Elections, Party- and Campaign Financing
The financing of political parties’ campaigns has been an unresolved issue since the change of regime and at the same time is also the biggest corruption risk in Hungary.
Since the change of regime, the majority of the parties’ revenue comes from subsidies from the state budget, while only a small part of it consists of party members’ contributions. Today in Hungary, even the most politically committed citizens do not feel the need to financially contribute to the activities of their preferred party. Starting this year, in accordance with the new regulation, apart from state funds and member contributions parties can only accept financial support from natural persons of Hungarian nationality.
The financial management of the parties is not transparent enough: there is no clear-cut regulation regarding the deadline by which parties are obligated to publish their financial reports on their websites. What is more, the reports are not detailed enough to provide deeper insight into their finances.
Within the framework of its “képmutatás.hu” project, TI examined the campaign financing of the 2010 general elections. The inquiry showed that the biggest parties (Fidesz and MSZP – The Hungarian Socialist Party) spent about HUF 1.5 billion instead of the legally allowed HUF 386 million. If we accept the revenues and expenditures indicated in the official reports as legal sums, we have to assume that the exceptionally costly election campaigns are being financed from illegal financial resources.
If legal funds are not sufficient, the parties will look for illegal financing options. Based on TI’s experience this mechanism works in the following way: parties become obligated to business entities which fund their campaigns, and when the governing party is elected the favour of corrupt financing is returned by allocating public funds in biased, fraudulent ways.
The Hungarian political elite has difficulties in admitting the fact that recognising the extreme expenditures of political parties and their campaigns, amounting to billions of forints, has lower social costs than gaining illegal funds.
On TI’s initiative the parties of the parliament made a promise about a new regulation which makes campaign financing resistant to corruption. The new regulation would ensure the absolute transparency of the parties’ and candidates’ revenues and expenditures. In addition, there would be unified conditions of campaign platforms. The new law on campaign financing, which was adopted on 10 June 2013 and is to be applied in the 2014 campaigning period, does not correspond to the aforementioned commitments.
The advantages of the new regulation are, on the one hand, that it provides parties with hundreds of millions of forints for campaigning, and on the other hand, the ceiling of campaign spending per candidate was raised from HUF 1 million to HUF 5 million. This measure will harmonize the actual campaign spending with the realistic estimates made by TI. This is a huge step in the combat against corruption in campaigns because if the state covers the campaign expenditures in a transparent way, it “whitens” the campaign. According to Act 36 of 2013 on the electoral process, electronic platforms are available for political advertising free of charge in both commercial and public service media. If the campaign tools which used to be extremely expensive during previous campaigns are made free of charge, the ceiling of HUF 5 million per candidate will be a realistic amount. The raised ceiling of campaign spending and the free of charge media advertising together will whiten political campaigns.
The weakness of the Act is that it fails to render fraud impossible and it does not initiate ways of control suitable for revealing attempts at fraud. Therefore, on the whole, the Act is insufficient for extinguishing campaign corruption because it creates as many loopholes as it eliminates – if not more.