Support to the Permanent Electoral
Authority (PEA) and local public
administration in Romania to implement
best practices in electoral processes
management
Constantine Palicarsky
General approach:
Cap on spending
 Cap on donations
 Transparency
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General findings
Detailed, high quality legislation
 Isolated issues that are don’t necessarily
have impact on political corruption
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 Company
donations
 Number of controls/checks
 Annual audit
 Accounting standards
 Regulation, transparency and compliance
Cap on spending
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Transparency of limits: PEA to express
caps and limits in absolute figures
Cap on Donations
Company (legal persons) donations
 Third persons issue and in-kind donations
 Transparency of limits: PEA to express
caps and limits in absolute figures
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Transparency
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Annual audit – benefits and opportunities
 Discipline
 Transparency
 Could be used
by PEA to simplify control
mechanisms
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Report on campaign spending
 Loans
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and unpaid bills problem
Monthly statement the subsidy is used
Third persons issue: how is third person support
taken into consideration?
Methodological norms issues
Transparency
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Prepare a list of criteria for evaluating donations to
determine if they are limiting the independence of
political parties, based on a checklist.
that they are not involved in public procurement.
PEA may compare at the end of the year the list of
the donors of the parties with the list of the
companies that have received public procurement
contracts.
EU Funds recipients.
Accounts of the political parties
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Need to include the reference to the
Accountancy law
PEA should be responsible for checking on
the accountancy law.
-it is important to relate this to the new
regime on auditing the political party
accounts on annual basis. Sanctions could
be imposed as a result of the checks.
Donations
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Donations regime: the mentioning of the civil code may need to
be abolished – in particular to the specific form.
Delete mentioning of “hand gifts”
Specific regime: cash could be donated with a simple transition
(bank transfer) or in cash.
Problem with the legacies: the legacies may be taken out as
they are not used.
Procedure: for cash donations up to … … RON the donors 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
the donations made through bank transfers – separate
declaration should be signed and mailed to the party-recipient.
Loans and debts
How will a political party open an
account if it is indebted and all its
accounts are blocked by creditors?This
effectively blocks the work of the party.
 Parties should pay all their bills in brief
period of time after the end of the
campaign (week)
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COMBINED ELECTIONS
Combined elections – control over the
election expenditures.
 Separate accounts for the elections?
Should the accounts be opened at
county level or lower?
 PEA may have problems verifying
thousands of bank accounts.
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Other points
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SANCTIONING OF THE POLITICAL PARTIES:
APPROACH
Obligation (time limit) on the imposition of a
sanction (one week after the submission of
the inspection report)
Transparency of the auditing report
SELECTION OF THE AUDITOR:
The political party shall select the auditor
according to its own procedures. All audit
reports shall be public and open.
Addressing political corruption
Many contributions not public: control may
not address these
 Need to cooperate with the Prosecution
service, National Integrity agency and
other relevant institutions.
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PEA
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Monitoring reports from NGOs could be used in the
campaign monitoring process
Need for clear authority to control also the “public
element” of the party budgets (now within the CoA remit)
Media to be obliged to submit info on the party spending
(media ads) in the course of the campaign (could be
submitted to the media council)
Control over the political campaign instead of the annual
control, including weekly/daily controls over the party
advertising; cost of advertisement (reported by the
media) could be compared to reported value by parties.
Thank you!
Constantine Palicarsky
palicarsky@gmail.com
International
organizations’
recommendations on
Romanian party funding
and campaign finance
Jurij Toplak
Bucharest 2011
Recommendations made by

Greco – Group of States Against
Corruption (Council of Europe)

OSCE ODIHR
all entities under the control of
political parties and county
branches of political parties
should keep proper books and
accounts
Party hq should instruct internal branches
on book-keeping
 Party hq or accountants should he held
responsible
 Can be regulated by legislation or not
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to clarify how the financial
activity of the various types of
structures related to political
parties is to be accounted for
in the accounts of political
parties
All internal parts (women organizations,
youth organizations, etc.) included in
financial statements
 If separate legal entities:
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 may
stay separate and not included
 Treated as third parties in elections
to increase the transparency
of “third parties”
(independent speech,
independent expenditures)
Put spending ceiling on independent speech
 Third parties (big spenders) need to register
and report income, spending
 Treat as in-kind donations unless the party
declares that they are not related and
requests them to stop
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to require that all donations be
recorded and included in the
accounts of political parties
and campaign participants
all donations above a certain
threshold should be made
through the banking system
No cash donations
 Cash donations up to certain amount (40
or 80 Eur) and they are recorded

all donations above a certain
threshold should be made
through the banking system
Where to transfer anonymous and illegal
donations:
 Return to the donor
 Transfer to the budget
 Transfer to a humanitarian organization of
party’s choice
to ensure that in-kind donations
are properly identified and
accounted for at their market
value, as donations
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How to evaluate market value?
Should there be receipts for in-kind donations?
Should non-paid goods and services be
considered in-kind donations?
Should value be published in donations register?
to provide clarification 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
If goods are sold market value
If goods are sold above market value
 Either fully treated as donations or treated
as donation above the market value
 Either we can deal with just with big
amounts or also small ones
to clarify the legal situation of
loans
Prohibit loans
 Allow bank loans & disclosure & reporting
 Allow loans up to the donation limit &
disclosure & reporting
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to include a requirement of
periodic reporting on campaign
expenditures during the
campaign and before election
day
One or two interim reports (monthly)
 Continuous reporting (online)
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improve campaign financial
statements presentation to the
PEA so that all legitimate
claims and debts are
adequately followed-up by the
PEA – how to deal with
negative balance
Debt means dependency, vulnerability
 Unpaid bills may be way of avoiding
donation limits
 Parties wait and try to pay debt in other
favors
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improve campaign financial
statements presentation to the
PEA so that all legitimate
claims and debts are
adequately followed-up by the
PEA – how to deal with
negative balance
all debts need to be sorted out immediately
 all debts need to be paid by time of
submission with postponement of the date
of submission
 allowing negative balances but regular
reporting is needed
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to require political parties to
present their consolidated
accounts to the PEA and to
make an adequate summary
available to the public
introduce independent
auditing of party accounts
external, internal auditing
 Large parties (UK) or all (Germany)
 Auditor may not be a party member,
employee, candidate
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to give PEA more monitoring
responsibilities, more control
powers, and more human and
other resources
to strengthen the cooperation
and coordination of efforts
between the PEA, Court of
Accounts, tax administration
and National Integrity Agency
formalised (agreement among them)
 non-formalised (regular communication)
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to provide in law that the PEA
report suspicions of criminal
offences to the competent
criminal law bodies
Legislative amendment
 Also stresses that CC applies to political
finance
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to increase the penalties
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all infringements should be punishable
effective, proportionate and dissuasive sanctions
sanctions for parties and individuals and donors
Misdem. and criminal (Spain 8, Latvia 6, UK 1yr)
always have a responsible individual (treasurer)
Possible sanctions also:
 removal from office, (Belgium, UK, India, etc.)
 ending of state funding,
 loss of illegal funds,
 ending of campaign
to extend the statute of
limitation
Currently 6 months
 2 to 4 years after the date of the
commission
 at least 1 year after the financial
statements become public
 Illegal funds collected in 10 years
(Germany)
 PEA could be empowered to check past
financial activity of parties
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Which parties should
receive state funding?
Currently parliamentary parties only
 OSCE ODIHR and some countries:
funding of non-parliamentary parties
improves democracy
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