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Select Committee’s Report on Funding of Political Parties

Comments of the Joint Economic Council

Over the recent years, a number of initiatives have been undertaken to improve governance at national as well as corporate levels. While the enactment of the Financial Reporting Act has clearly set the calendar to enhance good corporate governance following the work by the Committee on Corporate Governance, there is no clear implementation plan with respect to the recommendations of the Report ‘Select Committee on the Funding of Political Parties’ (October 2004).

The Select Committee’s Report addresses two essential components of the regulatory framework; these relate to the sources of finance and the mechanics for regulating the financing of political parties.

Sources of fund

There is a fundamental difference between the Sachs’ Report and that of the Select Committee. Whereas Sachs’ position is radical and prescribes State funding as the only source, the Select Committee takes the view that funding could be made by various stakeholders with the State giving some “minimal” reimbursement. The Sachs’ approach is exclusive and “State controlled” whilst the Select Committee’s adopts a more participatory and inclusive approach.

We believe that the position of the Select Committee is more appropriate and relevant to the context of Mauritius.

Mechanics of the regulatory framework

The Select Committee (building on the Sachs’ Report) has made a wide range of recommendations. While some of these will need further analysis prior to implementation, it is felt that the Report contains a critical mass of key recommendations, which, if implemented, could change the landscape of funding of political parties immediately. These recommendations are as follows:-

A. Role of Electoral Supervisory Comission (ESC)

  1. An enhanced role of the ESC; and
  2. ESC should maintain proper Reports on the finance of political parties for consultation by the public.
B. Sources of fund

  1. Private funding will be permitted under mandatory procedures for disclosure to ensure transparency;
  2. Donations to be properly regulated;
  3. No foreign funding; and
  4. Funding by religious organisations and parastatals should not be allowed.

C. Political parties

  1. Political parties to keep audited accounts on their sources of finance and to be submitted regularly to the ESC;
  2. Political parties to be corporate bodies; and
  3. Spending limit be set at Rs, 1,000,000 for individual candidates as well as candidates forming part of a political party; and
  4. A distinction has to be made between campaign and non campaign expenses.

The recommendations above will be necessary for establishing a transparent and clear framework for the funding of political parties and should be implemented urgently. We believe that the other proposals contained in the Report should be subject to further analysis and to be added, subsequently, to the regulatory framework.

The emphasis on transparency and the enhanced role of the ESC are essential elements of the proposed mechanism. This regulatory framework concurs with Section 23 of the JEC’s Code of Ethics which invites all companies opting to finance any political party to declare such an activity in their books.

The establishment of a regulatory framework is urgent, and as such, the Select Committee’s main recommendations should be implemented now. Such an action will improve transparency in the electoral process in a significant manner. As stated in the Report, “transparency acts as a powerful guard against corruption and promotes trust and accountability”.

February 2005