Donations, bribery and corruption

Canada’s electoral funding system is proving to be the gold standard. In 2004 Prime Minister Jean Chretien initiated reform of Canada’s electoral funding regulations, banning all donations from companies and unions. This legislation has arguably given Canadian democracy integrity not present in many comparable governances, including New South Wales. Fifty-seven per cent of Canadians are now in favour of the ban on all political donations from unions and corporations and 68 per cent support the campaign expenditure caps. There is a consensus that Canadian democracy is now cleaner.

In contrast, Premier Nathan Rees last week deferred his undertaking to implement a ban on political donations, citing potential legal obstacles. Rees has passed the buck to Federal Labor, already overdue to release an election funding green paper. He also called for further debate and submissions on election funding, despite the recent comprehensive, multiparty Senate inquiry, hearing 33 key witnesses, taking 189 submissions and making 47 recommendations, one of which was to ban large donations. Ironically Mr Rees is using the law to buy time and defer cleaning-up corruption.

Rees also made public Associate Professor Dr Anne Twomey’s commissioned report The reform of political donations, expenditure and funding, where the legal obstacles were first raised. In the release preamble, Rees states: “Let me be clear about this, the making of donations does not, and should never, influence Government decision making.” If this were true, there would be no need for reform, nor would there be criminal charges pending over the Wollongong political bribes scandal at this very moment.

Mr Rees’s decision to put off the bipartisan reform agreement may have significant consequences for NSW.

Since the 1980’s, politicians around the world have a growing awareness of the role of media, marketing and advertising in the electioneering process. This has fuelled an arms race of electioneering spending, reaching a dizzy pinnacle with Obama’s recent half-hour advertisement broadcast simultaneously on Fox, NBC and CBN and others, which delayed the world series baseball!

In this environment, incumbent governments, which get the lion’s share of political donations, are loath to restrict any income, and despite assurances to the contrary, donations are not purely altruistic. No politician can receive a large donation without either giving something in return, owing the donor a favour or, at the very least, arousing community suspicion.

This is the heart of the problem for democracies like Australia. The general public is resigned to it, oppositions draw attention to it, incumbents under pressure may concede the need to reform it, but at crunch time, politicians in power duck and weave as Mr Rees is doing.

A London School of Economics report from 2004 (Political Corruption and Party Funding in Western Europe - An Overview by Arnault Miguet) on political funding corruption in western European nations concluded that only Iceland has escaped major scandal in recent years! This is a sobering thought, considering that scandals require hard evidence and hence are probably only the tip of the corruption iceberg.

Italy has had its massive “bribe city”(“Tangentopoli”) controversy snaring almost all its political parties, while France had the “Elf” political bribery scandal, the ramifications of which also brought down Germany’s Chancellor Kohl,(“Don Kohleone”) when his huge slush fund was exposed. Greece, Ireland, Spain, Portugal … it’s a long list.

The UK has lurched from one crisis to the next: the Ecclestone affair, “cash for questions”, “cash for Peerage” plus anonymous donations and forced resignations. Could ex-pat Lord Ashcroft’s multi-million pound donations from his Belize tax haven, targeting marginal seats for the Tories, possibly be compatible with fair democracy?

In New Zealand’s 2005 elections, “both National and Labour … used anonymous donations and trusts to shield the identity of their major donors, allowing hundreds of thousands of dollars to flow into campaign coffers from hidden sources”. There is an “urgent need for an extensive overhaul to the rules governing the funding of New Zealand’s electoral campaigns” (Andrew Geddis, University of Otago).

No examination of elections and money would be complete without reference to the USA, where the election arms race has seen the recent Presidential candidates raise more than $1 billion for the first time ever. Donations on this scale have allowed extraordinary campaigns, meticulously crafted for the media and watched by the world with bemused fascination. How democracy fits in is debatable, with a massive funding imbalance of hundreds of millions of dollars between candidates. It must be acknowledged however, that Obama’s grassroots internet campaign has rewritten the rulebook on election funding, the ramifications of which are yet to be seen.