Mon | Oct 26, 2020

Editorial | Be aware of campaign-finance loopholes

Published:Friday | August 14, 2020 | 12:23 AM

Jamaica’s two big political machines are about to embark on a spending binge in support of their general election campaigns. Between them, if circumstances require it, and they have the money, the outlay, legally, could be as much as J$3.15 billion, inclusive of spending by candidates at the constituency level.

Of course, they are supposed to report how much money they raise for their campaigns, and, depending on the amounts, from whom. They are also to say how they spend the donations, whether they were received as cash or other forms of value. The intention, under the 2017 campaign finance law, was to bring transparency to the system and ensure Jamaica’s democracy is not on the block to the vested interests, of whatever variety, with deep pockets.

The process this time may well be less opaque, but we don’t expect it to be substantially more transparent than the past. For there are gaping loopholes in the campaign finance reporting regime, possibly helped by the absence of an obligation for political parties to share their annual audited accounts with the public. The Electoral Commission of Jamaica (ECJ), however, gets to see them.

Indeed, the more-than-decade-long debate, leading to the 2014 legislation for the registration of political parties and the later one opening the way – if the provisions are brought into force ­– for the State funding parties, reflected a deepened fear of dark money, including from narco-terrorists, capturing the island’s political institutions. So, under the law, registered parties are required, by the beginning of April each year, to submit to the ECJ audited financial statements.

Once, before the implementation of the law, the People’s National Party publicly released its accounts, but hasn’t done so since. Neither has the Jamaica Labour Party. Crucially, neither of them is required to do so, although the ECJ is empowered, presumably if it suspects the books are being fiddled with, to send in its own auditors. The arrangement potentially works in favour of the parties, not only in keeping too many eyes away from their finances, but in getting around some of the strictures of the campaign-financing rules.

ELECTION SPENDING

The law, which will be fully operational for the first time in a general election, allows political parties, during campaigns, to spend up to J$10 million per constituency, to a maximum of the number of candidates it fields in the election. On the basis of that formula, with 63 constituencies for the House of Representatives, the central party could have an election budget of J$630 million. Additionally, each candidate can, individually, spend J$15 million, or a combined amount of $945 million. That means that the total expenditure of a party, that is to say, the central organisation and its individual candidates, could be as much as J$1.575 billion.

The legislation establishes a “reporting period” in which parties and their candidates have to separately file the donations they receive and their campaign expenditures. That period starts the day an election is announced or the beginning of the last six months before the end of the term of a government, and ends 180 days after a general election. Big donors, those who give J$1 million or over, and those with contracts with the Government, have to be specifically identified.

The anecdotal evidence suggests, however, that most of the fundraising by parties and their candidates happens ahead of the reporting period. Everyone knows when you are coming to an election season. So, by the time the formal campaign period starts, parties and candidates have already undertaken a big chunk of their expenditure for election paraphernalia and other services.

UNDER-REPORTING

There is, in this circumstance, the potential for significant under-reporting of campaign spending. Indeed, there have been questions of whether this phenomenon was in play for last year’s Portland East by-election. Many people doubt it was really a J$100-million affair as the candidates’ filings suggest it was. The clear implication of this is that the purpose for which the law was made is easily circumvented, with the sanctity of the island’s democracy remaining open to probes by the corrupt.

Some of the additional expenditure, even if not reported as such, may be captured in the annual financial statements of the parties, identifiable, in part, by their higher income and expenditure in the period leading to elections. But with no requirement that these statements be made public, there is little opportunity for forensic analyses of these reports by citizens. The ECJ should, therefore, recommend to the next Parliament not only that the financial statements of parties should be fully public, but that they and their candidates be made wholly accountable for the financing of their campaign expenditures, beyond donations collected and spent during the reporting period.