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Party financing rules target opposition

by | Nov 23, 2011

TBILISI, DFWatch – A leading legal expert says the new rules on party financing will severely hamper opposition parties as Georgia enters two consecutive election years.

The new rules are widely seen as a move to make it more difficult for billionaire philanthropist Bidzina Ivanishvili to use his wealth to claim political power. They will criminalize many ways of directly or even indirectly giving money to political parties. Vakhtang Khmaladze, an experienced constitutional expert, thinks the measures might reinforce the reluctance among Georgia’s business community to support anyone else than the ruling party.

“A number of actions may be criminalized. In such economic condition which Georgiais in, how many people will have the possibility to donate to a party? If there will be any, do you think anyone will donate? Of course, the one who is scared. Usually it happens this way and it is proved by the list of the donators into the National Movement fund,” Khmaladze says.

In summer as part of a debate about reforming the election system, it was suggested to restrict party financing, but only after Mr Ivanishvili made his political debut on October 7 did the government put these ideas into the form of a specific proposal. The timing and secrecy has strengthened the opposition’s suspicions that Ivanishvili is the main target of these latest restrictions.

The law that is being changed is called Law on Political Union of Citizens, and it was recently discovered that the government has secretly sent a draft with the latest additions to the Venice Commission, a branch of the Council of Europe dealing with how to make elections fair.

With the latest changes, what is called ‘legal entities’ will be prohibited from financing parties. The only exception is banks, which will be allowed to give loans limited to 100 000 Georgian laris. ‘Legal entities’ are private companies or organizations, often called ‘legal persons’.

The limit on how much an individual may donate will be doubled to 60 000 lari; party membership fees can’t exceed 1200 lari per year. The total funds received by a party in a year can’t exceed 0.2% of the country’s GDP, including financing from the government. This means, based on Georgia’s budget for next year, that each party can not get more financing than 53 million lari in 2012. Any amount above this limit must be transferred to the state.

It’s also part of the changes that donations can’t be given as cash, but must go through bank transactions. Parties and legal entities are prohibited from giving money, presents and other material goods. Monitoring of all this will handled by the Chamber of Control, instead of the Central Election Commission (CEC).

These amendment to the Law on Political Union of Citizens come in addition to restrictions in another of Georgia’s laws, the Election Code, which regulates election funds financing separately and a draft of which was sent to the Venice Commission at the end of August. The proposed new Election Code in its latest draft allowed for legal entities to donate to party campaigns, but not more than 200 000 lari. This was part of an agreement reached in summer between the government and part of the opposition.

Pavle Kublashvili, chairman of the Parliament’s Judiciary Committee and head of the editorial group which worked on electoral issues, states that the Venice Commission’s recommendations about this latest proposal will be published along with their evaluation of the changes to the Electoral Code. Only after that will it be presented in parliament.

The recommendations about the Electoral code will be published on December 16 or 17, according to Tomas Markert,Venicecommission chairman.

The opposition and a big part of non-governmental organizations (NGOs) focus on the fact that the government prepared the bill without agreeing with civil society and secretly sent it to the Venice Commission, which they consider dangerous for the whole political process.

The government says the reining in of party financing comes following recommendations of the Anti-corruption Subcommittee of the Council of Europe and local NGOs. But NGOs and experts claim that there is no such thing in these recommendations.

“I’ve specially checked these recommendations and there is not written anything like that in them. There is one sentence saying ‘it’s possible to establish specific restrictions.’ And then there is a list of what such restrictions may be established; one of which is legal entity donation. But it’s about restriction, not prohibition. There already is a restriction today,” says Vakhtang Khmaladze.

The jurist further notes that what the government calls a recommendation was actually mentioned only as a theoretical possibility in the documents which the government refers to, when it comes to the ban on donations from legal entities which have been involved in state procurement. Another thing is that the recommendations contain a lot of other things the government didn’t pick up on.

“There are written many good things, which they are not foreseeing,” Khmaladze says.

The government’s opponents claim that all these changes are connected to the billionaire philanthropist Bidzina Ivanishvili entering politics. Also experts and NGOs supporting the government consider this to be the case.

There are several reasons experts are alarmed of what is happening. First of all, the changing of the party financing mechanisms.

Vakkhtang Khamaldze says this system gives a room for interpretation which will make it easier to consider money given to another person as a donation to a party, and hence a criminal investigation may be launched.

The expert explains that if one person gives money to another, so that the transaction originally has no connection with any political party, and then the receiver goes and gives the money to some party, it will appear that the person first giving money has indirectly carried out party financing, and if he falls under the law’s restrictions, the party will have this money confiscated.

Or there could be a case where a party wants to help someone who is poor, maybe based on acquaintance. In this case the authorities may say that the party has given a political bribe to this person, to vote for this party in the future. It doesn’t matter when the money was given, during the election period or not. According to the current law, giving money this way during an election period is considered a crime. But with the new law, the restriction will apply to also non-election periods.

“There is one more issue. If you remember, one of the NGOs had an investigation into donors to the National Movement. Then they came to one of the persons from the list of donors and said that he had made a donation of 30 000 lari and he didn’t even know what they were talking about, saying ‘not donation. I haven’t even had so much money in my life.’” Vakhtang Khmaladze says.

“What will happen is that when a person donates in favor of the government, they will ignore it. Even more, they will make donation in the name of somebody who won’t even know about it. That’s why they gather ID information, to use for such cases. No one will check this then. But if someone donates to [an opposition] political party, they’ll find some fault with them.”

The oversight of party financing will be carried out by the Chamber of Control instead of the Central Election Commission (CEC). Experts say that if we look at this issue from a theoretical point of view, it seems like many things are changing, because whoever is doing the monitoring, they will have to check the same thing. But there is one significant difference: the Chamber of Control is a state body, and setting it up is done by the government. But the financial monitoring group set up by CEC is staffed not by the officials, but ordinary auditors, and this reduces the likelihood of political partiality.

“Granting this function to the Chamber of Control strengthens the suspicion that all of these are linked in order to create more problems for political parties, because the government thinks that Ivanishvili will finance the opposition. But we should remember the fact that you cannot fully block it. Like air it will find a crack anyway,” Khmaladze adds.



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