Prohibited foreign funding to political parties and global scenario

LAHORE: Just as the Election Commission of Pakistan (ECP) is all geared up to announce the long awaited verdict in the Pakistan Tehreek-e-Insaaf (PTI) Prohibited Foreign Funding Case on Tuesday morning (today), restless political pundits across the country began their kite flying on Monday, as they were heard airing prophecies about the likely judgment, that is bound to have a major bearing on the country’s future.

While some of these analysts predicted that the election watchdog would only decide whether ‘prohibited’ PTI donations should be confiscated in favour of the State, according to the July 23, 2002 notification, a few pundits were of the view, that if contributions had been received by the PTI, directly or indirectly from foreign countries multi-nationals or domestically incorporated into public or private companies, a ban is most likely to be imposed on its functioning as a political party. Nonetheless, most experts felt that the matter would eventually go to the Supreme Court for the final interpretation of the stellar case, anxiously being watched by the nation.

Research conducted by the ‘Jang Group and the Geo Television Network’ shows that 124 countries across the globe do not allow their political parties to seek donations from foreign interests, such as governments, corporations and individuals, while 54 states do not bar their political leaders from seeking international financial assistance.

(Reference: Globally acclaimed Swedish intergovernmental organisation, ‘International Institute for Democracy and Electoral Assistance,’ also known as IDEA, which claims it has supported sustainable democracy worldwide since its inception in 1995, has compiled a political finance database for 180 countries) These 124 countries with bans on foreign funds include 33 African nations, 20 are from North and South America, 34 are Asian nations, 33 fall in Europe and four are from the Oceania Region, which comprises Australia, New Zealand, Fiji and some neighbouring islands.

These countries prohibit international financial assistance/contribution in any form that includes India and Pakistan. Similarly, the 54 nations with no such bans include 17 African nations, 14 are from North and South American countries, three are Asian countries, 11 are from Europe and 9 belong to the Oceania Region.

At a critical juncture when almost all mainstream political parties in Pakistan are vehemently accusing each other of receiving funds from prohibited foreign sources and other vested interests, fiery debates on this thorny issue have been going on everywhere in the world for years. In India, where foreign funding to political parties remains illegal, over 55% of the donations received by regional Indian parties in 2019-20 came from ‘unknown’ sources, the Association for Democratic Reforms (ADR) had revealed in November 2021.

In its November 12, 2021 edition, ‘The Indian Express’ had reported: ‘According to the ADR report, electoral bonds accounted for nearly 95% of the donations from ‘unknown’ sources. While the total donations received by 25 regional parties in 2019-20 added up to Rs 803.24 crores, Rs 445.7 crores was attributed to ‘unknown’ sources, the report said. Of the donations from ‘unknown’ sources, Rs 426.233 crores (95.616%) came from electoral bonds, and Rs 4.976 crores from voluntary contributions. The report noted that donations received by national parties from ‘unknown’ sources added up to 70.98% of their income.’

A few months earlier on June 10, 2021, this newspaper had revealed that in

2019-20, the ruling BJP had received roughly Rs 7.85 billion in donations from companies and individuals, according to its contribution report submitted to the Election Commission (EC). This was over 5 times of the Rs 1.39 billion that the Congress Party had received.

BJP MP Rajeev Chandrasekhar’s Jupiter Capital, the ITC Group, real estate companies Macrotech Developers and BG Shirke Construction Technology, the Prudent Electoral Trust, and Jankalyan Electoral Trust were among the BJP’s biggest donors.

The ‘Indian Express’ had stated:

The BJP received a sizable donation of Rs 20 crores from Gulmarg Realtors, the real estate company associated with builder Sudhakar Shetty, in October 2019. The Enforcement Directorate had raided Shetty’s residence and office in January 2020. At least 14 educational institutions were also among the BJP’s donors. These include Mewar University, Delhi (Rs 2 crores), Krishna Institute of Engineering (Rs 10 lakh), G D Goenka International School, Surat (Rs 2.5 lakh), Pathania Public School, Rohtak (Rs 2.5 lakh), Little Hearts Convent School, Bhiwani (Rs 21,000), and Allen Career, Kota (Rs 25 lakh).

In United Kingdom, according to the ‘US Law Library of Congress,’ there are a number of laws designed to ensure that money donated to political parties and candidates are regulated through reporting requirements on the parties and candidates and through spending limits.

Soon after the ‘Pandora Papers ‘ had surfaced on October 3, 2021, exposing the secret offshore accounts of 35 current and former presidents, prime ministers, as well as overn 100 billionaires and celebrities, a spotlight was immediately cast on the funding of the British political parties by wealthy donors.

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.

Similarly, a tycoon later convicted for perjury became the Liberal Democrats’ largest donor in 2005, allocating £2.4million to the party. The party faced criticism for not returning the donation, despite Michael Brown not being a registered UK voter and was found donating through a newly-created company. In 2010, three former Labour ministers - Geoff Hoon, Stephen Byers and Patricia Hewitt---were suspended from their party after they were filmed by a tv channel while apparently offering help to a lobbying firm in return for cash.

In 1994, ‘BBC News’ had reported:

‘Conservative MPs Neil Hamilton and Tim Smith were accused of taking cash from Mohamed Al Fayed, the then owner of Harrods.

Smith admitted to the payments and resigned immediately but Hamilton protested his innocence. He was, however, forced to resign as corporate affairs minister. He also lost his parliamentary seat in 1997.’

In United States, this is what the ‘Voice of America’ had remarked in its November 05, 2019 report:

‘Recent headlines have highlighted ways in which foreign donations can enter America’s political bloodstream, including the revelation that business associates of presidential lawyer Rudy Giuliani were indicted for pumping foreign money into federal and state campaigns and political action committees. Businessmen connected to Donald Trump’s lawyer Rudy Giuliani were recently indicted for funneling foreign money to federal and state campaigns. Prosecutors said two men, Ukrainian-born Lev Parnas and Belarus-born Igor Fruman, who helped Giuliani investigate former Vice President Joe Biden, conspired to pass along $1 million from an unidentified Russian businessman to various US candidates.”

In 2013, an international NGO ‘Commonwealth Human Rights Initiative’ had stated that 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 law for political parties to disclose their financial information to the people. Nepal, Poland, Romania, Slovenia, Suriname, Sweden, Tajikistan, Turkey, Ukraine and Uzbekistan also provide public disclosure on such funding.”

The NGO asserted: “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.

It is imperative to note here that the leading German political party--the Christian Democratic Union--was plagued by a funding scam during the 1990s. The party had accepted hidden donations from an armoured 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.

Consequently, these notorious practices were part of a secret political financial arrangements that had aided Kohl’s long tenure of 16 years in office. As a consequence, noted Chancellor, Helmut Kohl, lost his political influence, helping Angela Merkel to emerge as the most powerful German conservative politician.