Political Finance Transparency (HR0028)

• 2020 Annual ReportPolitical Finance Transparency in Croatia (March 23, 2021)

IMPROVING THE TRANSPARENCY AND FINANCING OF POLITICAL PARTIES AND ELECTION
CAMPAIGNS
Implementation of the measure is under way and will be conducted until 21 August 2019
Leader of the measure MINISTRY OF ADMINISTRATION
STATE ELECTORAL COMMISSION
Description of the measure
Which public issue does the measure address? The transparency of financing and implementing effective supervision of
the financing of political parties and election campaigns contributes to
public trust in election processes and has an important role in
strengthening preventive measures in the fight against corruption. At the
moment, a high degree of transparency regarding political financing has
been assured, supervision mechanisms have been put in place, and
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administrative and misdemeanour sanctions envisaged for violations of
the provisions of the Act on Financing Political Parties and Election
Campaigns. However, problems have been noted in implementing
supervision, caused by the high number of subjects for supervision and
the means by which financial reports are submitted and published. In
fact, the financing of political activities and election campaigns is
regulated by the Act in a transparent way, but due to the noted
shortcomings of the current solution (according to which financial reports,
report on donations, electoral campaign costs and other prescribed
reports are published on the websites of the subjects of supervision and
in various printed media, which makes supervising and monitoring
political financing by the public more difficult), it must be improved in the
sense of introducing an IT system for supervising financing, by which the
subject of supervision would submit all prescribed reports to the
competent bodies and ensure the publication of all prescribed reports by
subjects of supervision via this IT system in one place, on the website of
the supervisory body, which would allow more effective supervision and
monitoring of political financing by the public. In addition, financing
referendum activities, which is not governed at all at the moment by any
regulations, would be regulated by law in a transparent manner. Also, for
the proper application of the Act, it is necessary to ensure the
implementation of activities to inform the subjects of supervision of the
regulations governing the financing of political activities and the ongoing
education of persons obliged to apply the Act and those covered by
supervision.
What does the measure include? The measure includes improving the way in which financial reports,
reports on donations, reports on the costs of election campaigns and
other prescribed reports, ensuring the legal presuppositions for
establishing an IT system for supervising financing, are submitted and
published, and the establishment of this IT system, by which the subjects
of supervision (participants in election campaigns and participants in the
regular financing of political activities) would submit to the competent
bodies financial reports, reports on donations, reports on the costs of
election campaigns, and other prescribed reports, in electronic form, by
entering them in the IT system for supervising financing, and publishing
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them through this system in a single place – the website of the State
Electoral Commission.
The measure also includes the legal regulation of financing referendum
activities. The implementation of the measure will ensure efficient
supervision and the establishment of a permanently available, easily
searchable database, and will make it easier for the public to monitor
political financing. In addition, with the aim of assuring that the proposed
measures are feasible, activities are envisaged to educate parties,
independent members of Parliament, members of representative bodies
of units of local and regional self-government and election participants.
The overall goal of the measure is to raise the level of transparency in
financing regular political activities, elections and referenda.
How does the measure contribute to resolving the public
issue?
By setting up an IT system for supervising financing, by which all reports
relating to the financing of political activities and election campaigns will
be published in a single place, for all subjects, simpler access to data will
be assured and thus more efficient supervision, which will make it easier
for the public to monitor the financing of political activities and election
campaigns.
In addition, the prerequisites for monitoring the financing of referendum
activities will be assured.
This will improve the transparency of financing such activities and have
anti-corruption effects. The transparency of financing political activities
and election campaigns will be further guaranteed by implementing
training for the participants in these activities.
Why is this measure relevant to the values of the Open
Government Partnership?
The measure is relevant to transparency, since it guarantees public
access to information on the financing of political parties and election
campaigns by improving publication means (financial reports, reports on
donations, and other prescribed reports) which, instead of being
published on the websites of the various subjects of supervision, will be
published via the IT system for supervising financing in a single place for
all subjects – on the website of the State Electoral Commission. This
means that the public will have easier access to data on financing
political activities and election campaigns.
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The measure also assures the transparent financing of referendum
activities, which are not at present regulated by law, and guarantees the
public's access to information on financing referendum activities.
At the same time, the measure is relevant in terms of public
accountability, since transparent reporting on financial dealings is
assured by a mechanism by which the public can hold civil servants and
politicians accountable, particularly regarding the use of public funds.
Additional information The total cost of implementing the measure is HRK 600,000 for the
activities of the State Electoral Commission, while the activities of the
Ministry of Administration are guaranteed in the State Budget, section
Ministry of Administration 09505, activity A83000, within the regular work
of the Ministry of Administration (with no additional costs).
The measure is in line accompanying the Anti-Corruption Strategy 2015
to 2020, which identifies this issue within the strategic area Integrity
within the political system and administration.

3. Political Financing and Election Campaign Transparency

Language of the commitment as it appears in the action plan:

"Measure 3. Improving the Transparency and Financing of Political Parties and Election Campaigns" [17]

"By setting up an IT system for supervising financing, by which all reports relating to the financing of political activities and election campaigns will be published in a single place, for all subjects, simpler access to data will be assured and thus more efficient supervision, which will make it easier for the public to monitor the financing of political activities and election campaigns. In addition, the prerequisites for monitoring the financing of referendum activities will be assured. This will improve the transparency of financing such activities and have anti-corruption effects. The transparency of financing political activities and election campaigns will be further guaranteed by implementing training for the participants in these activities. (…) The total cost of implementing the measure is HRK 600,000 for the activities of the State Electoral Commission, while the activities of the Ministry of Administration are guaranteed in the State Budget (…) (with no additional costs)."

Milestones:

3.1. Improving the legal and institutional framework of transparent financing of election and referendum campaigns

• Draft amendments to the Act on Financing Political Activities, Election Campaigns and Referenda drafted and adopted at the Government session, regarding issues which had proved insufficiently regulated in the implementation of the Act, and by which the transparent financing of referenda campaigns will be assured.

3.2. Improving the method by which data on financing political activities and election campaigns are collected and published

• Production of application solutions to allow data to be submitted and gathered from subjects to whom regular monitoring of political activities and financing election campaigns applies.
• Production of a permanently available, searchable database of annual financial reports by political parties, independent members of Parliament, and members of representative bodies of units of local and regional self-government elected from candidate lists, and financial reports which, according to the Act on Financing Political Parties and Election Campaigns, must be submitted to the State Electoral Commission and State Audit Office by political parties, independent candidates, or selected candidates, and which enable easy searches of data on various grounds, and the permanent publication in open format of such reports on the website of the State Electoral Commission.

3.3. Adjusting and maintaining the website of the State Electoral Commission in machine-readable forms

• Election information on the website of the State Electoral Commission adjusted to be machine-readable, so that users can download it, and adhering to the standards required for data published in machine-readable forms.

3.4. Educating political parties, independent members of Parliament and members of representative bodies of units and local and regional self-government elected from the candidate list, with the aim of increasing transparency in the financing of political activities

• Creation of online education for supervising the financing of political activities and publication of online education on the website of the State Electoral Commission

3.5. Educating participants in elections for members of the European Parliament from the Republic of Croatia, with the aim of increasing transparency in the financing of election campaigns for such elections

• Creation of online education on supervising the financing of election campaigns for members of the European Parliament and publication of online education on the website of the State Electoral Commission

3.6. Educating participants in elections for the President of the Republic of Croatia, with the aim of increasing transparency in the financing of election campaigns for such elections

• Creation of online education on supervising the financing of election campaigns for the President of the Republic of Croatia and publication of online education on the website of the State Electoral Commission

Start date: Underway

End date: 21 August 2019

Context and Objectives

The Political Activities and Election Campaigns Financing Act [18] provides relatively high-level transparency of political financing as well as monitoring mechanisms and sanctions. However, problems were identified in regard to monitoring (due to a high number of subjects to supervise) and in the current legal solution for submitting and publishing financial reports. Financing referendum activities are not regulated, creating a legal void that has been exploited in recent years, as there is no threat of sanctioning potential infringements.

The commitment builds on the previous OGP action plan, [19] and is in line with the Anti-Corruption Strategy 2015−2020 [20] and its accompanying Action Plan, [21] which foresee strengthening election campaign transparency and regulating the financing of referendum campaigns. This commitment adds amendments to current legislation in the areas that have proven to be insufficiently regulated (Milestone 3.1), improves the collection and publishing of data on financing (3.2), and enhances the State Electoral Commission (SEC) webpage (3.3). [22] It also foresees training and education activities for political parties and independent council members at local and regional levels (3.4), Croatian candidates for the European Parliament (3.5), and presidential candidates (3.6). The overall goal of the commitment is to increase transparency in financing regular political activities, elections, and referenda.

The commitment is specific and relevant to OGP values of access to information and technology and innovation. The first three milestones ensure more efficient monitoring of political financing by the SEC and the public, introduce regulations for referenda campaign finances, including sanctions to deter infringements, and create a permanently accessible and easily searchable database. Namely, the commitment will enhance disclosure of information on political activity and election campaigns across the board, facilitating citizen access to data on political financing. It will also strengthen mechanisms for transparent and open behavior by political actors both in election and referendum campaigns. By decreasing the time needed for accessing information necessary for issuing rulings and sanctions, political parties, candidates, and organizers of referendum campaigns will be held responsible for disclosing financial sources. Creating an application to serve as an innovative use of technology in this area could also contribute to achieving this goal.

This commitment has a potentially transformative impact given the growing relevance of referendums in Croatia. They are increasingly used to decide important societal and political issues. Over the last six years, several referendum initiatives have occurred, mainly initiated by socially conservative groups pushing for refereundums on issues such as the constitutional definition of marriage, decreasing the number of parliament members and adopting the Istanbul Convention on Violence Against Women and Domestic Violence. Throughout these campaigns, there was no regulation regarding their financing. The publishing of the financial statements was solely on a voluntary basis and therefore not subject to any sanctions in the event that the reports were not published. The SEC called upon all participants in the campaign for defining marriage to publish their funding amounts and sources. Submitted reports were published on the Commission’s website. However, the main initiator, a CSO named U ime obitelji (https://uimeobitelji.net/) did not report their funding, citing a need to "protect their donors," and considered the Commission’s request for disclosure to be support for the opposing side. [23] Several CSO stakehoders [24] believe this commitment will be an important development. They would like to see the SEC using the new application mentioned above even before the new act is adopted, by urging political subjects to utilize it in the elections of May 2019. [25]

Next steps

The IRM researcher also believes this commitment should apply to political lobbying and monitoring the legislative footprints of MPs, government, and other officials in the next OGP action plan. This area is currently largely unregulated, despite many attempts by the lobbying community, relevant experts, CSOs, and other stakeholders.

In its policy paper issued in November 2018, GONG recommended [26] regulating political advertising on social networks, aligning the submission and publishing of annual financial statements of political parties with the rules for nonprofit organizations, legally strengthening the competences of institutional (SEC) and non-institutional monitoring mechanisms, and legally enabling the SEC to be composed not only of legal experts, but also of other professionals such as political scientists, sociologists, economists, and journalists in accordance with recommendations of the Venice Commission of the Council of Europe.

3. Political Financing and Election Campaign Transparency

Aim of the commitment

The commitment aimed to strengthen transparency of financing regular political activities, elections, and referenda. The commitment sought to address constraints to monitoring the number of political parties and candidates, submission and publishing of financial reports, and inadequate regulations on financing referendum campaigns. The commitment would amend existing legislation and ensure the collection and publishing of data on electoral and referendum financing on the State Electoral Commission webpage. It also aimed to educate local and regional political parties and independent council members, presidential candidates, and Croatian candidates for the European Parliament.

Did it open government?

Major

The commitment was fully completed by the Ministry of Administration and the State Electoral Commission. ^[12] The Political Activities, Election Campaigns and Referenda Financing Act (OG 29/19, 98/19), adopted in March 2019 and amended in October 2019, improved transparency of political financing by introducing an information system for monitoring and publishing financing. Supervised entities submit financial reports and grant reports to relevant authorities, including the cost of election campaigns and referendum activities. ^[13]

The State Electoral Commission website now offers a significantly increased amount of permanently accessible, searchable, machine-readable data on financing for political activities, as well as funding election and referenda campaigns. ^[14] GONG, a CSO monitoring funding of political activities, confirmed that transparency improved and information is now easily accessible, especially for the media and interested public. ^[15]

Implementation of this commitment has been tested in European, presidential, parliamentary, and local elections during 2019 and 2020, and the Organization for Security and Cooperation in Europe (OSCE) has reported that candidates “largely complied with their obligations,” which “brought about improvements to the transparency of reporting on campaign spending.” [16] This is also the first time referenda activity funding was regulated and the related information was published in Croatia.

The new system ensures that personal financing of political activity is included in financial reports 30 days after election day. GONG has criticized loopholes which allow campaigns to evade providing accurate spending details on specific social networks by just giving total amounts for all online spending, making it impossible to determine how much and where spending was targeted. ^[17]

Introducing regulation and improving transparency in political financing and referenda campaign funding has provided greater public access to information on political spending. This has contributed toward more effective oversight by relevant authorities and better monitoring of political funding by the public. The shortcomings however, mean that the implementation has had a major (rather than outstanding) result on opening government. Lax enforcement of accurate and disaggregated data (particularly spending on social networks) has especially diminished the intended result of this reform. Legislators and enforcing institutions could further the impact of these reforms by requiring better provision of disaggregated and accurate data from candidates and campaigns on online social network spending.