Nepal Needs More Transparency in Political Finance

By Siromani Dhungana
UWB

Political parties in Nepal should recognize the value of transparency in the political process and the importance of providing citizens with information on funds raised and spent in the election to influence their votes.

It is clear that money counts in elections where there are needy voters and greedy politicians. Politicians have always exploited vulnerability of poor voters. They have bribed poor people and bought votes in this country. The forms of bribery varies from cash to goods or favor and a few glasses of raksi.

Rich leaders in a poor country do not hesitate to spend billions during the election time. Most of the leaders mobilize goons just to create psychological threat to the voters and supporters of opposition parties. Bribery is a form of intimidation but more straight mediums are always used in all elections.

Another usual feature of Nepali elections is no leader or candidate, however much they spend in campaigns (which includes bribery), comes up clean with their account details.

A Washington-based independent organization International Foundation for Electoral System (IFES)- which is already in Nepal as poll dates have been announced, in a book entitled “Handbook on Campaign Finance in Tunisia: Issues and Monitoring” says:

“Political parties and electoral contestants need money to campaign and make their platforms known to the electorate. Political finance is all the more important in a context of democratic transition given the emergence of new political parties not always known by the electorate. Financing is necessary for parties to strive and play their role in a democratic society.”

I think it is not fair to keep political money hidden from the public eye. Nepali political parties spend millions without revealing the source of their funding and consequently, voters never learn of the origins of the money used in financing election activities including the heavy advertising done during the campaign. This is less than ideal for an electoral system in a country that has its leaders tirelessly talking about democracy not fully institutionalized.

Why Disclose?

It is high time that the need for public disclosure of political finances be demanded. Disclosure helps prevent financial abuse during election and is necessary to promote healthy political competition.

We need a body akin to what was set up in the U.S. under the Federal Election Campaign Act 1974. An agency called the Federal Election Commission supervises all financial transactions by political bodies that have solicited or spent money to support or defeat federal candidates. The organization verifies all reports presented and discloses the same to the public and the media. The Election Commission in Nepal should be empowered to do exactly the same.

Political parties, on the other hand, should be ready for the public audit of their income and expenditure. In a book ‘Funding of Political Parties and Election Campaigns’ published by International Institute for Democracy and Electoral Assistance (International IDEA), Karl-Heinz Nassmacher writes:

Most democracies have provided their controlling agency with the powers to sanction in one way or another financial misconduct by a party, candidate or other person or organization subject to the regulation.

In my own opinion, democratic system should be more transparent than any other political system and political parties should pledge to introduce a law to ban anonymous donations in democracy. In the context of Nepal, all political parties should formulate a common minimum understanding and issue the white paper regarding public disclosure of income and expenditure during election time for the time being.

Challenges of Undisclosed Contributions

An undisclosed contribution from any party is not a good sign for democracy. It is believed that contributors want returns from concerned political parties in the long run. But contributors themselves wanting anonymity would not deign well either as they will tend to take advantage of their political affiliation at the expense of ordinary people.

Past experience shows that undisclosed contributions can fuel ‘policy corruption’. The government in a country like Nepal compensates its financial contributors while introducing the budget. Tax exemption or special treatment to particular business enterprises can be regarded with suspicion as the number of politically active tax-exempt groups grows.

Undisclosed contribution often raises questions as to whether political parties benefit from influence peddling, organized crime or drug trafficking.

Terrorized Business Community?

Principally, a major share of funding should come from voluntary contributions but that is not happening in Nepal. Forceful donation drives by political parties has become a common phenomenon and has terrorized the business community. Almost all political parties tend to amass cash by forceful measures.

Some businessmen have even been revealing in public that all revenue frauds committed by them is a result of heavy donation that they have to give to political parties. According to them, they face problems in adjusting donation money in the balance sheet during the auditing process.

Transparency in donation would help boost the morale of the business community that has faced problems in adjusting their accounts because they were forced to donate with such conditions that they could not keep any record of the money dispensed. Political parties should now ensure that the election is not an event meant for terrorizing the business community.

Even Businessmen aren’t so clean

The business fraternity, however, is not clean of controversy. They also tend to appease political parties to hide their malpractices in business. The integrity of Nepal’s private sector is not very high. Multi-billion Value Added Tax (VAT) scandals, adulteration in food products and other unethical business practices have been growing in the country and successive governments have failed to take action against even a single corporate house. The private sector is guilty of its own crimes, and of being protected by the political leadership, which it cannot deny. Renowned faces from the business community entered the last CA representing different political parties which clearly showed that they want political protection and affiliation to go ahead in their business undisturbed.

A Silver Lining

In a commendable move, the Nepali Congress has recently promised that it is ready to reveal its sources of funds for the coming elections. The party has announced its commitment to accept donations through cheque as well.

Transparency is an essential principle of free and competitive markets; it is equally important in a system of free and competitive elections. Public disclosure of campaign contributions and expenditures is a core prerequisite of any effective system of electoral campaigns, and its value is yet to be acknowledged by the Congress and the courts.

The announcement may have provided relief to the business community. It is a common practice around the world that political parties rely on donations to build and sustain themselves, to train party cadres and to fight in the elections. Equally important is the fact that the sources of its funding undeniably influence the behavior of the party if it comes to power. The issue thus has a direct impact on democratic rights.

In the End

The recent announcement of the Nepali Congress party has provided strong ground for the business community to bring the donation issue to the public domain. Other political parties should be ready to do the same. As public institutions, political parties should be proactive to disclose their information and arrange for regular briefings using various information demystification channels.

Channeling money through bank accounts can also improve the identification of contributors which is important for the monitoring of limits as well as the disclosure of sources.

Nepal needs to set up a mechanism that can ensure accountability on the source and utilization of party funds. The present opportunity and its timing can be used to promise this much-needed change since the country is ready to go for new a CA election.

(Siromani is the Editor of UWB. He  tweets @siromanid and can be contacted at siromani@blog.com.np)

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