Oversight of election campaign and political party funding strengthens trust in the transparency of the funding

The oversight aims to ensure that political parties and candidates disclose the financial and other contributions they have received and that they comply with the statutory restrictions on the contributions. The oversight also covers so-called party subsidies i.e. support paid by the state to parties represented in Parliament. The fundamental purpose of the oversight is to strengthen trust in the transparency of the funding received by political actors.

To achieve the transparency, candidates and parties are required to enter the details of at least the most important financial contributions into the public register maintained by the National Audit Office of Finland (NAOF). The information in the register is freely accessible. Details of all contributions of at least EUR 1,500 must be entered into the register, and annual contributions exceeding EUR 30,000 may only be received from affiliated entities reported to NAOF. It is also laid down in the law that financial contributions may not be received from unidentified donors, public-sector organisations, or foreign companies.

Most candidates and political parties disclose the contributions they have received and comply with the restrictions and transparency requirements. The monitored entities have usually corrected any irregularities immediately after the audits carried out by NAOF.

However, the experience has shown that the concept of ‘contribution’ is open to interpretation, and irregularities have been discovered in the financial audits of party organisations and in the processing of the party subsidies. In fact, the legislation should be made more specific by producing a more detailed list of the exceptions to the disclosure obligation and by clarifying the conditions for using the party subsidies. It has also been noted in the audits that all political parties have not signed agreements on the use of the subsidies with the recipients, as required under the Act on Discretionary Government Transfers. Furthermore, it remains unclear whether party subsidies can be forwarded to limited liability companies, foundations, and cooperatives, as these organisations are not mentioned in the Act on Political Parties.

Gaps in oversight and development needs

Foundations have traditionally been important donors of political parties. Supervision of foundations is the responsibility of the Finnish Patent and Registration Office. When a foundation has been reported as an entity affiliated with a political party, the foundation’s financial operations and the appropriateness of the disclosures concerning them are also supervised and audited by NAOF. Combining the details reported to the Finnish Patent and Registration Office and NAOF provides a comprehensive picture of the channels of political party funding.

The fact that most of the foundations and thousands of party associations remain outside the audit regime of NAOF limits the transparency of the election campaign and political party funding. NAOF does not have any right to audit local associations, youth organisations, or pensioners’ organisations of political parties. This issue has been highlighted in the audits of affiliated entities in such areas as the Helsinki region, Kainuu, Central Finland and Southwest Finland. Under the Act on Political Parties, political parties must ensure that the associations and organisations belonging to the party family file up-to-date disclosures of the contributions that they have received. However, in practice it is difficult for them to supervise the activities of independent organisations. In fact, some of the political parties have announced that they will have closer contacts with these entities in order to enhance transparency.

Under the amendments to the Foundations Act introduced in 2015, foundations must now also disclose the links with their related parties in their financial statements. The amendments make it easier to trace the donations given by foundations, which may help to reveal money flows that remained hidden in the past. A foundation may have supported a local party association, which in turn has failed to file the disclosure of the contributions it has received, as required under the law.

The financial statements and reports on operations prepared by foundations and affiliated entities are often of general nature, and no details of individual recipients of financial assistance are given. This has also been noted in the political party funding audits carried out in affiliated entities though in their case, the necessary itemisations can be obtained from the affiliated entities’ accounts.

The transparency of political party funding could be enhanced through legislative changes: local associations, youth organisations, and pensioners’ organisations of political parties as well as foundations should be obliged to publish their financial statements or submit them to the authorities. Furthermore, entities affiliated with political parties and foundations should itemise their donations in their financial statements, and this obligation should also apply to foundations when they prepare reports on their operations. Entities affiliated with political parties must itemise the contributions they have received. Experience has shown that nowadays affiliated entities receive few contributions and that investments and services are their main source of income.

Political actors can today receive government aid from a variety of different sources. This is called multichannel funding. However, it causes a great deal of administrative work, which could be avoided if the assistance to cultural and youth organisations and party archives could be linked to party subsidies.

Under the law, candidates must file advance disclosures of the contributions they have received. The advance disclosures are, however, of preliminary nature, and therefore they only give an indication of the actual contributions. NAOF may check the advance disclosures of the candidates that are elected. If necessary, the accuracy of the election funding disclosures is verified with the help of the elected candidates’ bank statements; the candidates do not have any statutory obligation to keep personal accounts or have separate bank accounts for their campaigns. The elected candidates are not required to provide comparative information or to submit additional information. The election funding disclosures are based on estimates, which means that they may also contain inaccuracies. The details of election funding may also remain incomplete.