary represented political parties; Five non-parliamentary represented political parties, independents and organizations of the national minorities. 3. Legal framework regulating political parties and electoral campaigns in Romania The legislation includes: Law no 14/2003, regulating the political parties in Romania; Law no 35/2008 on the election of the Chamber of Deputies and the Senate; Law no 215/2001 on the local government; Law no 393/2004 on the status of local elected ofcials; Law no 69/1992 on the election of the President of Romania; Law no 334/2006 on the nancing of the activity of political parties and electoral campaigns; Law no 176/2010 on enhancing integrity in the exercise of public positions and dignities; Government Decision no 749/2006 on approving the methodological norms for the application on Law no 334/2006; 4. General Overview of political funding mechanisms and regulations As the modern democracies are primarily representative in nature, political parties are the main vehicle for organization of the civil society and representation of interest groups in the political process. In many countries they are even the only vehicle, as candidates may only participate in an election if they are a part of a party ballot. Political parties should reect concerns of citizens, represent the diverse interests in the society, formulate political vision of the future. By organizing the civil society politically, they usually build a membership base within multiple central and local structures. In order to be able to effectively participate in the political life - and to win elections -parties need funding. Moreover, in order to effectively participate in the political life, a key instrument used by the party members is .the support they provide to their political organization through funds - membership fees, donations, in-kind support. The current state of affairs in the media environment and the political life makes the nancial strength of the party a key element of future electoral success.
40
Group of States Against Corruption (GRECO). Third Evaluation Round. Evaluation Report on Romania on Transparency of Party Financing.
Advertising requires money; to probe the public opinion, to develop the necessary propaganda materials, to ensure they are effectively broadcasted and viewed by the broad public. With the vast number of media outlets and the cost of advertising, the cost of effective election campaigns may run in millions of EUR. At the same time, political parties have to maintain a certain administrative structure with permanent and temporary staff, party ofces and to cover their costs. This heavy nancial burden requires funding. Most of the modern democracies have opted for a mixed system of party funding, relying on a public component (provided by the state budget on the basis of certain electoral results) and a private component (fees from party members, donations from individuals and sometimes companies). However, the electoral competition is not always fair and as the potential benets (both political and private, for the party leadership) from winning the elections are huge, winning at all costs becomes a frequent practical approach, followed both in established and new democracies. This means that there is a strong incentive for violation of the party funding rules - either through accepting more donations then allowed, or by spending more then permitted41. In addition, the strict limitations to certain types of donation combined with the personal and organizational incentives to collect more money open the opportunity for "black", illegal funding that happens in the dark, against promises of future political patronage or services. Potentially this may lead to state capture - a situation where certain institutions within the state are "captured" by powerful private interests and stop working for the public good, beneting only the "captors" instead. 5. Corruption practices in political parties funding The paradox described above may result in substantial corruption ("abuse of entrusted power for private gain42"). The corrupt practices in question could broadly be classied as "demand based", involving the corrupt politicians, or "supply based", involving corrupt business people. On the demand side, corruption is manifested as the "predatory state", "captured state"., abuse of ofce, extortion and embezzlements. Politicians and party functionaries may be paying with services for the illegal funding they receive; or they may even defraud their own organization by stealing money they received illegally in the rst place (as the money do not go through the established accountability procedures) On the supply side, corruption is manifested mostly through active bribery, participation in procurement fraud and collusion in different corruption conspiracies. In addition, a key problem associated to illegal party funding is that money collected illegally must be spent illegally. There is no way to include them in the accounts of the political party and moreover there is no incentive to do so. Instead, they are used for bribing electoral commission ofcials, bribing voters and are sometimes outright stolen by party functionaries. Understandably, these illegal funds are not subject to the transparency provisions of the political party funding regime either. 6. General Regulatory framework Regulation of party nance is an important recent area of legislative interventions. Controlling party income and spending, in addition to introducing new forms of funding (public funds) and sometimes banning existing forms (corporate donations) became a key reform undertaken in most of the established and new democracies. Efforts to regulate political party nance and lower the risk of corruption include but are not restricted to: Introduction of Codes of conduct for political parties - to encourage a climate of open, free and fair political competition. Codes of conduct are not usually incorporated in law and can, therefore proclaim standards that are difcult to embody in a statute. Setting out the standards of behavior expected from each political party and its members, they send out a clear moral message and leave parties open to public criticism if they disregard the standards they themselves subscribed to; Disclosure rules - to enable the public to be aware of and closely monitor the interests potentially motivating party policies. Such rules are designed to ensure that the sources of funding (and of potential inuence on the policy) are made public and can be monitored. They usually require the listing of the amount, as well as the name and address of the contributor, but the threshold for disclosure differs substantially between countries and can range from zero to several thousand US dollars. Disclosure can also apply to party expenditures, either with or without thresholds. The way the information is to be disclosed varies, with several systems requiring public disclosure, some applying a mixed system of public disclosure and condential reporting to an oversight body and others requiring the reporting to party and election ofcials. Again the threshold for disclosure can vary. Some countries also have rules requiring the declarations of assets and interests of candidates both before and - for those who have been elected - after the election. This step is usually recommended to lower the incentives for corrupt dealings by heightening the risk of detection. Contribution limits (direct and indirect) and bans- to ensure that no private contributor exerts inappropriate inuence on the political system. Some countries, often with continental European traditions, operate a system of public
41 42
Funding of Political Parties and Election Campaigns. Handbook series. Transparency International denition; other denitions include "abuse of public ofce for private gain" or "abuse of public powers for private gain"
party and campaign funding (while still allowing for private donations to take place) to reduce the scope for undue inuence of private interests while supporting parties as an essential part of the democratic system. Limits of private contributions generally regulate the maximum permissible amount of the contribution. Limits on private contributors can also regulate the source of funding. This may include prohibition of anonymous contributions, or foreign contributions, and limits on the ability of corporations to make contributions; Expenditure limits - expenditure limits can regulate both the amount and the type of expenditures with the goal to limit perverse incentives and the need for "dirty money", i.e funding that exceeds the legitimate amounts. They have increasingly come into the spotlight as a necessary prerequisite for controlling corruption in political nance. The amount a political party is allowed to spend is regulated in a number of countries and can extend to limiting the ability of independent groups spending money on behalf of party candidate. Limits on the type of expenditure can range from prohibition of using party funds for personal uses to restrictions of the use of paid-for media advertising and other campaign-related expenditures. Most importantly, however, they may forbid the use of state resources by the ruling party for party-political purposes (this is particularly important in developing countries and emerging democracies, as the exclusive use of state resources by the ruling party creates big inequalities to the opposition's disadvantage)6. The extent to which these mechanisms are applied, and the regulatory level they belong to (i.e. constitution, electoral law, administrative regulations and codes) depends on the respective funding regime. Good regulatory practices Regulations controlling political nance are in no short supply. Yet they are, all too often, honored in the breach. A number of factors can, however be identied that are likely to impact on the effectiveness of the regulatory regime. Quality - the effectiveness of any regulation depends rst of all on its quality. A balance has to be struck between the need for regulation and the closing of potential loopholes, and the practicality of its implementation. Evidence suggests that simplicity, which refers to both the amount of laws regulating different aspects of the same issue and the amount of agencies involved, is key to making a regulation a success. Ideally, laws will identify agencies or bodies within the party as being responsible for the political nancial activity (to stipulate personal responsibility and to facilitate the task of monitoring by eliminating ambiguities), as well as state bodies to oversee and enforce the party nance regulations. However, the implementation of transparency provisions, including disclosure and reporting requirements involves costs and places an administrative burden on parties, in particular in transition and developing countries, without necessarily improving openness and accountability (for reasons related to the quality and timeliness of the information provided); Political will and commitment - Successful regulation of political nance laws also depends on the motivations underlying their enactment, which in turn impacts on their implementation. Evidence shows that lack of political will of both the designers of the law and of those subject to it has greatly undermined the effective implementation of nance regimes, in particular where politicians are writing the rules for themselves. Where new and complicated rules demand a change of attitude and a change of practices, implementation has to begin with an information campaign, providing training and support services for those affected by them. This includes civil society who will be able to effectively monitor compliance to nance rules only if they are aware and kept abreast of new developments, and are given access to relevant information. Norms - providing norms for transparency and accountability, compliant with disclosure requirements and expenditure limits7. In order evaluate the effect of donations on the independence of the political parties in Romania, a list of criteria could be prepared. These criteria should be objective, fair and reasonable. They should cover state support, as well as private support. The levels of political support should be calculated on the basis of objective criteria. The criteria most frequently used are the number of votes cast for a party, the number of parliamentary seats obtained or a combination of the two. Other criteria are also conceivable, such as the size of the party membership, for example, although that is less commonly found in political practice. Public funding should enable new and smaller parties to participate on an equal footing with parties having more nancial resources. The extent to which the system of public funding creates a level playing eld and facilitates the entry of new parties into the systemdepends in part on the method of allocation of state subsidies. Two basic principles can be employed for the allocation of state support to political parties and candidates. According to the principle of "strict proportionality" public subsidies are allocated in relation to the levels of popular support, usually measured in relation to the number of votes cast for the party or candidate in the national legislative elections and/or the number of seats obtained in the Parliament. Following the principle of "strict equality", each party or candidate receives an equal sum of money, or a lump sum regardless of its electoral strength or parliamentary size. Generally speaking a system which provides lump sums is more favorable to smaller parties, which would receive comparatively larger amounts of money under such a system than in one exclusively focused on levels of electoral support. As a rule, therefore, the "equality principle" makes the system more advantageous to smaller parties than the principle of "strict proportionality"43. In regards to private nancing, criteria could include: Restrictions on companies/entities participating in procurement or working with the public and state institutions to donate funds to political parties;
43
Financing political parties and election campaigns - guidelines
Fullling solemn statements by companies that donate to political parties in order to state that they do not have a particular interest; Keeping records identifying donations exceeding a certain value and their donors and making them public - transparent and accountable. In case of cash donations, the donors may sign a tally sheet with integrated declaration that they personally or companies they control directly or indirectly are not involved in public procurement in the last 12 months and will not be involved in public procurement in the next election period. For donations made through bank transfers - separate declaration should be signed and mailed to the party - recipient. 7. Overview of the specics in the political funding system in Romania The legal framework on nancing of political parties and campaigns in Romania is based on the Law no 334/2006 and the Government Decision No 749/2007 on approving the methodological norms for the application on Law no 334/2006. These regulations employ all three approaches listed above to ensure the integrity of the political process: limitation of private donations, public funding and enhanced transparency regime. They also aim at at ensuring sufcient resources for political competitors (parties or individual candidates). Law no 334/2006 on the nancing of the activity of political parties and electoral campaigns in Romania was amended in 2008 by three emergency ordinances. The system for avoiding conicts of interest and ensuring transparency of political life in Romania is complemented by a system of declaration of assets and interests of elected candidates, currently provided under Law no 176/2010 on enhancing integrity in the exercise of public positions and dignities. These declarations are collected by the Central Electoral Ofce and then examined by the National Integrity Agency (NIA). Monitoring the political parties funding in Romania is realized by the Permanent Electoral Authority (PEA) for the private sources of funding, and the Court of Accounts For the public subsidy. Law no 334/2006 contains provisions covering the various aspects of political nancing and its supervision. Chapter 1 to 5 deal with the private nancing of political parties (membership fees, donations, other sources of income), public nancing during, nancing during election campaigns of parties as well as (party - or independent) candidates. Chapters 5 and 6 regulate the control mechanisms by the PEA and the applicable sanctions. Chapter 7 contains nal transitional provisions on the transfer of responsibilities from the Court of Accounts to the PEA, among other arrangements. An important piece of secondary legislation was adopted with Government Decision no 749 of 11 July 2007 on approving the methodological norms for applying Law no 334/2006 on nancing activities of political parties and electoral campaigns. Romania has adopted a system for mixed public - private funding of political parties and campaigns where parties, coalitions and candidate may receive donations both from natural and from legal persons, subject to compliance with certain ceilings (also as regards campaign expenditure). According to provisions of Law no 334/2006, restrictions of political parties nancing apply to donations from abroad and from entities like trade unions, religious organizations, public institutions, etc. Parties may also generate an income through activities except those which are economic/commercial by nature. An exception of this regime is the so called "Internal income", or income from party activities. Political parties in Romania may own movable and immovable property that is necessary for the accomplishment of their specic activity. Law no 334/2006 stipulates that the nancing sources of political parties activities are: Party membership fees; Donations, legacies and other liberties; Income from party activities; Subsidies from the State's budget. Overall Law no 334/2006 is a well developed act, covering the major issues related to party funding and is in line with the mainstream approaches to regulating political party nancing in Europe. It aims at establishing a rather strict regime of control over political party nancing, providing for a system of control and sanctions. Though it certainly could be improved - as any other piece of legislation can - these improvements are unlikely to bring about dramatic changes in the levels of political corruption in the country. The reason is that the numerous restrictions in the existing legislation have already most probably driven all the "dubious" funding underground; it is not being declared and the funds collected are likely used outside the accepted forms of political propaganda and political debate. Same observations are valid for the Government Decision no 749/11 July 2007 on approving the Methodological norms for applying Law no 334/2006. The Decision provides for a supervisory mechanism under the joint responsibility of the Permanent Electoral Authority (PEA) and the Court of Accounts (COA), which are potentially powerful, and for a broad set of sanctions in case of non-compliance with the law44. 8. Issues in the monitoring and control procedures provided by Law no 334/2006 and Government Decision no
44
GRECO Third Round Evaluation Report for Romania
749/2007 Overall problems According to the GRECO Evaluation Report on Romania on Transparency of Party Funding, political nancing is largely perceived as a problematic and grey area. It seems that parties and candidates spend more than what their ofcially declared resources allow. Election observers have noted in that certain donors provided support to parties and candidates in amounts that ofcially exceeded their ofcial income. All this suggests that the informal nancing could account for a substantial portion of the real nancing activity. Buying of votes (typical for many countries of the region) remains an important issue and authorities are taking action in this respect. The GRECO Report also notes that many techniques are used in practice for illegally nancing activities: Creation of ctitious positions (including in the Parliament or town hall of the capital city); Public funding attributed directly to local party structures without these having applied for it; Creation of related party - structures for instance to disguise the real origin of income or to raise extra funding; Misuse of public facilities; Blackmailing of major business entities. Solutions for reducing the administrative burden on political parties As stated in the GRECO Report for Romania, Law no 334/2006 on nancing the activity of political parties and elections campaigns is a ne piece of legislation which provides for a variety of measures aimed at increasing the overall transparency of political life. It is all time over-ambitious and imposes many limitations that are probably difcult to enforce in practice, including a complex system of overall limits on campaign income and expenditures, etc. Thus an administrative burden is created for political parties and organizations, which hampers the smooth implementation of the Law's provisions. Achievement of administrative burden reduction in policy life in Romania depends on certain measures to be undertaken in order to achieve efcient results. Some of them include: Outlining clear and direct responsibilities of the PEA, as a supervision body of political parties nancing currently, according to Law no 334/2006, the supervision is a joint responsibility of PEA and the Court of Auditors. However these supervisory arrangements including the way responsibilities are distributed are not satisfactory. The Permanent Election Authority in Romania, should take over the lead responsibility in this area and be given the means to comply with the task. Simplifying reporting obligations of the political parties funding - currently Law no 334/2006, envisages a series of measures in relation to reporting of means received by political parties. Rules and requirements should be clear and simple in order to achieve the effect sought - reducing infringements in political parties funding; Easing the paper work of political parties, when reporting the sources of their funding; Setting clear responsibilities to political parties funding, as well as proposing strict sanctions in order to avoid circumvention of the law and corruption dissemination; Removing unnecessary requirements and provision in Law no 334/2005 and Government Decision no 749/2007 in order to achieve simplied, acceptable and achievable results. Identifying areas of improvement in the control performed by PEA Currently, supervision and monitoring functions of PEA are shared with the Court of Accounts (COA). According the statistics, neither PEA, nor the COA in the last two years has ever brought infringement cases of political parties nancing to light. In this relation, supervision functions need to be made more effective. At the moment about half of the positions in the PEA structures have not been fullled. Moreover, the ability of PEA to request and obtain additional information is strictly limited to political parties. The Permanent Election Authority has to strengthen its cooperation with the relevant anticorruption institutions in Romania in order to perform its functions imposed effectively. In order to achieve efciency in performing supervision and monitoring functions with view of political parties nancing, PEA should dispose of a number of tools for enforcing compliance, which may include: The full power to monitor nancial activity: supervise all the donations to and expenditures of parties, in order to identify irregularities in the nancial ow; The power to investigate potential infringements; The power to impose sanctions, including administrative sanctions; Generally speaking, in order to be effective in its efforts to regulate political nance, PEA needs to dispose of a clearly dened area of competence, real powers to review processes and to hold ofce - holders accountable, and adequate human and nancial resources to ensure the appropriate execution of its tasks. This covers background work such as records management and the timely publication of reports, but extends to the recruitment of personnel qualied for controlling the nancial and legal aspects of the electoral and political process. Lastly, PEA needs to be independent and be seen as independent. However total independence cannot be achieved10. 9. Practices from other countries. International experience International law has increasingly recognized the importance of transparency for mitigating corruption in party politics and using disclosure of political nancing a means to improve it. The United Nations Convention against Corruption (UNCAC), which entered into force in 2005, calls on states to enhance transparency in the funding of candidates for elected public ofcials ofce and where applicable, the funding of political parties. The Council of Europe
has also carried out important work in this eld, and in 2003 issued 20 political nance guidelines for its members that are largely focused on disclosure. Despite these mandates and recommendations, surprisingly few countries have good disclosure laws. Subsequent research on particular regions and countries has revealed other challenges to disclosure, such as inconsistencies between existing policies and current practice. Even where good laws do exist, such as in the US, independent ndings show that there are often signicant important gaps. In Canada for example, political parties use an innovative combination of public regulation through tax credits and organizational efforts to reach out to citizens through direct mail. The establishment of federal and provincial tax credits for political donations has helped to encourage small donations from individual citizens and local businesses. Once an individual candidate is nominated, his or her agent may begin to issue receipts for tax credits for donations while registered parties may issue these receipts continuously. The federal tax credit is calculated based on a percentage formula. In Germany, the threshold for receiving public funds is signicantly lower than the one required for having parliamentary representation (ve per cent of the vote). Any party can access state funding if it receives 0,5 per cent of the vote in national elections and one percent of the vote in the state. In the countries of Latin America, party nancing disclosure is encouraged. In Asia and more specically in Bangladesh an initiative on monitoring campaign spending was initiated. The involvement of civil society is the monitoring process is crucial for achieving transparency and accountability in policy funding. In this case, Tl's national chapter in Lebanoncarried out a monitoring project assessing the 2009 parliamentary elections in which campaign spending was regulated for the rst time in the country's history. Tl's Armenia chapter led similar monitoring activities in its parliamentary elections in 2007. Work focused on scrutinizing the nancial ows of political parties and the use of administrative resources for election campaigning. The methodology included reviewing the legal framework, analyzing media coverage and estimating the campaign costs in major cities45. With view of the rules concerning parties nancing, the practice from Czech Republic could be used. In Czech Republic, the state nancially supports political parties and political movements on the basis of their electoral results. There are two possibilities that may be combined: rst, each political party that a certain percent of votes in parliamentary election should receive an amount corresponding to the electoral support. The only condition is that the party obtains more than a minimum percent. This type of contribution is called permanent contribution. It is paid each semester during the four years of each legislature. The maximum amount is prescribed by law. Secondly, every national or regional mandate is also remunerated for the party. It is called mandatory contribution. The State should also pay a contribution in order to cover electoral campaign expenses. There is no maximum amount. The parties in Czech Republic may also receive private nancing or have commercial activities and other nonprot activities. The practice shows that the greatest problem arise from donations where the origin is not clear. Over a certain value, donor has to be known. Inspection on the regulatory in the nancing of political party is handled by the Chamber of Deputies in Czech Republic on the basis of the nancial reports delivered by the parties. Sanction of irregularities is non-payment by the Ministry of Finance of the monthly account and the eventual payment by the party of double of the irregular sum. To a general extent, the Czech system is very liberal indeed. The positive Poland's experience with political parties' nances is the introduction of a mechanism of budget subsidies for the parties. However, the scope of subsidies and the detailed reports that needed to be provided by parties with regards to these subsidies still need further legislative debates46. The good international practices emphasize on: Establishing a robust legal framework, regulating political parties nancing; Availability of strong oversight body - provided with sufcient resources and competences and functions; Involving civil society and media in the monitoring and supervision process of political parties funding and expenditure; 10. Conclusions Conclusions in relation to the party and election campaigns nancing in Romania Media in Romania, reported that many political parties don't keep proper books/accounts at branch level. The problem is that the branches have no legal personality and are only keeping specic documents. The Party Balance sheet is done at central level. It is considered not practical to create balance sheets at branch level. It is a serious issue, as the normative base stipulates that every political party have the obligation to keep books and accounts at every level. Additionally, the requirements for the storage of nancial records of political parties are not kept. The PEA itself is normally required to keep all les for a period of 30 years but in practice the staff does not keep nancial records for more than 6 months Annual accounts of political parties presented should be a subject of preliminary independent auditing prior to their submission. The audit should be conducted above a certain threshold. The political party shall select the auditor
45 46
Transparency International. Standards on Political Funding and Favours. Legislation and Control Mechanisms of political parties' funding.
according to its own procedures. Presenting these accounts to the public is not a practice followed by them. All audit reports shall be public and open. There is also a problem with the control over the election expenditures in combined elections. The issues of accounting, as well as verication procedures should be claried. This may impose amendment of the legislative base, summarizing the experience from different countries. Law no 334/2006 addresses gratuities, services provided free of charge, and discounts above 20%. At the same time, the implementing and accounting rules are not clear enough to address the various types of discounts, services provided free of charge and other material and non-material advantages that are granted in practice to parties and candidates. The relevant legislation (Law no 336) does not exclude anonymous donations. It only limits the overall amount of such donations that a given beneciary is entitled to accept. Article 6 of Government Decision no 749/2007 sets a threshold for the distinction between "hand gifts" and donations which is currently 3 gross minimum wages. This means that donations below this threshold do not need to comply with the various requirement of Law no 334/2006. The GRECO Report also puts stress on the fact that Law no 334/2006 does in fact allow political parties to generate an income from the organizations of meetings and events and thus to possibly raise funds also in cash on those occasions. The problem set is how these funds are accounted. In practice it seems that the parties are not using this source of revenue anyway and maybe the most reasonable approach would be to just take out the internal services category. The GRECO Evaluation Team (GET) was concerned about the various types of structures that could carry out nancial activities regarding political parties. They looked at the foundations of political parties. According to Romanian legislation foundations are considered independent entities with their own legal personality and their own accountancy. Foundations/companies should be considered "third parties" and others - woman organizations, youth organizations with legal personality could do their accounts through the political parties. In fact, in Romania this is not a widespread problem - only the organization of the Hungarians in Romania has such a foundation. So this could be identied as "potential" problem. The problem is that the connection between the "third party" and the political party may not be established in paper and may be difcult to prove. This could be regarded as "opening doors" to leading political propaganda by others different from political parties. In practice, political parties in order to abide by the expenditure limits are registering only part of the nancial transactions and are not registering others. Currently, in-kind donations to parties and election campaign participants are not properly identied and accounted for at their market value, as donations. In order to ensure their proper identication at their market value, steps should be undertaken - market research in order to identify the market value of the relevant donation, selection among three suppliers. All the donations should be recorded and included in the accounts of political parties and campaign participants. There is no requirement at the moment that all donations above a certain threshold to be made through the banking system. In order to cope with this problem, the threshold for donations to be made through the banking system should be xed or the quality of donor should be dened. Legal situation with provision of loans is also not quite clear. The particular problem is caused by the possibility for deferred payments that is often used by the political parties. While the parties should submit the report on their expenditures 15 days after the end of the campaign, the deferred payments may las up to 90 days or even more; thus they may not be properly reected in the reports and may actually conceal an in-kind donation. This deciency could be addressed by limiting the opportunity for making deferred payments or by putting a term of 7 days after the end of the campaign when all bills have to be paid. The parties involved in realization of control on the policy funding (PEA, COA and ANI) should have better cooperation and communication in their actions in order to achieve greater transparency and accountability. The Permanent Election Authority (PEA) does not have sufcient supervision and monitoring functions over the parties and election campaigns. PEA should exercise further control regarding party expenditure. The Court of Accounts could be eliminated from the Law no 334/2006 but their competence should be kept, according to the Constitution of Romania and their own law. In order to achieve full effectiveness, the PEA should control both the private and the public subsidies received, and the function of COA should exercise just subordinate functions. The issue of foreign entities being ale to give donations to political parties needs further clarication. One possible approach is to clearly dene that only persons with Romanian citizenship are allowed to make donations to political parties and for the purposes of election campaigns. In case of irregularities found, proper sanctions should be imposed; both dissuasive and prompt. The existing procedure required the PEA Control Department to produce a report and to propose sanctions. This report goes to the PEA Board; thus there is a gap, between issuance of the report by controllers and imposing sanctions. To avoid the gap, it may be advisable to include specic terms in the law in which the actual sanction should be issued after being proposed. Main points Romania has detailed, high quality legislation in relation to the parties and elections campaigns nancing. There are some isolated issues to be solved that do not necessarily have impact on political corruption in the country, like:
The level of company donations; The number of controls/checks to be initiated; Conduction or annual audits; Existent accounting standards; Regulations, transparency and compliance The legislation in the eld puts limits with view of the private funding of political parties and election campaigns; to enhance the transparency of these the Permanent Electoral Authority (PEA) may consider expressing caps and limits in absolute gures in the beginning of every year. Private donations may run the risk of establishing inappropriate links between money and specic political decisions. In Romania, private donations had to be reported but the donor's identity could remain condential when the amount did not exceed 10 times the minimum salary. Measures have to be taken by the government in order to provide specic rules to avoid conicts of interest, avoid prejudice to the activities of political parties, ensure transparency of donations and avoid secret donations. Equal competition can be seriously undermined by gross nancial disparities between political forces, giving the better resourced parties a substantial advantage over their competitors. In order to limit the concentration of private inuence on party politics, two basic approaches could be applied: Through public law, states can establish restrictions on the permissible amount of donations; States can impose certain conditions on the qualication of donors or donations. In the context of Romania, we have acting Law establishing prohibitions on the level of donations, so applying the second approach might be a good opportunity to restrict irregularities and corruption practices in the eld - such as limitations on participation in further public procurement or enhanced transparency regime. A key recommendation would be to conduct annual independent audit of political parties accounts, prior to their submission to PEA. The audit mechanism gives the following benets and opportunities with view of political parties funding: It provides discipline; It provides transparency and accountability; It could be used by the PEA as a control mechanism in relation to political parties and electoral campaigns funding. The problem with loans in Romanian system of political parties funding is not legally clear. Loans and fundraising are not addressed in Romanian legislation. But Romanian authorities underline that loans are not an allowed source of funding since the list of such sources, contained in Law 334/2006, does not deal with these. The legislation should clearly impose loans prohibition with view of political parties and electoral campaigns funding. Outside election periods, i.e on a permanent basis; the political parties have to submit to the PEA, also a monthly situation of the subsidy and expenses incurred. This is imposed with view of achieving greater transparency and accountability. The monthly statements allow keeping a track record on the subsidies and money ow. Another adequate issue to be addressed in Romanian policy and campaigns funding is the so called "third parties" in politics - groups that advocate interests and back candidates without themselves contesting elections. Third party support during elections is not regulated in Romania. That is a precondition for corruption dissemination. Usually "third parties" are loosely regulated private associations which are permitted to raise unlimited sums from sources that do not need to be disclosed. Private donors to these groups may even enjoy greater tax advantages than they would for partisan donations, because "lobbying" efforts may be treated as a business expense even when direct contributions to political parties cannot be treated this way. In order to solve this issue, Romania has to restrict third parties spending during election campaigns, so that these organizations do not swamp spending by legally restricted political parties. As mentioned above, criteria for evaluating donations could be proposed in order to determine if they are limiting the independence of political parties in Romania. These criteria may include: Restrictions on companies/entities participating in procurement or working with the public and state institutions to donate funds to political parties; Fullling solemn statements by companies that donate to political parties in order to state they do not have a particular interest; Keeping records identifying donations exceeding a certain value and their donors and making them public transparent and accountable. The Permanent Electoral Authority (PEA) may use as a tool, the comparison of the list of the parties' donors with the list of the companies that have received public procurement contracts at the end of each year. Special attention should be paid to EU Funds recipients. They should also be restricted in provision of funding to political parties and electoral campaigns. The provisions of Law no 334/2006 on the nancing the activity of political parties and electoral campaigns need to include reference to the Romanian Accountancy Law. The Permanent Electoral Authority (PEA) should take the responsibility for checking on the accountancy law with view of clarifying nancial activities of political parties and their structures. In relation to the recommendation for conducting audits on parties' expenditures, the PEA should be able to impose sanctions in case of breach of the Law. Section 2 "Modalities and registration form, registration and publication of donations, membership
fees and political parties' own revenues" of Government Decision no 749/2007 treats donations, membership fees, own revenues of political parties, etc. According to Article 6 of the Government Decision no 749/2007, the scope of donations includes liberties received by political parties consisting of donations and/or legacies according to the provisions of the Civil Code. Donations also include hand gifts whose value exceeds 3 gross minimum wages. Mentioning of the Civil Code may need to be abolished in particular to specic form. "Hand gifts" also needs to be abolished. Legacies may also be taken out of the normative base in the eld, as they are not used. Another signicant issue in Romanian policy funding system are cash transactions. As cash transactions cannot be followed up afterwards, public control of party nancing is further supported if major contributions and expenses are required to be routed via bank accounts. Legislation should prohibit donations in cash, especially donations exceeding the legal threshold and should require that these be made by bank transfer in order to identify the donor entity. Restrictions on cash transactions have the further advantage of impeding exploitation of the loopholes in the law on donations limits. Routing through bank accounts enables tracking of the identity, address and sometimes occupation or employer of the donor47. Another opportunity is when cash donations are not prohibited. Then for cash donations up to a certain threshold, donors may sign tally sheet with integrated declaration that they personally or companies they control directly or indirectly are not involved in public procurement in the last 12 months and will not be involved in public procurement in the next election period. For the donations made through bank transfers - separate declarations should be signed and mailed to the party-recipient. Issues like political parties debts have to be solved. Political parties will not be able to operate with their accounts in case they are blocked by creditors. This effectively blocks the work of the party. In order to solve this pending issue, legislation should give chance for deferred payment to creditors, etc. Parties should pay all their bills in brief period of time after the end of the campaign. In case of combined elections, control over the election expenditures has to be taken into account. If political parties open separate accounts for combined elections, the PEA may have problems verifying thousands of bank accounts. Thus, the obligation for opening separate accounts should not be required. Law no 334/2006 lists a series of infringements and sanctions which apply in relation to the most requirements of the law. Still the sanctions on penalties are not strict enough to guarantee observance of the Law's prescriptions. In order to achieve efciency and effectiveness, penalties applicable in accordance with Law no 334/2006 on nancing of political parties and electoral campaigns should be increased and thus to ensure that all the infringements are punishable effective, proportionate and dissuasive sanctions. In order to address political corruption and more specically the issue of political parties and election campaigns' nancing in Romania, active cooperation and coordination with the relevant stakeholders is required - other AC institutions, civil society and media.
47
Financing political parties and election campaigns - guidelines.
Needs assessment Department of Control of Political Parties and Electoral Campaigns of the Permanent Electoral Authority
Lead expert Constantine Palicarsky Cristian-Alexandru Leahu Octavian Onogea
Executive summary Currently Permanent Electoral Authority (PEA) is understaffed and low budgeted. Without a full staff, properly trained, the PEA will not be able to follow what is happening at territorial level and to monitor party branches expenditures. The Department of Control of Political Parties and Electoral Campaigns could also benet from strengthened cooperation and coordination on an operational and executive level between the with the Court of Accounts and other anti-corruption bodies in order to more effectively oppose corruption and infringements in party nancing by signing memoranda of understanding and by developing specic protocols on cooperation/exchange of information. The Department needs further equipment to maximize its performance. Statistical and fraud analysis software as well as provision of new automobiles for the mobility of the Department's staff are needed. Introduction The current needs assessment of the Department of control of nancing political parties and election campaigns within the Permanent Electoral Authority (PEA) is aimed at examining relevancy of its functions, effectiveness and efcacy with regards to the established national strategic and legal documents, international standards and good practices in organizing the operations of controlling departments. It aims at formulating proposals for strengthening the PEA's Control Department capacity to implement its control functions. Methodology for conducting the Department's need assessment The methodology for conducting the needs assessment comprises of the following stages: Formulation of critical issues to review; Data collection through document review, in-depth interviews with key informants and in groups discussions Analysis of the current situation and conditions within the Department of control of political parties and electoral campaigns with regards to the relevancy of the functions and the effectiveness and efciency of the activity, based on which the ndings and conclusions for the respective strong and weak aspects are formulated; Identication of areas for improvement, based on the ndings and conclusions from the analysis of the current situation, as well as the vision for the future development of the Department and good practices of our and other countries; Formulation of concrete recommendations for improvement of the respective areas identied. The needs assessment of the Department of control of political parties and electoral campaigns is based on the UNDP capacity assessment / capacity development methodology. According to this approach, capacity of institutions is identied to reside at three levels: 1) Enabling environment: refers to the broader system within which individuals and organizations function. It includes policies, rules and norms, values, government mandates, priorities, modes of operation, and civic engagement across different parts of society: in short "rules of the game" for interaction between and among organizations. 2) Organizational level: comprises the internal policies, arrangements, procedures and framework that allow an organization to operate and deliver on its mandate, and that enable the coming together of individual capacities to work together and achieve goals. 3) Individual level: refers to the skills, experience and knowledge that are vested in people48. PEA Description The Permanent Electoral Authority (PEA) is an independent institution, which ensures the uniform application of the laws on the organization and carrying out national and local elections. It also has advisory functions with regard to the organization of Referenda. PEA monitors compliance with the law on nancing political parties, political or electoral alliances, independent candidates, and election campaigns. Department of control of nancing political parties and electoral campaigns is one of the 12 main departments within the Permanent Electoral Authority (PEA). It was created in June 2007. Currently, the Department has 20 positions (including those in the territorial branches) of which 17 are lled and 3 are vacant. It may request information from Public authorities when carrying out its functions on controlling political parties funding. PEA is in charge of parties' compliance with the legal provisions on party funding. Inspections are carried out annually and incidentally, when there are indications that a breach of law regarding party funding has taken place.
48
UNDP Capacity Assessment Practice Note
The PEA and respectively the Department can act upon own initiative when a suspicion of infringement of Law no 334/2006 has arisen. Overall review of the PEA The Permanent Electoral Authority is headed by a president, ranked as Minister, appointed in a joint session by the Chamber of Deputies and the Senate. The President is supported by two vice-presidents, with a rank of a State Secretary, one appointed by the President of Romania and the other by the Prime Minister. The PEA also has a Secretary General - a head of the PEA administration, appointed by the Prime Minister, following a competition. The President and the two vice - presidents are appointed for a term of 8 years, and could be reappointed for a second (and last) term in ofce. The organization and functioning of the PEA's administration, number of staff, civil servants' statute, duties, and the organizational structure are established in the PEA Bylaws - Regulation on organization and functioning approved by decision of the permanent board of the two Chambers of the Parliament. The draft of the regulation is prepared by PEA itself. In carrying out its activities, PEA may issue decisions, adjudications and instructions. The promulgation of the PEA acts is a mandatory step for the PEA acts to enter into force. PEA acts have to be published in the Ofcial Gazette of Romania and are be mandatory for the public bodies. PEA Functions and powers Strategy development, with regard to ensuring and setting up the objectives related to elections process; Regulating elections process, drafting legislation and submitting it to the legislature. Drafting and adopting rules and procedures compulsory for the public authorities; Representing Romanian state in electoral matters, both internally and externally; Monitoring the implementation of the electoral and party funding laws throughout the country ; Guiding, supporting and monitoring local administration authorities in organizing elections. The PEA's powers include: Formulation of proposals on the organization of elections; Supervision and provision of support to polling stations; Monitoring of the lists of voters, checking and updating of the permanent lists ; Design and delivery of training programs in election matters for mayors and secretaries of administrative-territorial administrations; Exercising control over the nancing of political parties and election campaigns; Drafting legislation related to elections. Functions performed by the Department of control of nancing political parties and electoral campaigns Organization and functioning of the Department for Control of nancing political parties and election campaigns is regulated by Law 334/2006. The Department is headed by a general director and currently has a staff of 17 civil servants. Main functions of the Department include: 1. Drafting annual plan for controlling the nancing of political parties and electoral campaigns which is discussed with the Consultative Board and approved by the President of PEA. 2. Performing annual and ad hoc inspections according to the objectives of the plan -Department performs between 5 000 and 8 000 (electoral years -report on expenditures and income) annual inspections, with help from regional personnel, of nancing of political parties and candidates - both local and national with regards to objectives set forth in the annual plan for control. The inspections are completed within 30 days with possible extension to 45 days in case of additional documentation being requested. Inspection reports are published in Ofcial Gazette of Romania and on the PEA website. 3. Proposing sanctions for campaigns and political party funding violations. The sanctions may include nes, administrative sanctions up to termination of party activities if the party is not meeting certain minimum activity. The proposals for sanctions are reviewed by the Consultative Board and penalties are imposed by the PEA Board. 4. Formulation of proposals on improving control of political nancing laws; 5. Carrying out inspections on suspicions of violations. The results of the inspections are public. Department of Control carries out 15 to 20 annual investigations on suspected violations of party funding regime. Each of the investigations are completed within 1 week. Inspection results are published in Ofcial Gazette of Romania and on PEA web site. Assessment Pillars Enabling Environment The assessment at this level include review of:
The legislative framework - Laws; The existing political environment; Potential issues with communication/cooperation with other bodies; The framework of the National anti-corruption Strategy and accompanying Action plan (2008-2010, future NACS in elaboration with UNDP assistance) Legislative framework The legislative framework directly linked to the functioning of the Department includes: Law no 334/2006 on nancing the activity of political parties and election campaigns; Government Decision no 749/2007 on approving the Methodological Norms for applying Law no 334/2006 on nancing activities of political parties and election campaigns; Law no 67/2004 for the election of local administration authorities. The Law no 67/2004 was amended and completed by the Law no 35/2008; Law no 35/2008 - regulations on the elections to the Chamber of Deputies and the Senate. Law no 370/2004 on the election of the President of Romania; Law no 33/2007, containing regulations regarding the elections of the members from Romania within the European Parliament. Constitution of Romania The laws to be specically addressed are Law no 334/2006 and the Government Decision no 749/2007. Law no 334/2006 formulates the political party nancing regime and the mode of supervision and control. The law deals with both the private nancing of political parties (membership fees, donations, other sources of income) and public nancing, covering nancing during elections campaign of parties and individual candidates. Chapters 5 and 6 regulate the control mechanism by the PEA and applicable sanctions. Chapter 7 contains nal transitional provisions on the transfer of responsibilities from the Court of Accounts to the PEA, among other arrangements. All functions to be carried out by the Department of nancial control of political parties and election campaigns are listed in Chapter 5 "The control of nancing the political parties and the electoral campaigns" of Law no 334/2006. Article 35, Para. 3, 4, 5, 6,7, 8 of Law no 334/2006 provide for the establishment of the Department and the appointment of its management and the functions performed. Chapter 6 "Control procedure and methodology", Article 27 of the Government Decision no 749/2007, formulates the functions of the Department of nancial control of political parties and electoral campaigns. The Law no 334/2006 is the third in a row, after the previous laws (enacted 1996 and 2003). It introduces two key modications with view of control. First, it requires political parties to provide detailed nancial reports with respect to their revenues and expenses at constituency level. Second, control mechanisms are strengthened by introducing discounts within the private donation category and by fostering harsher punishments for disobeying the law49. A key issue with regard to the PEA Control department functions is that it only includes private donations and public funding. Control functions with regard to public expenditure are vested with the Court of Accounts (according to the Constitution of Romania). PEA Control department may perform on the spot checks, but it may not legally request private companies or individuals to provide documents relevant to its control functions - it may only request information that is available to other state bodies. The legislation does not provide for annual auditing of the parties' accounts to be carried out. Political environment Fight against corruption is high on the political agenda in Romania. It is a pressing issue, both because of the EU (through the CVM) and because of internal demand for integrity. In the recent years the Romanian Government has shown determination and commitment in ghting corruption. This is visible at policy level (through the implementation of the last two anticorruption strategies); at institutional level (by establishing institutions such as the National Integrity Agency, the Special Prosecution service and the National Anticorruption Directorate) and at legislative level, by adopting a number of legislative amendments that aimed at strengthening legal framework of the anti-corruption activities. The common perception however is that despite the progress made, consistency and results in a number of areas remain a challenge. The track record of the National Anti-Corruption Directorate (DNA) in investigating and prosecuting high-level corruption cases including against current Members of Parliament or Government, has remained convincing and an increase in the number of convictions could be observed. However, the results by courts continue to show a mixed picture. Although the majority of highlevel
49
State Resources and Pocket Money: Shortcuts for Party Funding in Romania
corruption trials are decided within a period of three years, a signicant number of important cases involving dignitaries are currently pending before courts for more than three years50. With view of political parties and electoral campaigns funding in Romania has the necessary legal and institutional framework in order to achieve strict control over this process. Party nancing in Romania gradually evolved from very general provisions valid for the rst post -communist elections in 1990 to very specic regulations in 2008 parliamentary elections51. The current regime on nancing political parties is very strict and is characterized by ample public funding of the leading (parliamentary represented) parties, by strict control over the public subsidy (released on monthly basis) and on frequent control activities and strict reporting regime. This, however seems to have the additional undesired effect of pushing certain party funding practices deep underground. This makes the political funding process rather opaque - a problem that has nothing to do with the quality of legislation, but rather with law enforcement. While the current statistics show that the PEA Control Department is effective in establishing minor violations of the law, there are few results with regard to the illicit funding happening "under the table". It must be noted that PEA is not a law enforcement agency and is not - and should not - be supposed to investigate illicit activities; however this effect needs to be noted with regard to the need for further cooperation by all bodies to ensure that there is no illicit party funding in Romania. Communication and cooperation Communication and cooperation with other bodies is an important challenge and a prerequisite for effective implementation of the party funding regime. The current practices show that there has been limited cooperation and communication with other public bodies in the past. After this has been identied as potential deciency in the GRECO Report, a trend of improving the status quo may be noted. Though Law 334/2006 foresees that all institutions have to support PEA in carrying out its control functions, no specic protocols of cooperation exist. PEA plans to sign such protocols of cooperation with the Court of Accounts, National Integrity Agency and the Tax Authority As one of the GRECO recommendations is to strengthen the cooperation and coordination of efforts on operational and executive level between the P e r m a n e n t Electoral Authority, the Court of Accounts, the Tax administration and the National Integrity Agency, this should become a primary goal of the institution strengthening efforts. Other anti-corruption bodies to strengthen cooperation with include: Ministry of Justice, National Integrity Agency (ANI), Ministry of Administration and Interior, the Government Secretariat. These are the so called bodies with preventive functions. The law enforcement bodies include: the National Anti-corruption Directorate (DNA) and the General Anti-corruption Directorate (GAD). Non-state actors, such as the civil society organizations and media could also be involved in the process to achieve transparency, strengthen accountability and effectiveness. Civil society groups have already carried out monitoring campaign spending, scrutinizing party accounts and empowering citizens to cast informed votes. Since electoral regulations are created and implemented by the same elected politicians who they are meant to regulate, civil society voices are especially important in national discussions on campaign nance. The media have a dual role to play in the ght against corruption is electoral process and political nancing. At large, if not the largest, share of party spending during elections goes to media campaigns, making media an important platform for waging electoral contests. Media outlets sometimes even provide in-kind donations to parties by giving discounted or free airtime to their favored contender. Close cooperation and communication between AC bodies, civil society and media will result in positive results of ghting and counteracting corruption. As a part of the overall Romanian efforts aimed at strengthening integrity, the Department of control of nancing of political parties and electoral campaigns should also conform with the provisions of international anti-corruption instruments such as UNCAC, and more specically its preventive measures: Develop and implement or maintain effective coordinated anti-corruption policies and participation of society (with view of political parties and electoral campaigns nancing); Establish and promote effective practices aimed at prevention of corruption (strict compliance with the legislative provisions in policy nancing, as well as relentless and adequate sanctioning of the infringements; Collaborate with other States and with relevant international and regional organizations in promoting and developing transparent and accountable policy nancing. Policies and strategies
50 51
Report from the Commission to the European Parliament and the Council on the progress of Romania under the Co-operation and Verication Mechanism. State Resources and Pocket Money: Shortcuts for Party Funding in Romania.
Romania developed its rst AC Strategy in 2001. It was completed successfully, with majority of measures implemented and outputs delivered to most of the objectives. Its successful completion was recognized in an assessment carried out by Freedom House. The National Anti-corruption Strategy (SNA) 2005 - 2007, adopted by the Government Decision no 231/2005, is a classic comprehensive three pronged strategy encompassing all public service and including measures on prevention, education, law enforcement, monitoring and evaluation. New specialized institutions were set up in the course of the Strategy implementation. As a comprehensive strategy, it provided for measures to be taken in all sectors of government and public life. It focused on "building of normality by instituting standards and establishing best practices at the level of administration and other key sectors, like education, sanitary system, law enforcement and justice" and "suppression of deviant behaviors from these standards and rules and includes the activities of countering corruption, as well as the completion of the institutional frame to allow an efcient countering of the phenomenon. The 2005 - 2007 Strategy denes corruption as "systematic deviation from the principles of impartiality and equity, that should be the basis of the functioning of the public administration, which state that public assets are universally, equitably and equally distributed and their substitution with practices that generate the allocation to individuals and groups of a disproportionate part of public assets compared to their contribution". In contract to that, the National Anti-corruption Strategy on Vulnerable Sectors and Local Public Administration 2008 - 2010, adopted by the Government Decision no 609/2008, provides for measures in only certain selected sectors. It is generally designed as a risk-based approach strategy; though it is not entirely clear how were the vulnerable sectors selected and why certain sectors were not included in the implementation of the Strategy. The 2008 - 2010 Strategy does not include a special denition to corruption, or a more "theoretical part", discussing the corruption issues at conceptual level. Organizational level General ndings The Department of control of nancing political parties and electoral campaigns is one of the 12 PEA departments. It was established in 2007. Currently, the Department has 20 staff positions (including those in the territorial branches) of which 17 are lled. Nine staff members are based in the Headquarters while 8 are in the territorial structures of PEA. The territorial ofcers have additional duties, apart from controlling party funding and expenditures. The main function of the Department is to control the compliance of the nancing of political parties and electoral campaigns with the provisions and requirements of the normative base -Law no 334/2006 and Government Decision no 749/2007. The Department is managed by a Director. The Department's staff is mainly of economic and accountancy background, while some had legal training. Some of the PEA staff was formerly employed at the Court of Accounts. The training and internal learning process is carried out mainly in the course of the monthly and annual PEA staff meetings. Availability of rules, procedures, manuals, guidelines, codes of conduct Manuals and procedures are put in place in PEA. All work processes are duly recorded and monitored. No additional strengthening is needed with this respect, though additional review of the manuals/procedures may be necessary with the change of the Law. Technological / infrastructure aspects PEA is equipped with computers, connected through a LAN. The PEA website is of high quality and provides detailed information to the public. Internal communication is provided by means of special communication services. The staff is equipped with mobile phones. A limiting aspect is that the PEA vehicles are already getting older, and the maintenance costs are rising while the reliability is declining. This may have an actual impact particularly on the work of the regional PEA ofces that should monitor election campaigns on the territory of several districts. No specic databases or means for statistical analysis exist yet. Though PEA is aware of the existing approaches allowing for fraud detection through statistical analysis, the limited resources are preventing it from actually procuring this capability. Internal communication aspects Monthly meetings of the central HQ staff are being held in order to exchange information and ensure actions coherence and staff motivation. Annual meetings of the territorial staff are conducted. Daily communication is carried out through email and telephone. This is a welcome approach; and it is clear that the limited staff resources in conjunction with the heavy workload make more regular meetings, trainings and exchange of experience difcult. It is important to note, however, that better internal communication will be necessary, in particular if the recommendation to strengthen the HR capacity of PEA is followed through.
Internal training infrastructure PEA public servants are to be sent to the Public Service Academy for regular trainings. However, PEA is not allocated sufcient budget for that. Training happens in the form of exchange of experience in the course of the regular staff meetings and the annual staff meeting. Budget PEA needs a budget for 250 staff; currently only 126 are employed because of budgetary restrictions. It seems that resources for maintaining the staff 126 are still insufcient. The 2012 Budget is 16 million RON, about 6 million to be given to the Political parties as public subsidy. This leaves PEA a budget of less than 2 million EUR for 126 staff; from 9 million RON going to PEA about 7 million RON goes for salaries. This leaves about 2 million RON for ofce maintenance, goods and services. Though understandable in the context of the austerity measures, these budgetary restrictions are effectively limiting the PEA effectiveness to perform its main functions. Individual level The number of the staff within the PEA is 126. The Campaign Finance Department employs 17 people, including one in the regional branches. Each Department's staff member conducts around 11 controls per year. Each inspection lasts around 15 days. Staff training The staff hired in the Department's has degrees in the eld of economics and law. The qualication degree for appointing the staff in the Agency is a bachelor degree. Knowledge of languages is not required. Few of the PEA Control Department staff has audit training and there are no actual auditors. This is a substantial limitation to the PEA's capacity to carry out the functions prescribed by the law. Salaries and additional benets PEA staff is Parliamentary public servants. As such their salary rates are prescribed by the law. While there is no discrimination in the PEA salary levels compared to other departments, it must be noted that the austerity measures introduced as a response to the economic recession are effectively lowering these salaries. Though understandable this may lead to a loss of qualied personnel, or inability to hire qualied personnel in the future. Staff tenure and status All of the Department's staff have the status of Parliamentary Public Servants and are employed on a permanent basis. There is no discrimination against PEA with this respect compared to the other elements of the Romania Civil Service. Recommendations: 1. To give the PEA full responsibility of monitoring compliance with Law no 334/2006, including powers to check compliance with accountancy law and the expenditure of the Public subsidy. 2. To strengthen cooperation and coordination on an operational and executive level between the PEA, COA and other anti-corruption bodies in order to more effectively oppose corruption and infringements in party nancing by signing memoranda of understanding and by developing specic protocols on cooperation/exchange of information. In order achieve efciency in the ght against irregularities of political parties and electoral campaigns funding , protocols of cooperation with the Court of Accounts, National Integrity agency and the Tax authority that formulate the exact procedures of cooperation and exchange of information should be signed. 3. To strengthen the HR capacity of the PEA Control Departmetn. Preferably it should be done by stafng in FULL the PEA, and in particular by ensuring that there is a PEA ofcer in charge of every separate Romanian District (41) with additional due attention paid to the internal Bucharest Districts (6) (47 staff members total at least in the territorial units). Otherwise PEA will not be able to follow what is happening at territorial level and to monitor party branches expenditures. 4. To improve the qualication and competences of the Department's staff through organization of regular trainings and exchange of experience with their colleagues in other European countries. Consistent organizational learning strategy should be developed that would strengthen the capacity of the individual staff members to perform their functions in a professional way. Each employee within the Department should have his/her job description with working obligations and requirements, in accordance with his/her qualication and experience. With view of introduction of audit functions on political parties' nances, trainings in the eld of audit are necessary in order to strengthen the Department's auditing function. Currently there are no auditors appointed in the Department. An internal training system (may be online-based) along with specic trainings on corruption, electoral fraud, political party funding, general auditing skills and fraud detection skills has to be but in place.
5. Technological means for statistical analysis should be provided in order the Department to perform their functions more efciently. 6. The Department needs further equipment to maximize its performance. Statistical and fraud analysis software as well as provision of new automobiles for the mobility of the Department's staff are needed. Procuring additional transportation vehicles would be a prerequisite for effective further control at local level.
Report on international standards and best practices on electoral nancing to promote women's political participation
Lead expert Jurij Toplak Cristian-Alexandru Leahu
Executive summary In Romania, public political funding favors women's candidacies. According to article 14 par. 2 in Law no 334/2006 on the nancing of the activity of political parties and electoral campaigns: "For political parties that promote women on their electoral lists, on eligible places, the total amount assigned will be increased proportionally with the number of mandates obtained in the elections by the women candidates." Public funding alone is not sufcient to promote women candidates because: a) women don't have enough power to control the allocation of funds within their political parties; b) given the gender gap disclosed by statistics, most incumbents are males and therefore it is much harder for a female challenger to be selected as a candidate or win a sit than for a male incumbent; c) public subsidies are usually insignicant in compared with donations received and distributed by the central powers within the party, where women candidates are often slighted; d) it doesn't usually address costs women uniquely or disproportionately face when deciding to run and campaigning. Thus, any attempts to neutralize gender disparities caused by campaign nance should target both public and private nancing. They should also be legitimate and efcient. Recommendations: a) Earmarking public subsidies for the activities of women's organizations; b) Gathering gender disaggregated data by monitoring expenditure made by women organizations and female candidates; Granting additional airtime for women during election campaigns; c) Increasing campaign expenditure limits for women; d) Including costs such as childcare and dependent care as eligible expenditure for female candidates. Introduction "The underrepresentation of women at all levels of ofce matters both politically and socially. First, studies of female legislators show that women uniquely contribute to the political process and tend to be more supportive of women's issues than their male counterparts. This body of work also demonstrates that within their respective parties, women place a higher priority and spend more time on equity issues as well as policies related to women's traditional roles as nurturers and caregivers (Dodson, 2006; Swers, 2002; Thomas, 1994; Wolbrecht, 2002). Women not only vote differently than their male colleagues, but also feel a special responsibility to represent women and work together to advance a collective agenda (Carroll, 2002; CAWP, 2001; Dodson, 2006). Women's presence in campaigns and public ofce also signals that public leadership is a legitimate role for women and can inspire women and girls' political engagement (Atkeson, 2003; Campbell & Wolbrecht, 2006)."52 Research Findings on Gender and Political Finance Campaign nance literature agrees that "lack of economic resources is one of the major obstacles to women's participation in political and electoral processes. Research has shown that women face specic and diverse economic and nancial challenges at various times in their political careers. In recent years, increased resource mobilization has been identied as central to achieving gender equity in the political realm. ... (Barreiro, 2004; Barrow-Giles, 2005; Baker, 2006) ... An analysis of the relationship between economic resources and electoral processes reveals important differences between women and men candidates. Women's unequal access to economic resources restricts their engagement in political activities. These restrictions range from women's exclusion from certain circles of power and moneyed networks, to their own actual economic status, which is documented to be inferior to that of men (Brodie, 1991; CAPWIP, 1999; Ballington, 2003)." 53 Running for ofce is made up of three different stages: deciding to run, winning a nomination, and conducting an electoral campaign) and the women's limited resources affect all three. Since women's resources are more limited, they are less likely to decide to run. Since their resources are limited, they are less likely to win the nomination and parties are less likely to support their nomination. And thirdly, when they nally win the nomination, their limited resources will make their campaigns smaller compared to male candidates.54 According to the WEDO 2007 report, several important ndings can be draw from theresearch: "Women have less money than men as well as less access to powerful and moneyed networks. Men are more likely to become money donors to campaigns, while women are more likely to become time donors, largely due to women's generally lower income level. With income being the key element determining who gives and how much is given, (both in numbers of donors and number of dollars,) men surpass women (Day and Hadley, 2005:8). Providing women with early money for nomination campaigns is key to increasing their potential for raising
Adams, Brian E. and Ronnee Schreiber (2011). Gender, Campaign Finance, and Electoral Success in Municipal Elections. Journal of Urban Affairs, Volume 33, Nr. 1, pages 83-97, p. 84. 53 "Women Candidates and Campaign Finance" Report by Women's Environment and Development Organization, based on the research conducted by Dr. Marcela Tovar, 2007, p. 3-4. Available at www.wedo.org/wp-content/uploads/women-candidates-and-campaign-nance-report-nal1.pdf
52
more money in electoral campaigns and increasing their numbers in elected seats. Citing evidence specic to the U.S., but relevant to the larger discussion of gender differences in relation to donors' activities, Baker (2006:20) corroborates the following: Individual contributions overwhelmingly comprise the most important source of nancing for all candidates, both women and men. The average size of individual donations to most female candidates continues to be smaller than the average donation to male candidates. The vast majority of large donors to political campaigns are men. Female candidates generally depend upon female donors for nancial viability and win monetary support from men only as their odds of election approach certainty. The small individual contributions received by females suggest that they must attract far greater numbers of individual contributors than their male counterparts just to equalize the total monetary value of their contributions. Women who win raise signicantly more money than women who lose, while male winners collect only marginally more money than their losing counterparts. Female candidates require more money than men to reach the thresholds of both campaign viability and electoral success; thus, a decline in female candidates' fundraising and/or funding needs to be interpreted as a decline in their ability to participate in the electoral process.55 "State budget funding of political parties and electoral campaigns affects participation and success of female candidates. According to the WEPO Report, "although public funding favors women's candidacies, public funding alone may not be sufcient to promote women candidates since they often have less power within their political parties which control the allocation of funds. In the Caribbean potential women candidates usually have to rely on their parties' funds. It is reported that parties provide little or no special assistance, nancial or otherwise, to promote women because they do not see them as necessary to win elections. In Belize, for example, "large donors make contributions to the political party, which in turn distributes that money amongst its candidates. Nevertheless, such amounts are insignicant compared with the large donations received and distributed by the central powers within the party, where women candidates are often slighted" (Selwyn, 2005:166)." Low contribution limits have a positive impact on the participation of women in elections as well. It has been shown that men are more successful in collecting large donations, but female candidates more frequently collect small donations and volunteer work. "The Center for Legislative Development (Philippines) and the UNDP-Asia Pacic Gender Equality Network suggest that campaign economic limits should be applied to every national and local election, as well as to donations used for "party building," voter registration, membership campaigns, and payments to partyrelated "think tanks." Aside from having a positive effect on women, these measures would also tend to reduce possibilities for the exercise of undue inuence on a candidate or party by contributors. For example, in Mexico the law limits the amount of contributions from nongovernmental organizations and bars funding from foreign citizens, religious ofcials and private businesses. Sanctions include economic penalties and nes, suspension of public funding for parties or revocation of party's registration. Countries with contribution limits as of 1995 include India, Taiwan, Japan, Israel, Russia, Mexico, Brazil, France, Italy, Spain, Turkey and the United States."56 According to the WEPO Report, public funding and campaign contribution and spending limits have been suggested as mechanisms to ensure more democratic elections. They are expected to help guarantee equitable participation of different social groups in electoral processes, and prevent having only those with better access to economic resources as candidates. Spending limits, however, can have adverse effect. When an incumbent candidate, often a male, is well known, low spending limits can disable new candidates to adequately present themselves to the voters. When voters are equally familiar with both male and female candidates, then low spending limits can have a positive effect on female candidates. "Establishing time limits at different moments of campaigning constitutes another measure that works in favor of women. Women's time availability is not as exible as men's, since they are usually committed to spending more time in the domestic sphere. Limiting time with constituencies, party activities, and propaganda exposure will help women to balance their timetables and perform better in their campaigns."57 Incumbency is also one of the factors that impedes women's access to resources (Burrell, 2005:144, Report, p. 10). Empirical data shows that the incumbent candidate has a great advantage over challenger candidates. Given the worldwide gender gap in elected seats, most incumbents are males and therefore it is much harder for a female challenger to win a sit than for a male incumbent. Gender and Political Finance in Developed Democracies In developed democracies, there are fewer differences between male and female candidates. Recent research on U. S. elections shows that on national, state, and local level"women do just as well as men when they seek ofce but
"Women Candidates and Campaign Finance" Report by WEDO, p. 5-6. "Women Candidates and Campaign Finance" Report by WEDO, "Section 3.1: Resources", p. 8. 56 "Women Candidates and Campaign Finance" Report by WEDO. 57 "Women Candidates and Campaign Finance" Report by WEDO, p. 9-10.
55 54
fewer women run. Further, of the women who do mount campaigns their backgrounds are quite similar to male candidates, raise comparable amounts of campaign funds, and receive contributions from the same sources.58" "Research on state and federal elections in United States has demonstrated that women can win at the same rate as men (Thomas, 2005). Women can also amass as much money overall as men, and sometimes more (Burrell, 2005; Hogan, 2007; Thompson, Moncrief, & Hamm, 1998; Werner, 1997). But women also have had a hard time attracting money from traditional sources (Fox, 1997; Ingalls & Arrington, 1991) and may need to appeal to a wider range of alternative contributors like women's political action committees (PACs) and organizations (Burrell, 2005; Burrell, 2006). Women are also more likely than men to give to women candidates (Baker, 2006), suggesting that women's campaigns attract a select and generally less wealthy segment of donors. In addition, women have had to rely on a larger number of individual donors and have raised less per donor than men (Baker, 2006; Fox, 1997). The need to rely on more and different types of sources can mean that women must work harder than men to raise similar amounts of money (Jenkins, 2007)."59 International standards "There is little mention of nancial resources and women's campaigns in international legislation or women's conventions. CEDAW, the Beijing Platform of Action, the Millennium Development Goals (MDG), the III and IV Summits of the Americas (Declaration of Quebec City [2001] Declaration of Nuevo Leon [2004]), and the Quito Consensus 2007, all contain some articles that allude to gender equity in political participation and decision-making instances. However, none of them explicitly address meeting the economic and nancial needs of women in order to permit them to enter the political and electoral process on even footing with men."60 There are therefore no specic international political nance rules, which would need to be followed by the countries in order to promote gender equality in elections. According to numerous international legal instruments, however, gender-based discrimination is forbidden and number of good practices have developed in democratic world with a goal to achieve gender equality in political process.61 Good Practices62 This section presents examples of successful campaign nance strategies used by women candidates as well as legislative political nance instruments used to promote gender equality. It should be noted, as it has been stressed in other literature on the subject,63 different strategies and legal instruments have evolved in different geographical, cultural and political contexts and may not be universal in their application. On the other hand, they do provide valuable examples of "best practices" and "lessons learned." Good Practices in Training Political training for women is the most visible form found in the spectrum of good practices adopted by international donors, women's organizations, electoral laws, gender equity laws and parties' protocols and statutes. Training constitutes the most common form of indirect resources destined for women. It is difcult to nd overall long- or short-term evaluations that assess the direct impact of training on a) an increase of the amount of women participating in political processes or b) an increase in the number of women being elected. Although it has been difcult to assess the impact that political training has had, numbers reported by The National Democracy Institute (NDI are persuasive. In Afghanistan, Bangladesh and Pakistan, NDI conducted training workshops for a total of 3,567 women party activists, candidates, and elected representatives in May 2004. Nine of the 30 Master and Provincial Trainers from Afghanistan ran for parliamentary and provincial council elections in September of 2005; three of these women won seats, and a number of other trainers were involved in supporting campaigns. A number of women trained in Pakistan are serving as local councilors, members of the National Assembly or members of a Provincial Assembly. In September of 2005, four Divisional Trainers in Bangladesh were elected to reserved seats for women in the Parliament. In Bolivia, NDI implemented the Winning with Women candidate training school for women running in the December 2004 municipal elections. Among the participants, 93 women obtained their parties' ofcial nomination as primary municipal council candidates. A total of 39 participants won their elections. In Georgia, NDI initiated a women candidates training program in spring 2006. NDI received approximately 400 applications for the program, 141 were trained. In the October 5 municipal elections, 27 of the women trained by NDI sought local ofce.
58 Adams, Brian E. and Ronnee Schreiber. Gender, Campaign Finance, and Electoral Success in Municipal Elections. Journal of Urban Affairs, Volume 33, Nr. 1, pages 83-97. 59 Adams, Brian E. and Ronnee Schreiber. Gender, Campaign Finance, and Electoral Success in Municipal Elections. Journal of Urban Affairs, Volume 33, Nr. 1, pages 83-97, at 84. 60 "Women Candidates and Campaign Finance" Report by WEDO,, p. 6. 61 Moreover, several international organizations are developing international campaign nancing standards, with some reference to gender. One of them is International Institute for Democracy and Electoral Assistance (IDEA), based in Stockholm. The other one is IFES, the International Foundation for Election Systems, which is working with a number of international partners to draft and build consensus around a set of global political nance standards. 62 This text is mostly based on Women Candidates and Campaign Finance" Report by WEDO, "Section 4: Good Practices," and on Amber R. Maltbie. 2011. "Campaign Finance and Gender Disparity" The Selected Works of Amber R Maltbie. Available at: http://works.bepress.com/amber_maltbie/2 63 "Women Candidates and Campaign Finance" Report by WEDO, p. 3.
Good Practices in Electoral laws and parties Electoral laws and parties' statutes are structural components in the democratic development of political processes in any country. They are decisive to the way political appointments are made, electoral seats are voted and won, and political bodies' compositions are shaped. After decades of women's struggles to gain political equity in electoral contests, today we know that unless work is also done directly with the parties and state ofces that dene and control political and electoral processes, gender equity is difcult to reach. Despite some successful experiences, women, unfortunately, have not yet gained sufcient ground. Needless to say, they have not been successful enough at directing economic and nancial resources towards women, either within their parties or in national budgets. Campaign Finance Practices to Decrease Gender Disparity in Elections Laws that attempt to neutralize gender disparities caused by campaign nance often target one of two issues: the costs women uniquely or disproportionately face when deciding to run and campaigning; or political parties' receipt of public funds. One way in which electoral laws can promote women's participation is by giving nancial incentives to parties that adopt measures to increase the number of women participating. Penalty inscription fees and taxes or, conversely, bonus reductions in fees can be effective at inducing parties and political collectives to encourage women's participation. Child care and domestic responsibilities have consistently registered as major obstacles to running for ofce. Campaigning requires considerable exibility on the part of the candidate, which is difcult for women with primary parenting responsibilities. Furthermore, women must consider covering the cost of dependent adult care and household work in their absence. Therefore, in some democracies women can include costs such as childcare and dependant care in nomination and election campaign budgets. An alternative method for balancing gender inequities in political participation is conditioning the use of public funds by political parties with meeting certain quotas. This strategy has been employed in several democracies where political parties receive public subsidies from the government. Conversely, other countries have "rewarded" parties that promote women candidates. In some countries, parties with female candidates are provided with more broadcast airtime. In the following paragraphs good practices from different parts of the world are presented. Africa The African Women's Development Fund (AWDF) implements a fundraising and grant-making initiative, which aims to support the work of the African women's movement. The Fund began grant-making in October 2001; by November 2006, they had awarded grants worth nearly U.S.$5,000,000 to 386 women's organizations in 40 African countries. COWAN, founded in Nigeria in 1982 as a response to the perceived marginalization of women and their condition of abject poverty, promotes traditional saving schemes by developing an African Traditional Responsive Banking (ATRB). This has allowed women in politics to have access to loans, enabling them to compete with their male counterparts. This strategy has had positive and sustained results at the local level, with rural women making signicant gains. During the 1999 election, 26 women were given nancial support to run for election. Europe In the Nordic countries, Sweden, Norway, Denmark, Finland and Iceland, which have reached and sustained high numbers of women in their parliaments, political parties receive a state subsidy or some form of assistance (e.g. free, equal broadcasting time on TV and radio for campaigns or party-related activities such as research) (Women in Government Source Kit, http://iknowpolitics.org). Indirect resources for women's campaigns can be provided through parties or through national, federal or local governments in various ways: allocating nancial resources for gender equality awareness-raising, supporting operative costs for gender equity organisms within the party, or employing functionaries who spend part of their time monitoring and ensuring the implementation of quotas. In Spain, at least one major party has a Gender Equality Ofce that coordinates different activities with women candidates and supports them in their governmental activities. In France the Constitution was amended in 1999 to "favor the equal access of women and men to electoral mandates and elected ofces and positions". The parity principle requires that 50 percent of candidates on lists forwarded for election must be women, or political parties face nancial sanctions. For local elections in constituencies with over 3.500 inhabitants, the lists must be made up of an equal number of candidates of both sexes; the lists that do not respect these rules are not registered. As a direct result of this provision, in 2001 47.5 percent of the councilors elected in towns with more than 3.500 inhabitants were women. For the election of candidates to the lower house, political parties face nancial sanctions if they do not put forward 50 percent candidates of both sexes (Doublet quoted in Ballington, 2003:165). Croatia provides an additional 10% of public funding to political parties for each elected Parliamentary candidate of the "underrepresented gender." Latin America and the Carribean In Nicaragua, the women's commission from the Partido Liberal Constitucionalista created a leadership school for women, and the Partido Frente Sandinista de Liberacin Nacional also created mechanisms to work with women's organizations to train women and organize electoral activities.
Garca (2004: 158-171) further identies good practices within Latin American parties that take into account national and international legislation on gender equity/equality. For example, some parties in Costa Rica and Panama have internal regulations that designate nancial resources for women's activities within the parties and electoral processes. In the case of Costa Rica, the national law that promotes social equity, "Ley de Promocin de la Igualdad Social," enacted in 1990, triggered innovative measures within a number of parties. Based on the legislation, the statutes of all parties designate nancial resources for training of women candidates. In 2002 Panama's electoral law was reformed to establish subsidies for political parties, of which 25% is earmarked for training activities and 10% for women's training workshops andactivities. El Partido Arnulsta (The Arnulsta Party) went further, establishing within its internal statutes the designation of 30% of state subsidies to women's political training. In order to achieve the goal stated in the electoral law, women may use these resources in forums, seminars, congress and other training activities that promote gender equity. In Chile, legislation promotes women's political participation by providing nancial support for women candidates, establishing a minimum number of women that parties have to include in their lists, and penalizing the parties that do not include the minimum number of women in their lists. In Haiti, the electoral law requires candidates to pay a ling fee, the amount of which depends on the position being contested, and if the candidate is not from a political party, the ling fee increases tenfold. However, the law permits a party's candidates discounted inscription fees if at least 30% of their lists are women, and the ling fee is lowered by two-thirds for women candidates representing political parties (Selwyn, 2005:174). Barrow-Giles (2005:221-223) argues that in Suriname, unlike other Caribbean states, fundraising for elections is centrally organized by the various political parties, and personal fundraising for an individual candidate violates the rules of conduct of the political party. Female candidates in Suriname, therefore, are in fact not adversely impacted by the need to raise large sums of money. In Suriname and Guyana, the fact that elections are fought on the basis of proportional representation (PR) enables small parties to obtain more funding than is available in states operating without this system Selwyn (2005:162). However, Essed-Fernandes (2007:5) states that for Suriname this is true when small parties seem to have a chance to play a role in forming a coalition government, in which case donors will give them more nancial support. In the smaller parties even more than the larger parties, however, women have to be ranked at the top of the party's list to make a good chance to win. In El Salvador, parties send money from the party budget to the National Ministry for Women, which uses it for national assemblies for party women, trainings and consultations with women. The parties also have special funds to train their own female members.64 North America Since 1974, the Canada Elections Act 1974, section 409(1)(b), provides for childcare expenses to be included in the personal expenses of a candidate for election. The Royal Commission on Electoral Reform and Party Financing (RCERPF) in Canada noted that the cost of childcare imposes an unequal burden on many women seeking elected ofce. Therefore childcare should be considered a legitimate tax deduction. Moreover, the left-of-center New Democratic Party has also implemented a nancial assistance program through which women and minoritycandidates are eligible for reimbursement of up to C$500 for childcare expenses incurred while seeking a nomination; C$500 for travel costs in geographically large ridings, or regions; and an additional C$500 for costs incurred in seeking nomination in ridings where the NDP incumbent is retiring. The party also allows female and minority candidates three times as much as other candidates for expense funding through the party for the purpose of allowing donors to take advantage of the generous tax credit afforded to parties who run women and minorities (Young, 2005: 137). Women's organizations in the U.S. have established political action committees (PACs) to directly nance women candidates. PACs, such as Emily's List, are organizations that solicit contributions from individuals and redistribute funds to candidates. Many PACs are afliated with businesses, unions or other organizations, but someknown as non- afliated PACshave been formed independent of another organization. One distinct subcategory of political action committees are women's PACs, which contribute money only to female candidates. This method has become one of the most successful for providing women candidates with early money. Recommendations65 To National Governments (Executive and Legislative bodies): National legislation on political campaign nance and parties' expenditure should coincide with international conventions and agreements that promote gender equity in political participation. As governments and parliaments are ultimately responsible for preventing all forms of gender discrimination, any policy or national plan formulation process concerning political participation should include a gender-sensitive
64 UNDP (2007). Electoral Financing to Advance Women's Political Participation: Primers In Gender and Democratic Governance #3, p. 20, citing Garcia Quesada 2005. Available at: http://www.beta.undp.org/content/dam/aplaws/publication/en/publications/democratic-governance/dg-publicationsfor-website/electoral-nancing-to-advance-womens-political-participation/GenderGovPr_Elections.pdf 65 These recommendations were produced during the Women Candidates and Campaign Finance Experts Meeting in Trinidad-and-Tobago, Dec. 2-4, 2007, and published in the WEDO Report, p. 1719.
nance component that secures the presence of, adequate training of, and monitoring of women candidates and decision- makers. Measures supporting women's effective election, such as legislation in favor of public funding, limits to contributions and expenditures in nomination/election campaigns, and quotas within parties or cabinets, should be included in Constitutional Reforms and secured at the Constitutional level. Legislation should establish incentives to support women candidates. For example, the amount of funding or refunding of election campaign expenses should be linked to the percentage of women candidates put forward by each party and/or elected to Parliament. Furthermore, in countries where funding is provided to parliamentary political groups, an additional premium linked to the proportion of women elected should be offered. As stated in the Beijing Platform of Action, national governments should keep their commitment to women's political participation at a minimum percentage of 30% representation. To public bodies that control electoral processes and monitor campaigns expenditures: Realistic limits on and "control" of campaign funding and campaign time, both in the nomination and election periods, should be in place. Data should be gender disaggregated. There should be effective accountability and transparency mechanisms, and information and resources should be publicly available, including data on voting patterns which can be extremely useful to candidates. Limits should be placed on candidates' expenditures, rather than parties' expenditures. To political parties (and National Governments, when these standards can be incuded in the national legislation): A gender equity policy should be included in national parties' statutes, ensuring that women candidates can benet from an equitable internal distribution of resources. Parties' resources would, therefore, more equally support the promotion of women running as party candidates, contribute towards women's nomination processes (during which women often require resources to establish a political reputation, both within and outside of their parties,) and contribute toward electoral processes. Parties committed to gender equality should a) ensure equal access to incoming resources for both women and men; b) designate a specic amount of resources for women candidates as an afrmative action; and c) incorporate gender equality criteria into parties' internal transparency and accountability mechanisms. The administration of money designated for a party's elected candidates should also adhere to gender equality criteria, ensuring that women continue to receive equal support once they assume ofce. To women within parties: Establishing an effective and functional women's caucus would empower women candidates and help ensure equal access to the party's resources, guaranteeing that nancial management has a gender perspective. Partnering with women's organizations can provide campaign nance training and help identify key nancial issues that women face when running. Women within parties or elected parliamentarians who are generally not beholden to big business or unclean money should address the issue of campaign nance reforms. They can, for example, initiate public hearings on the topic and initiate a process of mobilizing public opinion in favor of reforms. To women's organizations and networks: Campaign nance should be incorporated into the gender equality agenda, bringing attention to the genderspecic needs and nancial obstacles women candidates face in different geographical, cultural and political contexts. Campaign nance issues should also be included on the agendas of international forums, such as the United Nations' Commission on the Status of Women (CSW) and the Commission on Sustainable Development (CSD), during which gender equity is a cross cutting issue. Documenting best practices and presenting women candidates with effective strategies for raising both direct and indirect resources, as well as effective ways to use those resources, should be a part of trainings. Demanding and monitoring parties' accountability mechanisms for campaign expenditure and internal budgets, especially when parties have established budget compromises with women, should be a priority. Developing score cards has been an effective tool, making visible gender differences and identifying politicians that represent gender equity interests. Continuing to support elected women to make gender-informed decisions and advance gender campaign nance reform would supplement potential candidates' indirect and direct resources. Highlighting the economic value of unpaid work that women's organizations devote to women's political training and candidacies would contribute to the evidence that gender campaign nance reform is necessary. The Romanian case In Romania, public political funding favors women's candidacies. According to article 14 par. 2 in Law no 334/2006 on the nancing of the activity of political parties and electoral campaigns: "For political parties that promote women on their electoral lists, on eligible places, the total amount assigned will be increased proportionally with the
number of mandates obtained in the elections by the women candidates." Public funding alone is not sufcient to promote women candidates because: a) women don't have enough power to control the allocation of funds within their political parties; b) given the gender gap disclosed by statistics, most incumbents are males and therefore it is much harder for a female challenger to be selected as a candidate or win a sit than for a male incumbent; c) public subsidies are usually insignicant in compared with donations received and distributed by the central powers within the party, where women candidates are often slighted; d) it doesn't usually address costs women uniquely or disproportionately face when deciding to run and campaigning. Thus, any attempts to neutralize gender disparities caused by campaign nance should target both public and private nancing. They should also be legitimate and efcient. Recommendations: a) Earmarking public subsidies for the activities of women's organizations; b) Gathering gender disaggregated data by monitoring expenditure made by women organizations and female candidates; c) Granting additional airtime for women during election campaigns; d) Increasing campaign expenditure limits for women; e) Including costs such as childcare and dependent care as eligible expenditure for female candidates. Works Cited Adams, Brian E. and Ronnee Schreiber (2011). Gender, Campaign Finance, and Electoral Success in Municipal Elections. Journal of Urban Affairs, Volume 33, Nr. 1, 83-97. Atkeson, L. R. (2003). Not all cues are created equal. Journal of Politics, 65(4), 1040-1061. Baker, A. (2006). Reexamining the gender implications of campaign nance reform: How higher ceilings on individual donors disproportionately impact female candidates. The Modern American 2 (Fall), 18-23. Ballington, Julie. 2003. Gender Equality in Political Party Funding in Funding of Political Parties and election Campaigns. Stockholm: IDEA - Handbook Series Barreiro, Line. 2004. "Representacin de Mujeres para Gobernabilidad Democrtica" Ponencia en Seminario Internacional sobre Gobernabilidad Democrtica e Igualdad de Gnero. Santiago de Chile: CEPAL. Barrow-Giles, Cynthia. 2005. "Political Party Financing and Women's Political Participation in The Caribbean" in Funding of Political Parties and Election Campaigns in the Ameri cas. S. Griner y D. Zobato Ed. San Jos de Costa Rica: IDEA pp. 211-227 Brodie, Janine. 1991. "Women and Electoral Politics in Canada" in Women in Canadian Politics: Towards Equality in Representation". Research Studies of the Royal Commission on Electoral Reform and Party Finance, Vol. 6. Toronto: Dundurn Press. Burrell, B. (2005). Campaign nancing: Women's experience in the modern era. In S. Thomas & C. Wilcox (Eds.), Women and elective ofce: Past, present and future (pp. 26-40). New York: Oxford University Press. Burrell, B. (2006). Political parties and women's organizations: Bringing women into the electoral arena. In S. J. Carroll & R. L. Fox (Eds.), Gender and elections (pp. 143-168). New York: Cambridge University Press. Campbell, D. E., & Wolbrecht, C. (2006). See Jane run: Women politicians as role models for adolescents. Journal of Politics, 68, 233-247. Accessed April 23, 2010. CAPWIP. http://www.capwip.org/resources/ whatworked/pintat.html Carroll, S. J. (2002). Representing women: Congresswomen's perceptions of their representational roles. In R. C. Simon (Ed.), Women transforming congress. Norman: University of Oklahoma Press. Center for American Women and Politics (CAWP) (2001). Women state legislators: Past, present and future. Available at: www.cawp.rutgers.edu. Day, Christine and Hadley, Charles. 2005. Women's PACs. Abortion and Elections. New Jersey:Real Politics in America Series, Prentice Hall Ed. Dodson, D. L. (2006). The impact of women in Congress. New York: Oxford University Press. Fox, R. (1997). Gender dynamics in congressional elections. Thousand Oaks, CA: Sage. Hogan, R. (2007). The effects of candidate gender on campaign spending in state legislative elections. Social Science Quarterly, 88(5), 1092-1105. Ingalls, G. L., & Arrington, T. S. (1991). The role of gender in local campaign nancing: The case of Charlotte, North Carolina. Women and Politics, 11{2), 61-89. Jenkins, S. (2007). A woman's work is never done? Political Research Quarterly, 60(2), 230-239. Karnig, A. K., & Welch, S. (1979). Sex and the ethnic differences in municipal representation. Social Science Quarterly, 60, 465-481. Maltbie, Amber R. 2011. "Campaign Finance and Gender Disparity" The Selected Works of Amber R Maltbie. Available at: http://works.bepress.com/amber_maltbie/2 Selwyn, Ryan. 2005. "Disclosure and Enforcement of Political Party and Campaign Financing in the CARICOM States" in Funding of Political Parties and Election Campaigns in the Americas. (S. Griner y D. Zobato Eds.) San Jos de Costa Rica: IDEA pp. 161-193 Swers, M. (2002). The difference women make: The policy impact of women in Congress. Chicago: University of Chicago Press.
Thomas, S. (1994). How women legislate. New York: Oxford University Press. Thomas, S. (2005). Introduction. In S. Thomas & C. Wilcox (Eds.), Women and elective ofce: Past, present and future (pp. 3-25). New York: Oxford University Press. Thompson, J. A., Moncrief, G. F., & Hamm, K. E. (1998). Gender, candidate attributes, and campaign contributions. In T. Joel & G. F. Moncrief (Eds.), Campaign nance in state legislative elections (pp. 117-138). Washington, DC: CQ Press. UNDP (2007). Electoral Financing to Advance Women's Political Participation: Primers In Gender And Democratic Governance #3. Werner, B. L. (1997). Financing the campaigns of women candidates and their opponents: Evidence from three states, 1982-1990. Women and Politics, 18(1), 81-97. Wolbrecht, C. (2002). Female legislators and the women's rights agenda: From feminine mystique to feminist era. In R. Cindy Simon (Ed.). Women transforming Congress. Norman: University of Oklahoma Press. Women's Environment and Development Organization (2007). "Women Candidates and Campaign Finance" Report based on the research by Dr. Marcela Tovar. Available at www.wedo.org/wp-content/uploads/ women-candidates-and-campaign-nance-report-nal1.pdf Young, Lisa. 2005. "Campaign Finance and Women's Representation in Canada and US" in Funding of Political Parties and Election Campaigns in the Americas. S. Griner y D. Zobato Ed. San Jos de Costa Rica: IDEA pp.133-147 Other Relevant Works on Gender in Campaign Finance Burrell, Barbara. 1998. "Campaign Finance: Women's Experience in Modern Era" in Women and Elective Ofce: Past, Present and Future, Ed. S. Thomas and C. Wilcox, Oxford: Oxford University Press. Garca, Ana Isabel. 2004. Financiacin Poltica y Perspectiva de Gnero in De las Normas a las Buenas Prcticas. El Desafo del Financiamiento Poltico en Amrica Latina. S. Griner y D. Zobato Ed. San Jos de Costa Rica: IDEA pp.143-187 Green, J. C. (1998). The role of gender in open-seat elections for the U.S. House of Representatives: A district level test for a differential value for campaign resources. Women and Politics, 19(2), 33-55. Green, J. C. (2003). The times - are they changing? An examination of the impact of the value of campaign resources for women and men candidates for the U.S. House of Representatives. Women and Politics, 25(4), 1-29.
Third Evaluation Round Compliance Report on Romania Transparency of Party Funding
Adopted by GRECO at its 58th Plenary Meeting (Strasbourg, 3-7 December 2012)
Theme II: Transparency of Party Funding 1. It is recalled that GRECO in its evaluation report addressed 13 recommendations to Romania in respect of Theme II. Compliance with these recommendations is dealt with below. 2. As a general information, the authorities of Romania report that after the publication of the Evaluation report, the Permanent Electoral Authority (PEA) held a series of meetings with representatives of the Court of Accounts (CoA), the National Integrity Agency (NIA), the National Agency for Fiscal Administration (NAFA) and representatives of parliamentary political parties and NGOs. They discussed a series of proposals from the PEA concerning the implementation of the recommendations and ways of improving and increasing the effectiveness of supervision over the nancing of political parties and election campaigns. Following an agreement reached by the actors involved in the above discussions, the PEA and the United Nations Development Programme (UNDP) developed the joint project Support to the Permanent Electoral Authority (PEA) and local public administration in Romania to implement best practices in electoral processes management, under which the PEA beneted from the consultancy of 2 international experts in the eld of political parties and electoral campaign nancing. 3. These international experts completed their reports between March and April 2012, and on the basis of their conclusions, the PEA nalised the draft law amending Law no. 334/2006 on nancing of political parties and electoral campaigns (hereinafter the Draft Law), submitted it to public debate and sent it to various ministries for endorsement, prior to its submission to the Government for approval. 4. Moreover, the Parliament expressed support for the adoption of revised legislation regarding the nancing of political parties and electoral campaigns, with a view to increasing transparency and consolidating integrity in those areas, whilst taking into consideration the present recommendations issues by GRECO. This materialised in Declaration no. 2/2012 for the implementation of the new National Anticorruption Strategy 2012 2015, which was adopted in a joint session of the Chamber of Deputies and the Senate. 5. Lastly, the authorities add that the entry into force of the legislative amendments described above will subsequently entail the modication of Government Decision no. 749/2007 on approving the Methodological Norms for applying Law no. 334/2006 on nancing activities of political parties and electoral campaigns. Recommendation i. 6. GRECO recommended i) to clarify how the nancial activity of the various types of structures related to political parties is to be accounted for in the accounts of political parties; ii) to examine ways to increase the transparency of contributions by third parties (e.g. separate entities, interest groups) to political parties and candidates. 7. Concerning the rst part of the recommendation, the authorities of Romania report that the PEA issued Instruction no.1/2012, article 266 of which aims to clarify some theoretical aspects (that may be a source of problems in practice) of the Order of the Ministry of Economy and Finance (OMEF) no.1969/2007 on the approval of accountancy regulations for legal persons wthout patrimonial interest. This instruction was sent to all political parties and published on the PEA website. Additionally, the authorities refer to the methodological guide on nancing and controlling political parties and electoral campaign, published in 2012, which contains the accounting requirements applicable to the structures related to political parties and to the checks carried out by the PEA experts during which the experts provide counselling to the treasurers of political parties regarding the accounting requirements. A long list of information is also provided about the current autonomy of entities related to political parties, in particular political institutes. The UNDP review carried out earlier this year came reportedly to the conclusion that further legal clarication is needed concerning the denition of persons connected to a political party or candidate. 8. The Draft law amending Law no. 334/2006 on nancing of political parties and electoral campaigns Law foresees an amendment in the Law 334/200667 which will oblige political parties to submit detailed reports on the income and expenditure incurred in the previous year both by them and by the persons directly or indirectly connected to the political parties, as well as of all forms of associations laid down in art 13 of Law no. 334/2006. Moreover, in order to ensure the consolidation of the accounts, political parties will be required to designate, at national and county level,
66 Article 2 of the PEA Instruction no. 1/2012 stipulates that as: "Art 2. - (1) The territorial organizations of political parties and structures of political parties referred to in art. 4. para. (4) of Law no. 14/2003 on political parties, as amended and supplemented, organize and lead their own accounts to trial balance level without preparing annual nancial statements. (2) Political parties organize and lead the accounting so that the necessary information regarding the activity of regional organizations and structures referred to in para. (1) shall be available. " 67 Proposed article of the Draft Law reads as: Art. 381. (1) Annually, until the 30th of April, political parties shall submit to PEA a detailed report on the income and expenditure incurred in the previous year.(2) Reports referred to in para. (1) shall also include details on the income and expenditure of internal structures of political parties set out by art. 4 para. (4) of Law no. 14/2003, on the income and expenditure of the persons directly or indirectly connected to the political parties, as well as of all forms of association laid down in art. 13 of the present law.
persons responsible with the recording of all nancial activities according to the legal provisions in place68. At the moment, the nancial situation of all territorial units of a party are consolidated at county level, and then at national level, under the rules described under recommendation ii. 9. Concerning the second part of the recommendation, following similar conclusions reached by the UNDP review about the need for clarication concerning relations between third parties on the one hand, and political parties or candidates on the other hand, the Draft Law was amended; it now provides for the following: a) a set of criteria which allow to determine when a legal person is related to a party, political alliance, or a candidate and is to be considered directly or indirectly under the control of a political party or as a third party to be included in the nancial statements of a campaign participant (party, candidate etc.); these criteria take into account the ownership structure, the control power through voting rights, other forms of control etc. (art. 345) b) the establishment of a public register of third parties, managed by the PEA (art. 346); c) an upper limit on expenditures incurred by third parties, depending on the type of elections (parliamentary, presidential, local and Euro-parliamentary); d) the competence of electoral bureaus to determine when a third party engages in propaganda without being registered and to notify such cases to the PEA; the latter may apply the appropriate penalty provided by law; e) third parties are also obliged to submit to the PEA, within 15 days from the date of elections, detailed reports of the electoral campaign expenditure (art. 38 paragraph 2). The Romanian authorities stress that all contributions made by natural and legal persons during the local elections of June 2012 were published weekly on the PEA website. 10. GRECO takes note of the above information and the assurances given by the Romanian authorities according to which all territorial structures must be taken into account for the consolidation of the parties' nancial statements. The amendments contemplated by the draft law amending Law no. 334/2006 on nancing of political parties and electoral campaigns appear to be timely to ensure the overall consolidation of accounts with the inclusion of all entities related directly or indirectly to political parties, and additional clarication and criteria as to the determination of entities concerned. The same applies for the second part of the recommendation and the new provisions contemplated by the draft Law seem to meet the underlying concerns of the recommendation in this respect, when it comes to third parties in the context of election campaigns. For the time being, these various improvements are still in the drafting and adoption process. 11. GRECO concludes that recommendation i has been partly implemented. Recommendation ii. 12. GRECO recommended to ensure that all entities under the control of political parties and county branches (including the district sections in Bucharest) of political parties keep proper books and accounts. 13. The authorities of Romania report about various rules and principles that were already mentioned in the Evaluation Report. Law no. 334/2006 requires political parties to organise their own accounting books according to the accounting provisions currently in force. They also indicate that the pertinent accounting rules are the general ones, laid down in Law no. 82/1991 on accountancy but also the specic ones provided for in an Order no. 1969/2007 on approval of accountancy regulations for legal persons without a patrimonial interest. The Evaluation Report indicated that this Order requires all parties and related entities which have legal personality to keep a double entry accounting and to prepare annual nancial statements. An annex to the Order lists the categories of entities subjected to these requirements, including political parties and associations. 14. They also stress that in 2010, the PEA identied several irregularities in the way territorial units of the parties conduct their books and accounts; these were all sanctioned with warnings. The Romanian authorities however refer to the fact that contraventions are normally subject to a broad variety of nes (up to 40.000 lei) in accordance with Law no. 82/1991 on accountancy. At the same time, reference is made to the sanctions provided for by Law no 334/2006 concerning nes in the range of 5.000 to 25.000 lei. 15. Reference is made to the Methodological Guide of July 2012, adopted by the PEA (Instruction no. 1/2012), which would contain the applicable accounting regulations for the territorial organisations of political parties. A copy of it was provided: the document, which comprises ve articles, deals briey with the above matter: Art 2 - (1) Territorial organisations of political parties and structures of political parties referred to in art. 4. para. (4) of Law no. 14/2003 on political parties, as amended and supplemented, organize and lead their own accounts to trial balance level without preparing annual nancial statements. (2) Political parties organize and lead the accounting so that necessary information regarding the activity of regional organizations and structures referred to in para. (1) shall be available.
68 Proposed draft article reads as: Political parties are obligated to designate, at national and county level, persons responsible with ensuring the evidence of nancial operations, according to legal provisions in force.
16. The authorities reiterate that the Draft Law (article 381 para. (1) and (2)) aims at imposing on the political parties to submit to the PEA the annual nancial statements within 15 days following submission to the tax authorities, and to submit before 30 April a report on income and expenditure for the previous year. The latter shall include details on the income and expenditure of all internal structures of political parties, persons directly or indirectly connected to the political parties, as well as of all forms of association laid down in art. 13 of Law no. 334/2006. As also indicated earlier, and in order to ensure the consolidation of accounts, the political parties will be obliged to designate at national and county level, persons responsible for the recording of all nancial activities according to the legal provisions in force. During the discussion of the present report, the Romanian authorities provided assurances that as a result of the existing rules, a) all entities of a political party are required to keep books and accounts in a way that allows the central structures to prepare consolidated versions, and b) that this also applies in practice to the lowest territorial units, i.e. district sections (which exist only in Bucharest). The intended amendments will consecrate this duty for district sections but the above-mentioned controls already aim at ensuring compliance with the rules at all territorial/organisational levels. 17. GRECO takes note of the above and of the clarication and assurances provided by the Romanian authorities. The supervisory efforts and the attention paid in particular to local party structures go in the direction indicated by the recommendation. The designation of persons responsible for the purposes of consolidation is another proposal which addresses the underlying concerns of the recommendation. GRECO encourages, of course, the Romanian authorities to ensure the intended amendments do materialise and overall, it is satised with the follow-up given to this recommendation. 18. GRECO concludes that recommendation ii was dealt with in a satisfactory manner. Recommendation iii. 19. GRECO recommended to require political parties to present their consolidated accounts to the Permanent Electoral Authority and to make an adequate summary available to the public. 20. The authorities of Romania indicate that article 38 of the Draft Law will oblige political parties to submit their nancial statements to the PEA annually, within 15 days from their submission to the tax authorities (this obligation applies to all legal persons without any distinction based on turnover or activity). The PEA will publish these nancial statements on its website within 5 days following receipt. The PEA staff already asked political parties during their annual controls in 2011 and 2012 to present, in addition to other documents, their annual nancial statements. 21. GRECO welcomes that the draft Law provides explicitly for the submission of nancial statements to the PEA, and their subsequent publication on the PEA's website, in accordance with the recommendation. Once adopted, the provisions foreseen in the Draft Law will ll an important gap in relation to the overall transparency of political parties by giving also access to the information to the general public provided the issue of consolidation mentioned earlier will have been addressed. 22. GRECO concludes that recommendation iii has been partly implemented. Recommendation iv. 23. GRECO recommended to take appropriate measures i) to ensure that in-kind donations to parties and election campaign participants (other than voluntary work by non-professionals) are properly identied and accounted for at their market value, as donations; ii) to clarify the legal situation of loans. 24. The authorities of Romania report that the Government Ordinance no. 24, which sets a series of rules on the valuation of assets including in-kind donations, entered into force in 2011. The valuation of assets shall be carried out by any person who is an authorised valuator pursuant to this ordinance. Reference was also made to the fact that the International Accounting Standards Board (IASB) published IFRS 13 on Fair Value Measurement in May 2012. This new standard replaces the fair value measurement guidance contained in individual IFRSs. IFRS 13 denes fair value as the price that would be received to sell an asset or paid to transfer a liability date, i.e. an exit price, in a regular transaction between market participants at the measurement date. 25. The Draft Law includes new provisions69 which require the valuation of movable and immovable (real estate) assets donated to political parties, as well as the valuation of free of charge services carried out by authorised
69 The proposed article of the Draft Law reads as follows: (81) Assets and free of charge services stipulated under para. (8) shall be valuated according to Government Ordinance no. 24/2011 regarding measures in the eld of asset valuation. (2) Donations of goods and free of charge services will be registered in the accounting books at their market value. At the registration in the accounting books, the valuation shall be made by valuators authorized according to Government Ordinance no. 24/2011 regarding measures in the eld of asset valuation.
valuators in accordance with the Government Ordinance no. 24/2011 and recording of these contributions at their market value. 26. Concerning the second part of the recommendation, the authorities refer to the afore-mentioned methodological guide on nancing and controlling political parties and electoral campaigns which contains the applicable norms pertaining to the admissible sources of income for political parties and to the PEA instruction no. 1/2012, article 1 of which states that The nancing of political parties with loans is forbidden [and may be liable to] the sanction prescribed at article 41 paragraph (1) of Law no 334/2006. Moreover, the Draft Law includes new provisions70 prohibiting loans as a source of nancing for the political parties, as well as candidates involved in election campaigns. 27. GRECO welcomes the measures already taken or in the process of being adopted. As regards the rst part of the recommendation, GRECO is pleased to see that practical measures have already been adopted for the proper valuation of benets in kind. GRECO hopes that the matter will nonetheless be kept under review given the risk of contradiction between certain rules71. But GRECO is pleased to see that this part of the recommendation has been addressed. As for the second part of the recommendation, PEA instruction no. 1/2012 makes it clear that political parties may not use loans (which was one of the possible interpretations of the Law no. 334/2006 currently applicable). The issue still needs clarication as regards loans in the context of campaign nancing and GRECO is pleased that the intended amendments will clarify this matter as well. 28. GRECO concludes that recommendation iv has been partly implemented. Recommendation v. 29. GRECO recommended i) to require that all donations be, as a rule, recorded and included in the accounts of political parties and campaign participants; ii) to introduce a requirement that all donations above a certain threshold be made through the banking system. 30. The authorities of Romania acknowledge the problematic distinction between donations and hand gifts identied in the Evaluation Report, which leads to the duty to register only donations above the equivalent of 420 Euro (at the time of the visit). In order to clarify the interpretation of the provisions, the last sentence of art. 6 para. (1) of GD no. 749/2007 will be repealed when the GD no. 749/2007 is amended. The amendment process is expected to be initiated after the Draft Law is adopted. The latter stipulates (article 8 paragraph 1) that: All donations, regardless of their value, shall be registered and highlighted in a proper way in the accounting documents, mentioning the date when the donations were made, as well as other information allowing the identication of the nancing sources and the donators. 31. In response to the second part of the recommendation, the Draft Law obliges all nancial contributions exceeding 1 minimum gross salary at national level (approx. 140 Euro) be made only through the banking system; this concerns the general rules applicable to the nancing of political parties as well as the specic rules on the nancing of election campaigns72. 32. GRECO takes note of the information provided. The proposed provisions of the Draft Law, if adopted, seem to meet all the concerns underlying this recommendation (paragraph 116). For the time being, these are still draft amendments. 33. GRECO concludes that recommendation v has been partly implemented. Recommendation vi. 34. GRECO recommended to provide clarication as to the permissible funding generated by internal services and the organisation of events, and as to how the income generated hereby is to be accounted for. 35. The authorities of Romania report that in addition to the guidance provided to the treasurers of political parties about the modalities of registering income generated from other sources that are not explicitly listed in Law no 334/2006, PEA Instruction no. 1/2012 includes provisions aimed at clarifying the expression income raised by internal
70 The proposed draft article reads: (2) Political parties shall not take or grant money loans. (3) Candidates shall not take or grant money loans in order to nance political parties or electoral campaigns. (4) Political parties are not allowed to have ore use other nancing sources than the ones stipulated at para (1). 71 GRECO recalls that the current version of Law 334/2006 contains two sets of provisions on in-kind support: a) article 6 requires that discounts above 20% of the value of goods and services offered to parties and candidates shall be considered as donations and recorded according to regulations issued by the Ministry of Public Finance; b) article 8 paragraph 2 requires that all donations in the form of goods or services free of charge need to be registered at their actual value settled according to law. This could be problematic in case certain services or goods are provided at a symbolic price; it would appear that the above lack of consistency will persist. 72 Proposed amendment reads as; Art. 51. Money donations whose value exceeds 1 minimum gross salary at national level shall be made only through bank accounts. Art. 231. After the beginning of the electoral period, money donations received from natural or legal persons, which exceed 1 minimum gross salary at national level, shall be made only through bank accounts.
services, as well as from the organisation of meetings and seminars with a political, economic or social theme, and sporting and recreation activities73. At the same time, it refers back to the Order of the Ministry of Economy and Finance no. 1969/2007 on approval of accountancy regulations for legal persons without a patrimonial interest for the modalities of registration of such income in the accounting books (under this order, the income generated for instance by the sale of tickets is to be registered under a specic account no 739 other revenues which is subdivided into sub-accounts dealing with revenues from organising meetings and seminars, revenues from editing and the sale of propaganda material, revenues form cultural, sports and recreation activities etc.). 36. Another proposal, currently contemplated in the Draft Law, is to abolish in art. 12 para. (1) of Law no. 334/2006 the reference to income generated by internal services but to retain the reference to income generated by events whilst detailing these sources of income: income from the sale of tickets or participation fees for cultural, sporting and entertainment meetings as well as to seminars with a political, economic or social topic. The Romanian authorities indicate that in practice, the PEA has not been confronted with situations where the above sources of income could have been misused to dissimulate certain donations: political parties do not obtain income from the sale of member cards or fees during special events due to the difculty for parties to attract persons who would pay for this. 37. GRECO takes note of the above. It would appear that PEA Instruction no. 1/2012 has introduced additional and adequate clarication. GRECO is also pleased to see that the PEA has not been confronted with situations where the rules on donations have been circumvented by those on the sources of income generated by the parties' own income. 38. GRECO concludes that recommendation vi has been implemented satisfactorily. Recommendation vii. 39. GRECO recommended to amend the rules on the presentation of nancial statements concerning election campaigns to the Permanent Electoral Authority (PEA) so that all legitimate claims and debts are adequately followedup by the PEA. 40. The authorities of Romania report that draft provisions to this effect have been included in the Draft Law74; if adopted, these would require; a) political parties and independent candidates to spend all donations and legacies received for the campaign by the time of submission of the report on electoral income and expenses, and for paying the costs incurred during the election; b) nancial representatives to submit detailed reports to the PEA on revenue and expenditure of the political parties, political alliances and electoral alliances, the organisations of Romanian citizens belonging to national minorities and of independent candidates within 15 days from the date of elections; c) political parties and independent candidates to submit a list of their creditors in relation to the nancing of their campaign, and the amount of those debts; d) political parties and individual candidates to report quarterly to the PEA the status of their debts until they are paid in full. 41. GRECO very much welcomes these provisions of the Draft Law. If adopted, they will enhance the transparency of election campaign nancing in Romania. 42. GRECO concludes that recommendation vii has been partly implemented. Recommendation viii. 43. GRECO recommended to require that the annual accounts of political parties to be presented to the Permanent Electoral Authority, as recommended earlier are subject to independent auditing prior to their submission. 44. The authorities of Romania state that the Law no. 82/1991 on accountancy was amended by the Emergency Government Ordinance no. 37/2011, which was published in the Ofcial Gazette on 22 April 2011. Pursuant
73 Articles 3-5 of PEA Instruction no. 1/2012 stipulate that: Art. 3. (1) The income generated by internal services shall mean income generated by delivering services to political parties members, such as the following: a) services delivered by using ofce equipment owned by the party; b) selling member cards; c) selling promotional materials with the insignia of the political party, such as badges, pens, notebooks and calendars. Art. 4. Income generated by organizing meetings and seminars with a political, economic or social theme, cultural, sports and recreation activities shall mean income from the sale of tickets or participation fees at these events. 74 3 The proposed amendments read as follows: Art. 34 - (1) Political parties and independent candidates shall use donations and inheritances received for the electoral campaign, to pay the costs incurred during the elections by the deadline for submitting the report of electoral income and expenses. (2) All amounts not spent referred by para. (1) shall be made revenue at the state budget. Art. 38 - (1) Within 15 days from the date of elections, nancial representatives shall submit detailed reports to the Permanent Electoral Authority on revenue and expenditure of the political parties, political alliances and electoral alliances, the organizations of Romanian citizens belonging to national minorities and of independent candidates, as well as lists of persons to whom debt is owed as a result of the election campaign, and the amount of the debts. (4) Reports referred to by para (1) and (2), lists of persons to whom debt is owed as a result of the election campaign, and the amount of the debts shall be published in the Ofcial Gazette of Romania, Part I, by Permanent Electoral Authority, in a term of 60 days since the publication of the election results. (5) If at the time of submission of the detailed report on electoral income and expense, candidates or political parties will record debts, they shall report to the PEA, quarterly on debt payment, until the debts are fully paid.
to the above-mentioned amendment75 political parties which benet from state funding (currently 5 political parties), shall have their annual accounts audited by authorised auditors. This rule, which is not specic to political parties, concerns all legal persons without a patrimonial interest which receive public subsidies. This recently introduced requirement will also be included in legislation and a provision to this effect was inserted in the Draft Law76, which also foresees that the audit reports are to be communicated by the political parties to the PEA. In their latest comments, the Romanian authorities also refer to the general standards on auditors' independence, objectivity and professional integrity contained in the recent Government Decision no. 433/2011; the latter also includes an article 59 on the prevention of conicts of interest in the relationship with the client. They also indicate that after amendments to Law 334/2006 are adopted, additional rules will be included to avoid that the audit can be done by a party member or by the same audit service provider for more than 4 years in a row. 45. GRECO welcomes the above changes already effective following the amendments of 2011 concerning the obligations of legal persons without a patrimonial interest which receive public subsidies. GRECO had acknowledged in the Evaluation report that audit requirements should at least apply to the major political parties in order to avoid overly cumbersome procedures in respect of small parties with little or no administrative means. The number of parties currently subjected to auditing requirements seems rather low in comparison to the overall number of parties registered (47 at the time of the visit, of which 15 were considered as active) but it would appear that the major parties are captured by the criteria of public subsidisation. GRECO also welcomes the recent introduction of general principles on independence and integrity, and rules on conicts of interest with the client. The latter are for the time being, based on the assumption that the audited entity is a business entity. GRECO therefore encourages the Romanian authorities to complement, as planned, the existing rules with additional safeguards that take into account the specicity of the customer relationship with political parties. 46. GRECO concludes that recommendation viii has been partly implemented. Recommendation ix. 47. GRECO recommended i) to give the Permanent Electoral Authority (PEA), the full responsibility of monitoring compliance with the Law no. 334/2006 on the nancing of activities of the political parties and election campaigns; ii) to strengthen the effectiveness of the PEA's supervision over party and election campaign nancing, including endowing the PEA with additional control powers regarding party expenditure and entities other than political parties, and sufcient human and other resources to perform this task. 48. The authorities of Romania explained that the confusion between the tasks of the Court of Accounts (CoA) and those of the PEA are more apparent than real: a) the CoA is competent for the control of public subsidies, in accordance with article 35 paragraph (2) of Law no 334/2006 (which states that The control of the subsidies from the state budget shall be also made simultaneously by the Court of Accounts, according to the provisions of the Law no. 94/1992 on the organisation and functioning of the Court of Accounts); b) other than the above-mentioned simultaneous control power given to the CoA, the sole authority fully responsible for monitoring compliance with Law no. 334/2006 and for enforcing sanctions is the PEA; c) additionally, the PEA signed a protocol with the CoA detailing how these simultaneous controls are to be carried out; d) in the National Anticorruption Strategy (NAS) approved by Government Decision no. 215/2012, it is the PEA which has been designated as the sole authority responsible for implementing the objective. Increasing transparency of political party and electoral campaigns nancing. 49. Regarding the second part of the recommendation, the authorities refer; a) to the recently adopted National Anti-Corruption Strategy which proposes supplementing the human resources for the Department of Control of Political Party Financing, with an increase of 11 positions in the organisational chart and additional nancial resources; it is planned to hire further additional staff in 2013; b) to the project entitled Support to the Permanent Electoral Authority (PEA) and local public administration in Romania to implement best practices in electoral processes management, carried out by PEA and UNDP; c) to article 35 paragraph (1) of the Draft Law which proposes that PEA shall be empowered to monitor compliance with legal provisions concerning revenues and expenditures of political parties, political alliances or election of independent candidates, as well as the legality of campaign nancing.; d) to article Art. 351 of the Draft Law which stipulates that (1) In order to check the legality of income and expenditure of political parties, the PEA may request documents and information from natural and legal persons who provide services, remunerated or non-remunerated, to political parties, as well as from third parties. (2) Natural and legal persons referred to at para (1) are under the obligation to submit to PEA representatives requested documents and information. (3) Political parties are under the obligation to allow control bodies of PEA with access to their premises. (4) Political parties shall provide
75 The proposed amendment of Accounting Law no. 82/1991 reads as follows: The annual accounts of public legal persons shall be subject to statutory audit, done by statutory auditors, natural or legal persons, as requested by law. In the meaning of the present law, the term public legal persons shall mean () legal persons without a patrimonial interest which receive public subsidies. 76 The proposed amendment reads as follows: Political parties which receive public subsidies shall have an annual external audit of their nancial statements. The audit reports shall be submitted to the PEA.
PEA all documents and information required within 15 days of the request. 50. GRECO welcomes the developments reported regarding the clarication of responsibilities of the PEA and the CoA for monitoring the implementation of the Law no 334/2006. GRECO is not opposed to a certain level of overlap but it recalls that concern was expressed in the Evaluation Report regarding the fact that in practice, both the PEA and CoA where focusing only on the major parties which receive public subsidies and that the former was exerting its supervision only with regard to the income of political parties whilst the latter had taken responsibility for the control of spending. Also, there was no clear responsibility acknowledged in practice by either of these bodies as regards the supervision of election campaign nancing. It would appear that the Draft Law, once adopted, will spell out that the PEA is to monitor the overall nancial activity of political parties and candidates for election. The Draft Law also foresees the introduction of additional control powers for the PEA. It is also envisaged to increase the stafng of the PEA; GRECO welcomes of course this proposal but it reiterates the importance of lling all positions actually provided rather than creating new positions which will never be lled (at the time of the visit, the problem was that only half of the staff that the PEA was entitled to had been appointed). Pending the nal adoption of the measures envisaged, including additional clarication and improvements, GRECO can only conclude that the present recommendation has not been fully implemented yet. 51. GRECO also expects that convincing elements will be provided demonstrating the PEA's ability to address major recurring problems including overspending during election campaigns and undeclared sources of funding, which were mentioned in the Evaluation Report. Information provided by the authorities in respect of sanctions applied to date suggests that the PEA is progressively conrming its position and authority, but also that the infringements detected concern formal requirements77. 52. GRECO concludes that recommendation ix has been partly implemented. Recommendation x. 53. GRECO recommended to strengthen the cooperation and coordination of efforts on an operational and executive level between the Permanent Electoral Authority, the Court of Accounts, the tax administration and the National Integrity Agency. 54. The authorities of Romania report that various meetings were held in 2011 (seven in total78) to analyse the modalities of enhanced cooperation. Representatives of the four bodies mentioned in the recommendation were involved in those consultations and as a result, the PEA signed cooperation protocols with NIA and CoA, and a further one with NAFA is in preparation. 55. GRECO welcomes the steps taken by the authorities in order to increase cooperation and coordination in the eld of political nancing supervision. 56. GRECO concludes that recommendation x has been implemented satisfactorily. Recommendation xi. 57. GRECO recommended to provide in Law no. 334/2006 on the nancing of activities of the political parties and election campaigns that the Permanent Electoral Authority report suspicions of criminal offences to the competent criminal law bodies. 58. The authorities of Romania state that the Draft Law includes a provision79 which explicitly compels the PEA to notify the criminal investigation bodies whenever a suspicion of criminal offence arises in the course of controls carried out by the PEA.
1) One county section of a party failed to send to its headquarters the list of natural persons who made in a scal year donations whose cumulated value exceeded 10 minimum gross salaries at national level, in order to be published in the Ofcial Gazette of Romania, Part I, sanctioned with a warning and the conscation of 18.540 lei; 2) for the same violation, another party was sanctioned with a warning and the conscation of 8.516 lei; 3) or failing to publish the personal identication number of the donors, a party was sanctioned with a warning; for failing to present documents allowing for the identication of donors, the same party was sanctioned with a ne of 5.000 lei and the conscation of 10.819,21 lei.; 4) one party received a donation from the a County Prefect Institution for which it was sanctioned with a ne of 5.000 lei and the conscation of 6.070 lei; 5) one party accepted donations from 4 foreign citizens for which it was sanctioned with a warning and the conscation of 8.271 lei; 6) one party obtained income from commercial activities (sublet its premises) for which it was sanctioned with a ne of 5.000 lei and the conscation of 3.700 lei; 7) one party failed to publish in the Ofcial Journal of Romania, Part I, all revenues obtained from other sources, until the 31st of March, for which it was sanctioned with a ne of 5.000 lei and the conscation of 6.012,49 lei; 8) also, PEA sanctioned with a warning and the conscation of 312,10 lei one party for using public subsidies to pay delay penalties to suppliers as well as a ne; 9) in the context of local elections in 2012, PEA controllers have proposed sanctions against 986 independent candidates who had not submitted the detailed income and expenditure report to the PEA, and the sanctioning of a political party with the conscation of 698 lei; these proposals are currently under review by the management. 78 On 20 April, 11 May, 18 May, 8 June, 22 June, 17 November and 14 December 79 The Draft proposal reads as follows: If suspicions related to the commission of a crime arise during a control carried out by PEA on the compliance to the legal provisions regarding political party and electoral campaign nancing, PEA noties the organs of penal pursuit.
77
59. GRECO takes note of the information provided and looks forward to the nal adoption of the draft proposal. 60. GRECO concludes that recommendation xi has been partly implemented. Recommendation xii. 61. GRECO recommended to increase the penalties applicable in accordance with Law no. 334/2006 on the nancing of activities of the political parties and election campaigns and thus to ensure that all infringements are punishable by effective, proportionate and dissuasive sanctions. 62. The authorities of Romania report that it is foreseen, in the article 41 of the Draft Law, to divide the nes applicable in case of breaches to Law no. 334/2006 in 2 categories and to increase these: in the rst category from 1.100-5.600 Euro to 2.250-11.200 Euro and in the second category from 1.100-5.600 Euro to 11.200-22.500 Euro. In addition, a series of new contraventions will be included, which would be punishable with nes up to 11.200 or 22.500 Euro, depending on the case, for instance in case of failure to use the banking system for donations above the threshold, or failure to comply with the ceiling on spending for a given campaign. The new wording for article 42 of the Draft law provides for the forced transfer to the State budget of the amount of money and/or the money equivalent to the assets and services which constitute the object of the contravention; this provision is applicable in respect of all breaches to the law specied as such. 63. GRECO welcomes these draft amendments and considers that once adopted, they will enhance the effectiveness of the administrative sanctions applicable for breaching the rules on the nancing of political parties and election campaigns. The possibility to transfer to the State budget any illegal funding compensates for the still limited nes80 in case of major illegal donations or overspending. 64. GRECO concludes that recommendation xii has been partly implemented. Recommendation xiii. 65. GRECO recommended to extend the statute of limitation applicable to violations of Law no. 334/2006 on the nancing of activities of the political parties and election campaigns. 66. The authorities of Romania state that in light of the GRECO's recommendation, it is proposed to increase the statute of limitation for the application of sanctions provided by Law no. 334/2006 from 6 months to 3 years in accordance with article 41 paragraph 5 of the Draft Law. 67. GRECO takes note of the proposal to extend the limitation period applicable to the sanctioning of violations of the legislation on political nancing, which is in line with the underlying concern of this recommendation. GRECO is looking forward to the nal adoption of the Draft Law. 68. GRECO concludes that recommendation xiii has been partly implemented. III. CONCLUSIONS 69. In view of the above, GRECO concludes that Romania has implemented or dealt with in a satisfactory manner three of the twenty recommendations contained in the Third Round Evaluation Report. Thirteen of the seventeen remaining recommendations have been partly implemented. The four other recommendations have not been implemented. With respect to Theme I Incriminations, recommendations ii, v and vi have been partly implemented and recommendations i, iii, iv and vii have not been implemented. With respect to Theme II Transparency of Party Funding, recommendations vi and x have been implemented satisfactorily and recommendation ii has been dealt with in a satisfactory manner. All the other recommendations (i, iii to v, vii to ix, xi to xiii) have been partly implemented. 70. Concerning incriminations, Romania has gone through a very comprehensive and commendable legislative reform process regarding its criminal law. Together with the recently introduced proposals for amendments to the Law on the implementation of the New Criminal Code, the provisions of the New Criminal Code (adopted by the parliament in 2009 and waiting for nal promulgation with the entering into force of the LNCC on 1 February 2014), can be expected to respond to the requirements of most of the recommendations. That said, GRECO regrets that the authorities have not changed their adverse stance to widening the application of bribery and trading in inuence provisions to the acts/omissions that are not under the ofcial's competence and to revising and amending the effective regret provisions. GRECO can only urge the authorities to complete the reform process and to nally enact the New
80 The Romanian authorities indicated this is the maximum level of nes applicable in cases of misdemeanours, in accordance with Government Ordinance no. 2/2001, as amended.
Criminal Code. 71. Insofar as the transparency of political funding is concerned, GRECO notes with satisfaction the process engaged to amend the legislation on the nancing of political parties and election campaigns, and the support expressed by the Parliament to this process. If adopted, the amendments would ll a number of gaps identied in the Evaluation Report. In particular, the public will have access to the annual nancial statements of political parties. GRECO is particularly pleased to see that all recommendations are being taken into consideration and that the Permanent Electoral Authority seems to be progressively consolidating its position and authority. GRECO encourages Romania to pursue its efforts towards the completion of the reform process and the broadest implementation of all recommendations addressed to it. 72. In view of the above, GRECO notes that Romania has been able to demonstrate that substantial reforms with the potential of achieving compliance with the pending recommendations within the next 18 months are underway. It should be added that the new Criminal Code will enter into force on 1 February 2014 and this is an important factor for the implementation of recommendations of Theme I. GRECO therefore concludes that the current low level of compliance with the recommendations is not globally unsatisfactory in the meaning of Rule 31, paragraph 8.3 of GRECO's Rules of Procedure. GRECO invites the Head of the delegation of Romania to submit additional information regarding the implementation of recommendations i to vii (Theme I Incriminations) and recommendations i, iii to v, vii to ix and xi to xiii (Theme II Transparency of Party Funding) by 30 June 2014 at the latest. 73. Finally, GRECO invites the authorities of Romania to authorise, as soon as possible, the publication of the report, to translate the report into the national language and to make this translation public.
Permanent Electoral Authority 6th Stavropoleos Street, Bucharest, 030084 www.roaep.ro

Brosura AEP - A4 - 01.10.2013

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Brosura AEP - A4 - 01.10.2013

Uploaded by

Copyright:

Available Formats

POLITICAL FINANCING.

THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

pag. 72 pag. 83 pag. 91

Chapter 1. General provisions

Chapter 2. Private nancing

SECTION 3 Other income sources

Chapter 3. Public nancing

Chapter 4. Financing during the electoral campaigns

SECTION 2 Financial manager

SECTION 3 Maximum limits of expenditure

14 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 15

16 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 17

Chapter 7. Final transitory provisions

18 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 19

Chapter 1. General Provisions

Chapter 2. Current accounts of political parties

Chapter 3. Provision and use of subsidies from state budget

24 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 25

26 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

28 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

Chapter 5. Financial Manager

Chapter 6. Control procedure and methodology

30 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

Chapter 7. Establishment and enforcement

Chapter 8. Final Provisions

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 31

32 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 33

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 35

Third Evaluation Round Evaluation Report on Romania on Transparency of Party Funding

II. TRANSPARENCY OF PARTY FUNDING GENERAL PART

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 37

38 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

315 315 314 313 309 315 70 63 3 1 1 28 18 2065

137 137 137 136 132 137 48 24 3 1 0 3 0 895

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 39

Percentage (%) 36,39 36,07 20,56 6,96 100

40 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

44 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

fees of tota country; o o o o o o o

Other income: each source of income.

46 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 47

Within 15 days from the publication of the elections result

Deadline By 31 March of the following year

By 31 March of the following year

By 31 March of the following year

By 31 March of the following year By 31 March of the following year

(ii) Supervision (Article 14 of Recommendation Rec(2003)4)

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 49

50 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 51

52 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 53

54 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

56 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE

POLITICAL FINANCING. THE ROMANIAN EXPERIENCE | 57

58 | POLITICAL FINANCING. THE ROMANIAN EXPERIENCE