Overview of political finance laws in UK and elsewhere

LAHORE: Soon after the Pandora Papers, comprising 11.9 million leaked documents had surfaced on Oct 3, 2021, to expose the secret offshore accounts of 35 current and former presidents, prime ministers, as well as more than 100 billionaires and celebrities, a spotlight was immediately cast on the funding of the British political parties by wealthy donors.

The very next day, the “BBC News” had written: “The Conservative Party is under scrutiny after files included in the Pandora Papers leak revealed how a prominent donor was involved in a corruption scandal. In the past, Labour and the Lib Dems have also been exposed for accepting money in questionable circumstances. Parties need to be able to raise money in order to run. But there are concerns when it looks like those giving cash expect something in return.”

At the start of his premiership, Tony Blair had faced criticism over his interactions with ‘Formula One’ tycoon, Bernie Eccleston, who had donated one million pounds. It was later revealed that Bernie had met Blair to have ‘Formula One’ exempted from a tobacco advertising ban.

The “BBC News” then opted to peek into the past: “A "cash for honours" scandal hit Tony Blair's government in 2006, when it emerged that a number of large secret loans had been made to the Labour Party before the 2005 general election. Some of the lenders had subsequently been nominated for the House of Lords. Tony Blair became the first prime minister to be questioned by the police during an investigation. However, the long and expensive probe led to no charges.”

In 2020, Prime Minister Boris Johnson nominated Peter Cruddas — who had given £50,000 to Johnson's campaign to be party leader -— for a seat in the House of Lords, going against official advice.

Further research shows that Britain has surely made some headway during the last three decades to tackle the influx of dubious and dirty finance into its political system through prompt accountability of corrupt elements.

In 2010, three former Labour ministers --- Geoff Hoon, Stephen Byers and Patricia Hewitt --- were suspended from their party after they were filmed by a news channel while apparently offering help to a lobbying firm in return for cash.

In the United Kingdom, donations to political parties are regulated by the Political Parties, Elections and Referendums Act 2000. And a donation is defined as money, goods or services given to a party without charge or on non-commercial terms, with a value of over £500.

British parties must thus report all impermissible donations, all permissible donations over £7,500, all permissible donations and loans that add up to over £7,500 from the same source in the same calendar year, all permissible donations and loans that: are (or add up to) over £1,500; and come from a source that they have already reported to the government in the same calendar year.

If these parties do not receive any reportable donations, they are still required to submit a report, which is called a ‘nil return.’ If a party does not declare what it should, a range of sanctions are available - including fines of up to £20,000. Very serious offensives can also be referred to the police.

The total pubic grant is £2 million per year in the UK and distributed via a formula among political entities. Research conducted by the Jang Group and Geo Television Network, shows that in 2013, an international NGO "Commonwealth Human Rights Initiative" had stated: "In countries like Sweden and Turkey, political parties have a voluntary arrangement to open up their records. Parties in some of these countries depend solely on state funding while in a majority of others their counterparts receive both public funding and private contributions. Countries like Austria, Bhutan, Brazil, Bulgaria, France, Ghana, Greece, Hungary, Italy, Kazakhstan, Kenya and Kyrgyzstan have a system by law for political parties to pro-actively disclose their financial information to people. Nepal, Poland, Romania, Slovenia, Suriname, Sweden, Tajikistan, Turkey, Ukraine and Uzbekistan also provide public disclosure on such funding."

The NGO had held: "Countries like the US, UK, Belgium, Canada, Australia, New Zealand and South Africa, among others, have adopted different models of disclosure of details of political party and election campaign financing. In Japan, the law requires political parties to submit statement of accounts to the state.

Even politicians in Denmark have been under scrutiny. Transparency International had warned some years ago that loopholes in Danish law may also allow the identity of large donors to be kept secret by spreading contributions across several local branches of a political party.

Germany is no exception too, as a leading political party -- the Christian Democratic Union -- was plagued by a party funding scam during the 1990s. The party had reportedly accepted hidden donations from an armored vehicles manufacturer to help promote sales to Saudi Arabia and Canada, besides being guilty of the non-disclosure of cash donations, the maintenance of secret bank accounts, and illegal wire transfers to and from foreign banks.

The public finance system in the United States is under a constant vigil too. In October 2019, according to the “BBC News,” two Donald Trump donors were charged with violations of campaign finance laws.