The devil is in the details: more transparency is needed for effective oversight of party financing in Croatia

Tinatin Ninua, Programme Coordinator for political corruption at Transparency International, writes on the need for more transparency in  reporting of political party finances in Croatia. 

A recently published report on the Western Balkans calls for effective oversight of political party funding that needs to be addressed both by public institutions and civil society. While political parties tend to mobilise significant amounts of money for elections,  looking at their financial transactions during regular activities can be very insightful since  parties often tend to start campaigning long before the official campaign period commences. The question is whether the election funds mobilised and spent outside of the official campaign period are properly reported and accounted for in a transparent and timely manner.

The example of the Croatian election held last Sunday illustrates why this is important. The official election campaign period in Croatia started on November 17 although by that time most of the contestants in the race had already put up their billboards and engaged in other forms of active voter outreach. Ten days before the election watchdog groups Transparency International Croatia and GONG had said that two of the biggest political groups in the race had been reporting less than what they have spent, according to the independent estimates. Two groups monitored the amount of media space used for election advertising and calculated their value according to the publicly available price lists.

Observers agree that this election represented the first real test for the application of the new law, the Political Activity and Election Campaign Financing Act which was passed earlier this year and has introduced stricter provisions on reporting and disclosure requirements for parties.

As indicated by the findings of the report on transparency in funding of Political Parties in Croatia launched in Zagreb two weeks ago the reliability of official party reports in the past has scored quite low, suggesting that it is not always possible to obtain an accurate idea of financing from official records of political parties. Reports which have to be filed to the Central Election Commission after the election will demonstrate how parties comply to the new requirements. It will also show to what extent the oversight will be exercised, particularly when it comes to identifying the breaching of rules and sanctioning the violations.

However, for the oversight to work it needs to make sure that parties are properly reporting on all funds raised and expenses undertaken. For that purpose there needs to be a clear distinction between regular financing of parties and funding of election campaigns. The Central Election Commission has stated that all expenditure related to elections has to be reported irrespective of the timing of transactions falling in the campaign period. In other words, parties have to report how much money they have paid for placing ads, holding meetings and purchasing services for printing election related material even before the official campaign period kicked off .

However, for the Central Election Commission to know whether parties are in fact reporting on all their election related expenses they will need to see that annual reports of parties do not contain any expenditure that could be related to elections. And this is where the loophole of the current system lies. The expenditure part of the annual reports of parties are not detailed enough to allow that kind of analysis and comparison.

As part of its recommendations of the report, Transparency International Croatia is calling for making expenditure section of the annual financial reports sufficiently detailed. This would allow the identification of vendors and transaction times. That would help the oversight agencies to detect any possible violations and identify to what extent parties have procured services for election purposes outside of the election periods. Such details could help to bring teeth to the new law and make it a real instrument of effective oversight in the hands of the supervising institutions and greater public.