politics : culture : economics

Turkey’s opaque system of political financing

In Constitution, Democratisation, Electoral system, Turkey on December 20, 2010 at 2:23 am

In my most recent post I highlighted the seeming over-reliance of Turkey’s political parties on state funding. But what of the role of private funding in Turkish politics? When we think about the corruption of the political process, it is usually private money we are talking about. State funding has the scope to play a problematic role in influencing the terms on which parties get to compete, but the risk that politicians and policies will be ‘bought’ is a risk that relates primarily to the influence of private money.

There are three key stages that a political-finance regime needs to provide for. First, a set of rules to govern the receipt of donations and other benefits. Second, a system to register these donations in a transparent manner so that voters can see who’s bankrolling whom. And third, a system of supervision and sanctions to ensure that rules are adhered to and that breaches are punished. As I will explain in the sections that follow, Turkey has problems in each of these areas.

The rules on political donations

Donations to Turkey’s political parties are subject to a range of restrictions, which are set out in the Law on Political Parties (2820). For example, anonymous donations are prohibited (article 69, paragraph 3), as are foreign donations (article 66, paragraph 3) and donations from public institutions (with exceptions including trade unions, employers’ associations, charities and foundations; article 66, paragraph 1).

There is an upper limit on the amount of money that any one individual or organisation can donate to a party each year. However, it’s not that easy to establish where this ceiling lies. Article 66, paragraph 2 of the Law on Political Parties puts the figure at 2,000 TL, but that number is now long out of date. To see why, we need to look at the law’s sixth ‘additional article,’ which requires an annual revision of the ceiling for donations, in line with the provisions of the Tax Procedures Law (213). A quick scout around has left me none the wiser as to what the limit for 2010 was, so for the moment I’ll rely on this year’s report on political financing in Turkey by the Group of States Against Corruption (GRECO), according to which donations were capped at 23,473 TL in 2009.

So far, so good. In theory at least, it would seem that Turkey’s party-finance system provides a significant degree of flexibility for private funding to offset differences between the public funding received by the various parties that are entitled to it. For example, in 2010 the governing Justice and Development Party (AKP) received 52.7m TL from the state, compared to 23.6m TL for the opposition Republican People’s Party (CHP). The difference between those two figures is equivalent to around 1,250 maximum donations. That sounds to me like the kind of fundraising target into which a well-administered and hungry-for-office opposition with its fair share of well-heeled supporters ought to be able to make a significant dent.

But let’s pause for a moment and consider these numbers from a slightly different angle. According to GRECO, the three parties currently receiving public money claim that this funding accounts for 90 per cent of their total income. Let’s take the CHP as an example and see what this would mean in practice. If their 23.6m TL allocation of state funding in 2010 really did amount to nine-tenths of their total income for the year, then that would mean that their private fundraising managed to yield 2.6m TL, or the equivalent of 112 maximum donations. That seems like an exceptionally low figure. It suggests that Turkey’s parties aren’t very good at one of two things: raising private money, or declaring the full extent of the private money that they do raise.

The mother of all loopholes

I’ll turn in a moment to some of the problems with Turkey’s system for declaring and publishing the donations received by political parties. But before doing so, I want to note an extraordinary blindspot in the country’s rules on political donations. The various provisions I’ve outlined above apply solely to party funding. With one exception (a prohibition on foreign donations) the regulations are entirely silent on the way in which individual politicians are permitted to finance themselves.

This bewildering gap in the rules is one through which any party with its wits about it must surely be able to drive a cash-laden coach and horses. As the following excerpt from GRECO’s evaluation report suggests, turning a blind eye to the fundraising of individual politicians risks completely undermining the integrity of Turkey’s entire system of political financing:

“Many interlocutors identified this issue as the most significant problem regarding election financing in Turkey, asserting that some candidates run expensive campaigns and the sources of their funding are unknown. In this context, there are strong incentives for donations to be channelled to candidates, rather than political parties, in order to avoid disclosure requirements and monitoring by the Constitutional Court.” (emphasis added)

Show us the money: a chronic lack of transparency

The Law on Political Parties requires that Turkey’s parties maintain a record of all income and expenditure (including the names and addresses of all donors) and that they submit consolidated accounts to the Constitutional Court by the end of June each year. However, there is no obligation on either the court or the parties themselves to publish even a summary of these accounts.

The only legal requirement is for the Constitutional Court to publish (in the Official Gazette) its audit decisions relating to party accounts. To say that the electorate is being denied a clear view of the way in which the political process is financed would be an understatement.

Moreover, as we have seen, the Constitutional Court’s audit work is conducted on party accounts that exclude whole categories of income and expenditure. We’ve touched on the system’s silence regarding individual politicians, but GRECO also notes that party accounts also exclude the finances of “entities related to the party, or under its control.”

Nor does it stop there. The failure to require the parties to provide a comprehensive account of their financial affairs is then compounded by the seemingly haphazard way in which the parties are allowed to present the limited details that are required of them. The GRECO report again:

“[D]uring the on-site visit the GRECO Evaluation Team’s attention was drawn to certain deficiencies in the current reporting practice. According to various observers, party accounts are far from being systematic and rigorous. It transpired from the interviews that donations—especially donations in kind—are frequently not properly recorded and that accounts tend to lack detailed and comprehensive information on the finances of the parties concerned. … A low level of detail impoverishes the actual meaning of the information available to the public and it therefore hampers the effective monitoring of party financing. In this connection the [team] was advised that the format of the accounts submitted varies considerably from one party to another and is thus a potential source of confusion. Several interlocutors, including party officials, openly admitted the need for guidance by the competent monitoring body (i.e. the Constitutional Court).”

The ineffective versus the immune

Given the problems outlined above, it is arguable that any chance of exercising effective supervision over Turkey’s political financing has already been lost by the time the parties’ accounts arrive at the Constitutional Court each year. Nevertheless, the GRECO report makes it clear that a further layer of stark deficiencies emerges once Turkey’s highest judicial body assumes its role in the process. The evaluation team goes out of its way to be polite about the court, but there’s no avoiding the clear impression that GRECO thinks it simply isn’t up to the task of keeping Turkey’s parties honest.

Part of this comes down to resources. The team within the Constitutional Court with responsibility for monitoring political finances has no specific budget allocation and consists of just nine individuals: six auditors and three people providing administrative support. “Numerous interlocutors,” says the GRECO report, deem this insufficient for a country as large (I can’t help hearing an unspoken “and corrupt” here) as Turkey. Interestingly, however, this isn’t a view shared by the Constitutional Court. Far from using the GRECO evaluation as a pretext on which to make a grab for extra resources, the court’s view appears to be that everything is tickety-boo when it comes to the supervision of political financing.

This isn’t a view supported by the GRECO team. In one short but loaded paragraph, they list a catalogue of shortcomings. First, the court limits itself to assessing the accuracy of the details that the parties provide, not the sufficiency of those details. Second, this narrow focus persists even when there might be prima facie evidence (such as an expensive election campaign) pointing to non-declared sources of finance. Third, there is insufficient verification of gifts and donations in kind, such as transportation or advertising services placed at a party’s disposal. Fourth, there is no in-depth monitoring of the way in which state funding is used (by law, it should only be spent on the “needs or activities of the party”). Fifth, the court hasn’t even once availed of its right to carry out investigations at party headquarters or local offices. Sixth, the court’s auditing of party accounts is subject to a huge time lag, with auditing occurring “up to several years” after the period to which accounts relate.

GRECO’s assessment of the cumulative effect of these various problems with the court’s supervisory function is expressed in very matter-of-fact terms. But if you think about it, it’s about as damning a conclusion as one could plausibly reach: “For these reasons, the current monitoring mechanism does not ensure that party accounts are accurate reflections of the money raised and spent.”

Nor, once again, does it end there. The final, if unsurprising, twist in this long and tangled story is the weakness of the system of sanctions for those who break the rules. While a broad range of sanctions exist on paper, GRECO notes two important problems when it comes to imposing them.

First, in cases where wrongdoing is established the weakest penalties tend to be the ones that get handed down. GRECO points to 37 instances in the period 1998-2006 of administrative sanctions being applied, involving the Treasury confiscating party assets. By contrast, it says that it is unaware of criminal sanctions ever having been applied, despite various notifications of criminal activity being issued by the Constitutional Court.

The second problem derives from a familiar failing of Turkey’s political system—the troubling breadth of the the immunity from prosecution enjoyed by the country’s members of parliament. The GRECO report states:

“[A]ccording to numerous interlocutors met during the visit, the current regime of immunities in Turkey seriously hampers the enforcement of political financing regulations. It was pointed out that these regulations mainly address high-ranking party officials who are—at least in larger parties—mostly MPs and therefore immune from prosecution under Article 83 of the constitution.”

Conclusion

Given the thorough-going nature of the problems that afflict Turkey’s system of political financing, it is perhaps encouraging that GRECO feels able to conclude its evaluation with a list of just nine recommendations, which it believes would bring Turkey into line with European standards. These are summarised in the box below. They set out clearly defined steps that a government with the requisite political will could introduce almost overnight.

But, of course, therein lies the rub. If politicians took these principles seriously, then the long catalogue of problems I have outlined probably wouldn’t have arisen to the same extent in the first place, because a more effective system of controls would already have been in place. As things stand, there is little to suggest that anyone in Turkish public life is ready to start shining too bright a light into the many dark corners where politics and money meet.

*****

GRECO’s recommendations to Turkey
(i) to ensure that annual accounts of political parties include a) income received and expenditure incurred individually by elected representatives and candidates of political parties for political activities linked to their parties, including electoral campaigning, and b) as appropriate, the accounts of entities related to political parties or otherwise under their control;
(ii) to take appropriate measures to ensure that annual accounts of political parties provide more detailed and comprehensive information on income and expenditure, including the introduction of a standardised format backed up by common accountancy principles, as well as the provision of guidance to parties by the monitoring body;
(iii) to ensure that annual accounts of political parties and monitoring reports of the supervisory body are made easily accessible to the public, within timeframes to be specified by law;
(iv) to regulate transparency in the financing of parliamentary, presidential and local election campaigns of political parties and candidates and, specifically, to find ways of increasing the transparency of contributions by third parties;
(v) to require political parties and election candidates to regularly disclose all individual donations (including of a non-monetary nature) they receive above a certain value, indicating the nature and value of each donation as well as the identity of the donor, including during the electoral campaign period;
(vi) to introduce independent auditing of party accounts by certified experts;
(vii) that the supervision of the party accounts be complemented by specific monitoring of the campaign financing of parties and candidates, to be effected during and/or shortly after presidential, parliamentary and local elections;
(viii) (i) to ensure more substantial, pro-active and swift monitoring of political financing, including investigation of financing irregularities and closer cooperation with the law enforcement authorities; and (ii) to increase the financial and personnel resources dedicated to the control of political financing;
(ix) to introduce effective, proportionate and dissuasive sanctions for infringements of yet-to-be-established regulations concerning election campaign funding of political parties and candidates.
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  1. OK, just to provide a sense of how common certain ways of doing business are, and how people involved are used to such ways, I’ll link to a something funny (these things are rarely reported, unfortunately, and when they are there’s usually a reason that’s not obvious). Note how the politicians involved are saying it is ‘unacceptable’ while they must know how common/usual/expected such things are. The businessman involved seems more honest when he implies that he sees it simply as a cost of doing business in that field: http://webarsiv.hurriyet.com.tr/2003/07/11/315626.asp

  2. […] » Turkish politics » Istanbul notes blog on Turkey’s political financing Turkey’s opaque system of political financing by […]

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