ABSTRACTPolitical parties submitted reports for 2001 on 1 March 2002. Municipal elections took place on 11 March 2001, but information on who contributed to political parties was only disclosed to the public one year later. Further, the submitted financial reports do not provide a clear picture of political parties' expenditures before and after the municipal elections. These declarations once again confirm that the existing legislation on political party financing does not allow society to obtain clear and current information on the income and expenditures of political parties.

The law currently regulating political party finances states that political parties must submit reports on contributors only once per year – 12 months after municipal elections and five months after Saeima (parliamentary) elections. This means that when voting for a political party, society is not informed about the sources of parties’ finances. Further, parties’ expenditures rise significantly in election years. This usually takes place in the form of pre-election campaign expenditures, which comprise about 65% of political parties’ expenditures in election years. An expensive election campaign may directly affect election results, therefore it is necessary to require political parties to provide detailed information regarding how much money was spent on pre-election campaigns before the elections take place. Changes in political party financing legislation that would require regular accounting of party income and a detailed list of expenditures must be made without delay. Otherwise, the 8th Saeima elections will be just as secretive as all the previous ones.

It must be admitted that legislation on flows of political party finances cannot resolve everything, because in and of itself it does not guarantee that the information submitted by political parties is accurate. Considering the great deal of illegal money flows in the economy , it must be assumed that a lot of that money goes toward political party financing and is not reflected in official company or party reports. Also, even if regulation of party finances is entrusted to a particular institution, this is not always done effectively, because it is difficult to guarantee this institution’s independence and political non-involvement.

Of all political parties’ expenditures in election and non-election years, advertising is the greatest expenditure and merits special attention. In this situation, conducting an independent accounting of advertising, the project ‘Openly about the 8th Saeima electoral campaign financing’ managed to document almost 2/3 of all political parties’ expenditures . In a situation where political party finances are practically unregulated and in which official reports do not include all money flows, these calculations provide a rather clear picture about political parties’ funds and underscore the importance of independent observation.

This effort is even more important when one considers that this study found that party finances are concentrated in the hands of the largest parties. The report concludes that in the 2001 municipal election campaign efforts, 87% of all expenditures or about 1 960 000 lats were spent by the three largest parties: PP (People’s Party), FFF (For Fatherland and Freedom) and LW (Latvia’s Way) (out of 2 250 000 lats). The People’s Party spent the most, 44%. Latvia’s Way came in second place, with 25% of total expenditures, and FFF spent 17% of total expenditures. These numbers confirm that contributors are most attracted to parties with Saeima representation and which control politics and economics. By contrast, a political party’s ideological affiliation has much less meaning. The stark difference in the amount of money in the hands of large and small parties could lead one to conclude that large parties may potentially be much more subject to contributors’ influence. Only by drawing the attention of society and the media to the amounts of money involved and its proportionality is it possible to ensure fair play by all political parties.

A Reflection of the Shortcomings in Legislation on Party Financing in the 2001 Finance Declarations

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