Challenges in the implementation of the Law on financing of political parties in Montenegro

20 Feb 2013

imagePhoto: UNDP in Montenegro

According to the NGO Centar za monitoring (CEMI), the political life in Montenegro in the current three years will cost €17.5 million of citizens’ money. That is the amount provided from the budget for the elections and parliamentary parties. According to the representatives of the NGO sector the way political parties are being financed is not controlled sufficiently. Also, jurisdictions of institutions often overlap in this regard. Therefore, the Law on financing of political parties that has been enforced only a year ago may soon face amendments.

Just like the vast majority of what makes our life the way it is, financial resources are required for the functioning of political associations and elections, too. In addition to the resources acquired from private sources such as membership fees, donations, etc., political parties are subsidized by national budgets.

Monitoring of financial operations in this regard remains high on the EU agenda, and it makes a part of political criteria for the accession. Therefore, a well-designed and functional legal and institutional framework for monitoring of financing of political parties is very important for further advancement of Montenegro towards the EU – especially now, after there is some experience with the implementation of the Law on Political Party Financing.

The importance of State Audit Institutions (SAI) in checking whether public expenditures are performed adhering to the principles of efficiency, effectiveness and legality cannot be overemphasized. The age of dwindling resources and lagging effects of financial turmoil require vigilance and prudent use of budgets. This is where State Audit Institutions come in as the fourth branch of power and an ultimate controller. Subsequently, the attraction of making the SAI the oversight body for political finance can be understood. However, there are concerns over whether giving it this role is an optimal solution due to primarily issues of legal remit, powers and capacity and political sensitivity.

The Issue Paper that was commissioned by UNDP’s regional center in Bratislava and prepared by Mr. Quentin Reed underlines the above mentioned and offers some interesting insights and examples with respect to the supervision role of SAIs.

With respect to the SAI supervision of political party/election campaign financing, the region of Southern Europe is somewhat specific, as it is relatively common that SAIs are given these tasks. According to the database of the Institute for Democracy and Electoral Assistance (International IDEA) the SAI is the sole oversight body or one of the oversight bodies for political finance in most countries. However, in neither of the Western Europe countries does SAI perform this role.

The role of NGOs and the media in monitoring of political party financing is important, especially during elections when spending is most visible. There are already examples of such a monitoring in Montenegro and in the region that can greatly assist the work of the supervisory institutions.

The Ministry of Finance and the State Audit Institution of Montenegro, in cooperation with the UNDP Montenegro, recently held a round table on the topic “Challenges in the Implementation of the Law on Financing of Political Parties“. The aim was to analyze the experience in the implementation of the Law which brought innovation in this area and contributed to the expanded jurisdiction of the State Audit Institution and the State Election Commission. Relevant practices in the region were discussed at the round table, as well as possible and necessary amendments to the Law.

Participants in the discussion were representatives of the Ministry of Finance and other line ministries, the State Audit Institution, the National Electoral Commission, the Parliament of Montenegro, heads of MP clubs, as well as representatives of NGOs and media.

At the opening of the roundtable Mr. Miroslav Ivanišević, President of the Senate of the State Audit Institution of Montenegro said: “The control and monitoring of funding of political parties, as well as monitoring of financing of election campaigns, are the subject of a joint responsibility of all political institutions and state bodies, with an aim to eliminate any irregularities that may derive from non-transparent spending.”

The Ministry of Finance has established a working group tasked to propose changes to the Law on financing of political parties, and adoption of these amendments is expected in the first quarter of 2013. Mr. Damir Rašketić, Secretary of the Ministry of Finance emphasized that the amendments would, inter alia, relate to differentiation between the responsibilities of institutions when it comes to monitoring and control of financing of election campaigns. “They will also relate to the frameworks and mechanisms regulating the imposition of sanctions in order to improve effectiveness of measures,” said Mr. Rašketić.

Representatives of the NGO CEMI stated that it was bad that NGOs were excluded from the process of proposing the changes in the Law. Mr. Rašketić responded that NGOs were not excluded from the study group, but they had left the body themselves. The CEMI indicated that the public does not know who funds political parties. Ms. Milica Kovačević of CEMI added that she knew that parties receive a lot of money from the state, but it is not known how the money is being spent.

Mr. Branislav Radulović, member of the Council of the State Audit Institution said: “We have the Socialist Democratic Party which borrows €50 000 to its coalition partner, and the Socialist People’s Party which gets loans on the account of elections. We have the Nova party where one of its leaders borrows money to his political organization. This is legal, but the law does not recognize it as such. In neither of the Western European countries does the State Audit Institution control parties.” Both representatives of the State Audit Institution and the State Electoral Commission recommended that, since they have already decided for such a model - the responsibilities should be clearly divided.”

Ms. Sanja Bojanić, UNDP Montenegro Democratic Governance Cluster Leader observed that for example no state institution in the world has revealed an undeclared donation. “Such information usually comes from the NGO sector or the media,” Ms. Bojanić stressed. She also indicated that although there is attraction in making SAI the oversight body for political finance there are at least three considerations/limitations related to legal remit, powers and capacity and political sensitivity that need to be taken into account.    

At the roundtable the Ministry of Finance offered the experts of CEMI to return to the working group for writing laws that they have left because of disagreements. Now what remains is to change the Law, which all participants agreed was still not functional enough.

“We believe now is time to take stock and see if we need any adjustments, and how to ensure and build up best capacities for their implementation. Naturally, in these considerations it is always useful to have in mind the experiences of other countries, especially those from the region. We remain committed to supporting further development in this area as we see it as vital in the accession process and for the country’s development. We sincerely hope that the Issue paper will shed light and bring relevant experience that will inform the discussion on potential refinements/adjustments of the Law on Financing Political Parties,” Mr. Rastislav Vrbensky, UN Resident Coordinator and UNDP Resident Representative to Montenegro concluded.

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The Ministry of Finance and the Supreme Audit Institution of Montenegro have recognized UNDP Montenegro as a partner in 2012. In the same year they jointly organized a regional conference entitled “The role of State Audit Institutions in monitoring political party financing”. UNDP Montenegro also supported peer exchange between Croatia and Montenegro and assisted State Audit Institutions in conducting the audit of political parties for the very first time.