Election campaign financing 20 06/2007

1. Election campaign financing 2006/2007 Transparency - Serbia January2007

2. Why is important to monitor campaign financing? • Campaign affects voters • Political parties spend a lot of assets for a short period of time in the campaign • Campaign donors affect to decisions of current or future authority carriers • Parities which dispose with public resources are tempted to use them

3. Initiative – reporting form • Initiative to change the reporting form for reporting on campaign financing. Success: media support and Ministry of Finance support – adoption on November 8th 2006 Important innovations: • Obligation and appropriate column for presenting gifts in the form of free or less paid services of physical persons and legal entities • Obligation to submitthe list of donors over 6000 RSD • Clear instructions that the budget as source of incomes for campaign financing can be stated only if the assets are really received from the budget (can’t be accounted in advance) • Presentation of the structure of expenditures (according to types of expenses stated in the demand) • Specification of the destination of expenditures (e.g. how much and to what TV station is paid for advertising) • Obligation of verifying the reports from all members of coalition

4. Initiative for changing the REC Rules of procedure Problems: No sanctioning of violation of rules on campaign financing; unsecured publicity of reports; insufficient control capacities • Initiative is based on the opinion which we received from Ministry of Justice, according to which REC is authorized to bring misdemeanor procedure (before misdemeanor court)for observed breaking of the Law on Financing of Political Parties which refers to election campaign. • Second part of initiative refers to REC to determine as its obligation to publish reports on campaign financing at their web site, and to publish in the same way their report on conducted control. • Third part of initiative is to define the subject of “data check" performed by REC, so that it can comprehend completeness, timeliness, accuracy... • Fourth part of initiative refers to REC to ask from authority organs resources for conducting control (engaging of auditors).

5. Possible greater role of RBA related to campaign financing • In the letter to RBA we asked for information in which way will RBA check if broadcasters fulfilled the obligation to treat in equal way participants in election campaign (e.g. if the broadcasters offered same conditions for advertising to all parties)

6. Programs and campaigns of elections participants • Letter addressed to all election participants (parties, coalitions, citizens’ groups). In this letter we asked for their election programs, list of activities during election campaign (e.g. list of gatherings, campaign plan by billboards and the like), extracts from statute (harmonization with the Law on Financing of Political Parties). • Only one answer till now • By insight on the web sites of campaign can be seen that negligible number of them has at all published program

7. Information on campaign financing for future analysis • Data from official reports • Data on price of renting media space and duration and the number of advertisements • Data on price of renting the space for promotion • Second available data on sources of financing and assessments on campaign expenditures

8. Budget financing • According to decision on using assets from budget reserve for campaign financing 323.026.000 RSD is secluded from budget. • Law says: “0,1 percent of the republic budget reduced for transfers to other levels of authority and organizations of obligatory social insurance” • On the bases of what is this amount calculated? It should be taken into concern budget amount for 2006, since the one for current year still isn’t adopted. • By calculating in two criteria, from budget should be secluded 370, that is 384 million RSDfor this purposes – more than it was secluded in practice. • Consequences of late determining: • Campaign participants, especially “smaller parties” are uncertain to how much money can they count on from the budget • Legal uncertainty regarding the amount of assets which can be collected from private sources, amount of total campaign expenditures and amount of single donations of physical persons and legal entities

9. The way of allocating the money and limitations • To every list 3,23 million RSD from the budgetbefore the elections (unspent is returned to budget) • For every parliament seat taken 1.033.683 RSD is paid to the list (10 days after the election) – they have the right to keep that money if they spent it in the campaign • It can be collected and spent (from donations, membership fees, incomes from party property) 64.605.200 RSD at the most. Who gains ¼ of parliamentary seats has the possibility to refund from the budget expenditures of complete campaign (if it was in the scope of legal limits) • Donation of one legal entity up to 1.292.104 RSD • Donation of one physical person up to 323.026 RSD

10. Impact of the limitations to the course of campaign financing • Small amount of money from the budget for usual way of leading the campaign (large number of participants) • Striking avoiding of majority to declare on the sources of financing and amount of expenses in advance • Loans and delayed paying – using “Law loopholes” or breaking the Law? • Consequences of previous small allocations from budget: • 1. Increasing dependence of parties from their donors; • 2. Parties which have more chance to gain incomes from membership fees and their own property are in advantage; • 3. Parties which have more possibilities for using public resources are in advantage

11. Some features of election campaign which affect to its price • This campaign is probably the longest, and by that probably more expensive than earlier ones (lasts round 70 days). • Possibilities of advertising are better then before (e.g. more space for placing billboards)but expenses are larger (e.g. prices of political marketing are twice as higher than for regular advertising). • Second feature which increasescampaign expenses is that organizing of gatherings in closed spaces is much more frequent than gatherings at the squares.

12. (Un) ordinary using of public resources • Announcements of large investments, works, promotions of authority success at the republic and local level as party success etc. • Specific of this election campaign is that its precursor was referendum for which neither party hasn’t placed its bills (if we exclude the information from DS that they returned unspent amount), and all parliamentary parties got budget money for promotion of referendum and used it as introduction in promotion of pre electoral campaign. • Separate question is using the assets intended to financing of regular work of political parties from the budget for election campaign. It is against the Law, but is often thought wrong that it is allowed. Some parties even speak openly that they use this assets for campaign.

13. Questions to which we should turn our attention to • Respect of formal demands for reporting – one step forward would be if all participants would fulfill their obligations for showing structure of recollected and spent assets, completely and in time • Will all of them practice the same methodology when reporting – important for mutualcomparing • Large possibility that many of the participants will exceed established limitations – if in the future the limit should be increased or by other measures limit the expenses? • Uncertainty regarding completeness of control and its consequences (crucial role of REC, but also the necessity of public support and securing financial and other conditions for conducting control)