Description
Reform Description
On July 07, 2023 the Parliament approved the revised version of the Law on Political Parties of Mongolia. The Law amendment has several changes made including party internal democracy to be improved, and the sources of assets and income expenditure shall be transparent to the general public, operational rules, financing as well as direct or indirect support by the State as stated in article 19 of the Constitution of Mongolia. The amendment is effective 1 Jan 2024 and is to be enacted after the 2024 Parliamentary election.
In addition, major changes in the amendment of the Law on Parliamentary elections (effective from June 2023) were the mixed election system for organizing Parliamentary elections, and to increase the transparency and control over election activities to reduce the cost of elections.
According to this Law, the General Election Commission shall implement 18 functions under the following two directions:
a. political parties’ finance and its oversight,
b. political parties’ structure, organization, and information transparency.
In this regard, the GEC has the following measures to implement: developing an online platform where parties submit their financial report and statement files, and where such disclosure of income and expenditure of political parties is made available to the public at large. To ensure this platform can be used effectively by the relevant stakeholders, meaning that they are able to process, submit, receive and monitor incoming reports, the GEC will also provide the necessary training to the relevant stakeholders (political parties, GEC, auditor) as part of this Challenge commitment implementation.
With the implementation of the activities, we expect the party membership, assets, and financial activities will be transparent and open to public scrutiny, and the public trust in the political party will improve, and the election cost will be reduced.
Problem(s) Addressed by Reform
The new Law on Political Parties requires Mongolian political parties to submit financial statements on a semi-annual basis, to the General Election Commission. At present, the GEC does not have a system to centralize this reporting mechanism. Hence the reporting is presently done in traditional or paper form, which makes it challenging to combine, comb, or review the submitted reports. Aside from the challenge of manual labor, the lack of an integrated open channel to receive the documents render the practice to be lacking public transparency. It will also be a significant challenge for the GEC to monitor or assess the submitted report.
Developing a digital system/online platform for a transparent and simple reporting process of the political parties’ finances will help to disseminate the state funding information not only to political parties and the public.
Improving the internal democracy of the party will support the formation and the functioning of the party; Furthermore, information access through open channels will provide oversight and increase the trust of people.
As public confidence in political parties has been eroded, the newly established legal framework provides a condition to transform political parties into policy parties, letting them function accountably and transparently further to increase its internal democracy. For that parties are obliged to report the information on their membership, assets, and financial activities, and disclose those to the public to reduce suspicion.
As for the GEC, it shall perform the following duties: review the state funding to be provided by the state, and allocate them to parties who meet the legal requirements; issue independent audit opinions in the financial statements of the party by an auditing legal entity; to prepare the conclusion to submit for a Parliament review. (LPP: 43.1.The central election body shall compile and inform the financial statements and brief operational reports of the parties to the State Great Khural within May of each year, post the same on its website, and compile and publish them from time to time). Moreover, organizing a large-scale meeting, and training to provide voters, and the general public with information and understanding of the amendments to the legal changes, strengthening the necessary human resources, and introducing a digital system are activities planned within the mandate.
Relevance to OGP Values
Transparency: In the past, election campaign financing was often marred by corruption cases because of its ambiguous sources that financed political parties’ activities that required to be open to the public for oversight and at the same time to protect from private entities or certain groups’ influence. Given the newly established legislation framework in political finance, political parties’ income flow and expenditure will be disclosed and the reporting process made clearer to follow the procedures as mentioned in the law. For instance, the Law on political parties (article 31) mentions the mandates of the GEC to oversee the financing of political parties’ operation activities during the non-election period on the other side political parties are obliged to deliver financial statements periodically. According to Article 43 of the LPP, the GEC will prepare and compile the reports of political parties and publish them online.
Participation: GEC has given the right to request parties to eliminate errors or inconsistencies if any found in the financial report. Another challenge that was often discussed and which was a threat to the principle of fair elections was offering a ‘pledge money’ to parties, in turn, to be nominated to run in elections. As of the new regulations, disclosing financial reports of parties eliminates unlawful actions to reduce lack of transparency.
The new law prohibits parties from accepting any form of money when nominating candidates, and the General Election Commission has the authority to resolve complaints related to this.
Intended Results
The entire process of receiving financial statements converted into the digital system anticipates that it will be cost-effective, save time, and be easily understandable for parties and overseeing entities. It also prevents any information gap between the stakeholders. Citizens will be able to access financial information online. Furthermore, introducing a fully digital system helps to create conditions for political parties not only to improve the accountability of the political parties but also to increase the responsibility of citizens and voters. In general, it enhances an electoral culture that fully ensures the principles of democratic elections.
Also, ensuring that the process of ensuring transparency in party funding is clear, easy, and traceable will have an important impact on ensuring full compliance with the law.
Milestones
This reform agenda is foreseen to be implemented from 2025 to 2027 with several milestones as follows:
- Training will be provided to senior officials of the 37 parties to access the website to provide financial and operational reports and statements, and donation information. 1st Q of 2025
- Training of the GEC staff 8 staff, to improve the ability to monitor auditing reporting on party finance, to learn international best practices: III-IV quarters of 2025
- To develop an online platform/digital system development to collect, and publish financial reports of parties that contain donation information, and income expenditure flow, in addition to the state subsidies’ registering and counting process, decision on the amount of subsidies which party to receive as per legal requirements: II-IV quarters 2025
- Introduction and launch of the platform/digital system: IV quarter of 2025
- Conduct a meeting annually with all (37) political parties and NGO representatives to provide them information on legislative changes, understanding of the digital system, and reporting procedures – 2025-2026 years
In preparation for the Law implementation GEC will undertake the following:
- Adoption of relevant procedures: “Structure of the report and reporting of the financial report of the political party”; “Procedure for the reporting and monitoring of party finances and monitoring of the state funding to the party and indirect support” – IV quarter of 2024
- The enforcement of the Law to be registered at the Ministry of Justice – I quarter of 2025
- Promoting public awareness of legislative changes and increasing awareness through the media and social networking channels – Ist quarter of 2025
- Law enforcement and environment assessment of the newly adopted Law and Procedures; conduct of research on international good practices in party finance oversight – I and II quarters of 2026 and 2027