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SIMULATING COMPLIANCE: PARTY AND CAMPAIGN FUNDING IN MOLDOVA
Paper prepared for the 5th ECPR Graduate Student Conference
Panel “The Funding of Political Competition”
University of Innsbruck, 3‐5 July 2014
Sergiu Lipcean1
European University Institute
Preliminary draft
Please do not cite without the author’s permission
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TABLE OF CONTENTS
ACRONYMS .......................................................................................................................................................... 3
1. INTRODUCTION ........................................................................................................................................... 4
2. DEVELOPMENTS OF THE REGULATORY FRAMEWORK ON PARTY AND CAMPAIGN
FINANCING ......................................................................................................................................................... 6
3. DRAWBACKS OF THE REGULATORY REGIME ............................................................................. 12
3.1. Regulation of party/campaign revenue ............................................................................................. 12
3.2. Regulation of party/campaign spending ........................................................................................... 14
3.3. Regulation of reporting and disclosure .............................................................................................. 15
3.4. Regulation of oversight and sanctions ............................................................................................... 17
4. PATTERNS OF CAMPAIGN REVENUE ............................................................................................... 19
4.1. The nature and extensiveness of donors’ networks ......................................................................... 19
4.2. The composition of campaign revenue ............................................................................................. 22
5. PATTERNS OF CAMPAIGN SPENDING ............................................................................................. 26
6. CONCLUSION ............................................................................................................................................... 31
7. ANNEXES ....................................................................................................................................................... 33
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ACRONYMS
BAEB – Braghiş Alliance Electoral Bloc
CDPP – Christian Democratic People’s Party
CEC – Central Electoral Commission
CUM – Centrist Union of Moldova
DMEB – Democratic Moldova Electoral Block
DPM – Democratic Party of Moldova
EAM – European Action Movement
FNCP – For Nation and Country Party
LDPM – Liberal Democratic Party of Moldova
LP – Liberal Party
LPP – Law on Political Parties
LPSPO – Law on Parties and Socio-Political Organizations
OMA – Our Moldova Alliance
PCDP – Peasants Christian Democratic Party
PCRM – Party of Communists of Republic of Moldova
PFR – Party Funding Regime
PRCM – Party for Rebirth and Conciliation of Moldova
PREB –Patria-Rodina (Motherland) Electoral Bloc
PSDM – Party of Social Democracy of Moldova
SDPM – Social Democratic Party of Moldova
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1. INTRODUCTION
Moldova is one among few post-communist countries in which legal provisions regulating the
activity of political parties set up at the outset of transition survived more than 15 years without
substantive changes. At least this claim can be hardly challenged concerning the regulation of party and
campaign finances. Whilst other factors affecting the dynamics of party competition, like registration
requirements or electoral threshold, were quite often subject of regulatory intervention meant to tip
the scales in favour of a given political actor, then party funding regime has been kept almost
untouched for quite a long time. This by no means implies the lack of regulations or amendments
related to party/campaign funding. On the contrary, party funding regime (PFR)2 has developed in
time and the initial provisions regarding the control over the money flows both towards and from
parties’ treasuries embedded in “Law on Parties and Other Socio-Political Organizations”3 have been
complemented and detailed by specific clauses inbuilt in the Electoral Code.4 However, the regulations
concerning PFR were tailored rather in a manner that made it quite permissive, thus creating a large
room for manoeuvring, and making the life of political parties less stressful. Accordingly, parties could
easily circumvent the rules given the gaps and ambiguities in the regulations. Furthermore, these
shortcomings were backed by the lack of enforcement that largely explains the resilience and
persistence of PFR, as well as the unwillingness of political actors to amend considerably the current
regulatory framework.
As in many post-communist countries5, regulation of party and campaign funding in Moldova
has always been a politically sensitive issue. On this point Moldovan parties and politicians resembled
their colleagues from other post-communist countries by using similar strategies to devise the rules of
the game to their own advantage, and at the expense of their competitors. What is, however, different
is their skilfulness to have kept away for a long time this issue from the public debate. Yet even in such
circumstances it was difficult to avoid permanently the discussion concerning the need of reforming
the PFR.
The way how political parties managed to avoid the exposure of their financial activities to the
general public and maintain the rules unchanged is rather a notable exception.
Furthermore, Moldova’s case stands as an outlier for another reason – political parties are not
yet entitled to receive direct state funding and have to rely exclusively on private sources. From this
2 I apply the term to both regular and campaign financing of political parties. 3 Law on Parties and Other Socio-Political Organizations, No. 718-XII of 17.09.91, the Official Gazette of Republic of Moldova, No. 11-12/106, of 17.09.1991 4 Electoral Code, Law No. 1381-XIII of 21.11.97, the Official Gazette of Republic of Moldova No.81/667, of 08.12.1997 5 Janis Ikstens et al., “Political Finance in Central Eastern Europe: An Interim Report,” Österreichische Zeitschrift Für Politikwissenschaft, no. 1 (2002): 21–39; Daniel Smilov and Jurij Toplak, Political Finance and Corruption in Eastern Europe: The Transition Period (Ashgate Publishing, Ltd., 2007); Steven Roper and Janis Ikstens, Public Finance and Post-Communist Party Development (Ashgate Publishing, Ltd., 2008).
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vantage point, it does not match neither the ‘cartelisation thesis’6, regardless of its conceptual critique7
and the empirical analyses of the established8 and emerging democracies9, nor the ‘competition thesis’,
according to which the formalisation of party funding regime and the provision of public funding is a
function of the robustness of political competition instead of collusion.10
In spite of the ability of political actors to have kept the issue of party funding almost
untouchable for such a long time they were forced to address it.
The impetus for a tighter regulatory regime came from the outside. As a newly emerging
democracy Moldova was exposed to various external pressures having to assume and respect its
commitments as a member of international organizations by carrying out democratic reforms.
Consequently, parties were obliged to adjust their functional needs to external conditionality, at least at
declarative level. At the same time, democratization reforms also meant international assistance and
expertise in dealing with many policy areas. Party regulation, as a specific issue of party building, was
one among many other policy domains subject to a particular attention from international community.
But even in this respect parties managed to eschew from embedding tighter requirements
concerning their finances into legal framework. While the recommendations towards other aspects of
party regulation were substantively considered, those regarding PFR received rather a procedural
interpretation.
This paper aims to shed light on several aspects of party and campaign funding in Moldova as a
peculiar case among post – communist countries.11 It proceeds as follows. In the second section I look
at the developments in the area of party funding showing how thorny the process was resulting in
several failed attempts to enact a new legal framework. Third section is devoted to a brief analysis of
current regulatory regime by focusing on its fundamental shortcomings. In the fourth section I
6 Richard S. Katz and Peter Mair, “Changing Models of Party Organization and Party Democracy The Emergence of the Cartel Party,” Party Politics 1, no. 1 (January 1, 1995): 5–28; Richard S. Katz and Peter Mair, “Cadre, Catch-All or Cartel? A Rejoinder,” Party Politics 2, no. 4 (October 1, 1996): 525–34; Richard S. Katz and Peter Mair, “The Cartel Party Thesis: A Restatement,” Perspectives on Politics 7, no. 04 (2009). 7 Ruud Koole, “Cadre, Catch-All or Cartel? A Comment on the Notion of the Cartel Party,” Party Politics 2, no. 4 (October 1, 1996): 507–23; Herbert Kitschelt, “Linkages between Citizens and Politicians in Democratic Polities,” Comparative Political Studies 33, no. 6–7 (September 1, 2000): 845–79. 8 Kevin Casas-Zamora, Paying for Democracy: Political Finance and State Funding for Parties (ECPR Press, 2005); Klaus Detterbeck, “Cartel Parties in Western Europe?,” Party Politics 11, no. 2 (March 1, 2005): 173–91; Jon Pierre, Lars Svåsand, and Anders Widfeldt, “State Subsidies to Political Parties: Confronting Rhetoric with Reality,” West European Politics 23, no. 3 (2000): 1–24; Susan E. Scarrow, “Party Subsidies and the Freezing of Party Competition: Do Cartel Mechanisms Work?,” West European Politics 29, no. 4 (2006): 619–39. 9 Alenka Krašovec and Tim Haughton, “Money, Organization and the State: The Partial Cartelization of Party Politics in Slovenia,” Communist and Post-Communist Studies 44, no. 3 (2011): 199–209; Derek S. Hutcheson, “Party Cartels beyond Western Europe Evidence from Russia,” Party Politics 19, no. 6 (November 1, 2013): 907–24; Allan Sikk, “Party Financing Regimes and Emergence of New Parties in Latvia and Estonia,” 2004; Tim Haughton, A Law Unto Themselves: Money, Regulation and the Development of Party Politics in the Czech Republic, Working Paper Series on the Legal Regulation of Political Parties, 2012, http://www.partylaw.leidenuniv.nl/uploads/wp2012.pdf. 10 Anna Grzymala-Busse, Rebuilding Leviathan: Party Competition and State Exploitation in Post-Communist Democracies (Cambridge University Press, 2007); Anna GrzymalA-Busse, “Political Competition and the Politicization of the State in East Central Europe,” Comparative Political Studies 36, no. 10 (December 1, 2003): 1123–1147. 11 Given the main purpose of this paper and limited space I do not pay attention to the state of the art on party and campaign funding in post-communist area.
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investigate the consequences of regulatory framework by scrutinizing actual patterns of campaign
funding. Here I tackle the revenue side of financing by focusing on donors’ networks and income
structure. The fifths section approaches the other side of campaign funding by examining spending
trends and patterns. The last section concludes.
2. DEVELOPMENTS OF THE REGULATORY FRAMEWORK ON PARTY AND
CAMPAIGN FINANCING
After the adoption of the Electoral Code in 1997, which laid down more rigorous, but still lax,
provisions on campaign financing, there were undertaken three attempts to reform the legal framework
on political parties including financial aspects related to parties’ activity. The first two attempts failed
despite strong support from civil society and international organization that provided expertise. Both
draft laws reached the parliamentary agenda, however none of them succeeded
The first draft has been developed by the Ministry of Justice in cooperation with independent
experts and with the support of specialised organizations (International Foundation for Electoral
Systems) being presented to parliament for review on 2 August 2000.
The bill included more detailed provisions on donations, bans, party ownership, and spending.
In the same vein, it was stipulating an enhanced control over parties’ financial activities through more
demanding requirements regarding disclosure and oversight.12 It was approved in the first reading, but
afterwards remained locked in the parliament. This outcome may be explained partially by the political
circumstances during the electoral cycle 1998-2001 characterised by high governmental instability
generated by a twofold political conflict. On the one hand, there was a conflict among the members of
the government coalition. On the other hand, there was a clash between parliament and president,
resulting in a constitutional amendment whereby parliament took over the president by modifying the
procedure for electing the chief of the state. Yet, the failure of the parliament to elect the president in
accordance with the new procedure has led to early parliamentary elections. Under such uncertainty, all
political forces were much less concerned with enacting a draft law that might have negatively affected
the channels though which they were pouring the money into electoral battle.
The outcome of early parliamentary elections held on 21 February 2001 was quite surprising,
representing a landslide victory of the PCRM who gained 71 out of 101 mandates (See table 1 for the
results of parliamentary elections). Initially the PCRM seems to have engaged in the promotion of the
bill by submitting it to Council of Europe expertise.
The feedback was generally positive, however the experts voiced their concern regarding the
appropriateness of the Ministry of Justice as the institution empowered with monitoring and oversight
functions, recommending “a body or person independent of the political process” in exercising this
12 For the purposes of this paper I will refer only to issues of party and campaign funding leaving aside the provisions related to other areas of party activity.
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Table 1: Parliamentary elections results 1994-2010
Election date/year → 1994 1998 2001 2005 5/4/2009 29/07/2009 2010
Electoral threshold →
4% 4% 6% 6% - 1 EC* 9% - 2 EC
12% - >2 EC
6% - 1 EC Electoral blocks
prohibited
5% - 1 EC Electoral blocks
prohibited
4% - 1 EC 7% - 2 EC
9% - >2 EC
Electoral competitors ↓
Votes%
Seats Votes %
Seats Votes %
Seats Votes %
Seats Votes %
Seats Votes %
Seats Votes %
Seats
DAPM 43.18 56 3.63 0 1.16 0 SPUEMB 22 28 PIB 9.21 11 APCDF 7.53 9 PCRM 30.01 40 50.07 71 45.98 56 49.48 60 44.69 48 39.34 42 DCEB 19.42 26 FDPMEB 18.16 24 PDF 8.84 11 BAEB 13.36 19 CDPP 8.24 11 9.07 11 3.04 0 1.91 0 0.53 DMEB 28.53 34 PRCM 5.79 0 DPM 5.02 0 2.97 0 12.54 13 12.7 15 OMA 9.77 11 7.35 7 2.05 0 LP 13.13 15 14.68 15 9.96 12 LDPM 12.43 15 16.57 18 29.42 32 Others 18.08 0 19.9 0 16.36 0 16.42 0 9.18 0 2.26 0 6 0 Total 100 104 100 101 100 101 100 101 100 101 100 101 100 101 Source: Central Electoral Commission Note: EC – Electoral Contender. DAPM – Democratic Agrarian Party of Moldova; SPUEMB – Socialist Party and Unitate-Edinstvo Movement Bloc; PIB – Peasants and Intellectuals Bloc; APCDF – Alliance of the Popular Christian Democratic Front; PCRM – Party of Communists of the Republic of Moldova; DCEB – Democratic Convention Electoral Bloc; FDPMEB – For a Democratic and Prosperous Moldova Electoral Bloc; PDF – Party of Democratic Forces; BAEB – Braghiş Alliance Electoral Bloc; CDPP – Christian Democratic People's Front/Party; DMEB – Democratic Moldova Electoral Bloc; PRCM – Party for Rebirth and Conciliation of Moldova; DPM – Democratic Party of Moldova; OMA – Our Moldova Alliance; LP – Liberal Party; LDPM – Liberal Democratic Party of Moldova.
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task.13 Additional objections referred to the poor formulation of provisions pertaining to the
transparency requirements such as publishing financial information, including donors’ identity, as well
as extremely scarce provisions on direct state funding, with no specification of eligibility criteria, thus
leaving the room for violation of “the principles of pluralism and equality”.14
Notwithstanding, PCRM fully abandoned this draft without any explicit justification of its
withdrawal from the parliamentary agenda. One can only assume that, once reaching the public office,
the PCRM gained access to the state resources which could be employed for party building and
partisan purposes. Hence, the party was not interested in passing a law prescribing in detail the
requirements for a full disclosure and control over financial resources.
The second attempt to update and improve the PFR has been undertaken by the communist
authorities in 2005. A new draft law was exclusively focused on party and campaign funding and was
regarded as an indispensable tool in fighting against political corruption. It was seen as a constitutive
element of broader endeavours unfolded in the framework of National Strategy for Preventing and
Combating Corruption15 adopted by the parliament in December 2004.16 Among many goals and tasks
envisioned by the strategy, those concerning PFR were aiming to adjust the national legislation to
international standards by emulating the best practices to ensure transparency and political
accountability of parties. A particular emphasis was placed on introducing criminal liability for bribing
voters during election campaigns. According to the action plan for implementing the strategy, the
Ministry of Justice and the CEC have been empowered with the drafting process of the bill. Already in
September 2005 the government announced the approval of the draft law, which was devised by
embedding the recommendations of the Parliamentary Assembly17 and the Committee of Ministers18 of
the Council of Europe.
The bill stipulated a more precise definition of banned sources including foreign governments,
individuals and legal entities; public institutions at local and central administrative tiers; trade unions,
foundations, religious organizations, and anonymous persons. Additionally, it instituted a more
restrictive control over funding by establishing harsher sanctions in case of breaching the rules.
Among new provisions, the draft law specified limits on the total amount of private
13 James Hamilton, Expert Opinion on the Draft Law on Political Parties and Socio-Political Organisations of Moldova (Strasbourg: Council of Europe, September 11, 2002), accessed 20 May 2014, https://wcd.coe.int/ViewDoc.jsp?id=302981&Site=COE. 14 Ineta Ziemele, Expert Opinion on the Draft Law on Political Parties and Socio-Political Organizations of Moldova (Strasbourg: Council of Europe, September 11, 2002), accessed 20 May 2014, https://wcd.coe.int/ViewDoc.jsp?id=302981&Site=COE. 15 Second chapter “Measures to prevent and combat corruption”, section 2.2 b “Ensuring transparency and accountability of political activity” mention explicitly actions that should be taken to combat political corruption. 16 Parlamentul Hotărîre Nr. 421 din 16.12.2004 pentru aprobarea Strategiei naţionale de prevenire şi combatere a corupţiei şi Planului de acţiuni pentru realizarea Strategiei naţionale de prevenire şi combatere a corupţiei. Publicat: 21.01.2005 în Monitorul Oficial Nr. 13-16, art Nr: 58, Data intrării in vigoare: 16.12.2004. 17 Recommendation 1516 (2001): Financing of political parties. (CoE, Parliamentary Assembly), accessed 20 May 2014, http://assembly.coe.int/Main.asp?link=/Documents/AdoptedText/ta01/EREC1516.htm 18 Recommendation Rec(2003) of the Committee of Ministers to member states on common rules against corruption in the funding of political parties and electoral campaigns. (CoE, Committee of Ministers), accessed 20 May 2014, https://wcd.coe.int/ViewDoc.jsp?id=2183
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contributions a party was authorised to receive during an election and a non-election year. Donations
received by a political party during a non-election year could not exceed 15 thousands conventional
units, while the limit on the aggregate amount of donations over the election year was established at 30
thousands units.19 Beside the aggregate ceilings, the bill also envisioned limits on individual and
corporate donations. Individuals could contribute to a political party by not more than 500 units (MDL
10000/€ 648), while the limit for businesses were established at 1500 units (MDL 30000/€ 1944). Yet
businesses would have been allowed to contribute only if they would have already paid all the taxes to
the state.
Likewise, the bill foresaw the allocation of state subsidies to political parties. The amount a
single party was entitled to receive should not exceed 0.02 % of the budgetary revenue over one fiscal
year. The budgetary subsidies ought to be earmarked based on two criteria. The first criterion foresaw
that parties represented in the parliament would have been allocated an equal lump sum regardless of
their vote share. The second one stipulated the distribution of subsidies according to the number of
mandates. An interesting feature of this draft touched upon extra parliamentary parties that were also
entitled to receive state subsidies based on their vote share. Yet they would have obtained state
subsidies only if there was something left from the parliamentary parties. The monitoring process was
split between the Court of Accounts and the Tax Service. The Court of Accounts was empowered to
oversight and control the appropriate use of subsides and loans, whilst the Tax Service was authorized
to check the utilization of other funds.20 The bill has been submitted to parliament, but the legislative
did not discuss it within the prescribed time frame according to the law-making procedure and even
abandoned the subsequent examination of the draft.21
Nevertheless communist party had to fulfil its commitments toward external partners like
Council of Europe, OSCE, and the opposition. At least formally, they were forced to embark on
carrying out a democratic reform package as a payoff to opposition who voted for a communist
candidate for the presidency.22
External and domestic commitments resulted in the third and successful attempt to adopt a
new law on political parties. But the drafting process, parliamentary debates and the passage of the bill
revealed a deep disagreement between the government and opposition over the content of regulations.
19 A conventional unit represents a monetary equivalent of about 20 units of national currency – MDL (cca. € 1.30). Therefore, 15000 units amount to 300000 MDL (€ 19444) and 30000 units equals 600000 MDL (38888). Average exchange rate in September 2005 at the moment of adoption the draft law by the government € 1=MDL 15.43 (Source: National Bank of Moldova). 20 ‘Guvernul a Aprobat Proiectul de Lege Privind Finanţarea Partidelor Politice şi a Campaniilor Electorale’. Moldova.org, accessed 24 May 2014, http://www.moldova.org/guvernul-a-aprobat-proiectul-de-lege-privind-finantarea-partidelor-politice-si-a-campaniilor-electorale-5029-rom/. 21 Sergiu Grosu, Legislaţia Partidelor: Quo Vadis şi în ce Mod?.., e-journal, Guvernare şi Democraţie în Moldova (Chişinau: ADEPT, 30 November 2007), accessed 24 May 2014, http://www.e-democracy.md/comments/legislative/20071204/. 22 As the result of parliamentary elections held on 6 March 2005 Communist Party obtained 56 mandates which were insufficient to elect the president, but the opposition provided the necessary votes for electing the president in exchange for a package of legislative and institutional reforms.
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The chief novelty of this draft concerning the financial dimension of party activity relates to the
introduction of direct state funding and the stipulation of detailed clauses regarding the size of
financing, eligibility and allocation criteria. The bill foresaw 0.05 % of budgetary revenues for the
respective fiscal year to be distributed amongst parties based on the electoral performance in the
parliamentary and local elections. Accordingly, one half of public funds were to be distributed
proportionally with the number of mandates, whereas another half would have been apportioned based
on the number of votes gained at the local elections, provided that parties obtained at least 20 mandates
of counsellors in representative institutions of administrative units of the second level (Art.32).23
It should be noted that all political forces agreed upon the fact that the issue of party funding
needed an urgent solution. A new bill has been submitted to parliament in December 2006 and was
conceived to substitute the outdated LPSPO. Some of the top communist public officials publicly
acknowledged that parties’ finances represented a grey and shady area of parties’ activity, lacking
transparency with respect to all financing operations and sources of funding. Therefore the draft law
was designed to address this issue by establishing clearer, fairer and more transparent rules meeting the
requirements of Council of Europe and European Union.24
The opposition, however, questioned the fairness of rules foreseeing the provision of public
subsidies, openly accusing governmental party of a clear bias in setting up the eligibility criteria to gain
access to budgetary resources. Interestingly, there was even a split inside the opposition who was
unable to articulate a common position against the governmental party. For instance, CDPP has made a
common front with PCRM in drafting the bill and has defended it against the inquiries of other
opposition parties.25 Besides, even within the components of DMEB who entered the legislative on a
joint electoral list or inside the same parliamentary fraction there were different views on the rationale,
amount and eligibility criteria of public funding. Some deputies invoked the scarcity of budgetary
resources and the inappropriateness of providing subsidies to parties.26 Others, on the contrary, while
stressing the relevance of public funding, underscored that the envisioned amount of subsidies was set
up at a very low level and will not allow parties to break down the vicious circle of revolving around
oligarchic clans, thus preventing them to become functional democratic institutions that would be able
23 Draft Law on Political Parties of the Republic of Moldova. Accessed 23 May 2014, http://www.legislationline.org/documents/action/popup/id/15676. 24 Statement of Marian Lupu, Speaker of the Moldovan Parliament. Parliamentary Minutes of 28 December 2006 (Chişinău: Parliament, 2006), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/28.12.2006/. 25 Statement of Iurie Roşca, Chairman of CDPP. Parliamentary Minutes of 28 December 2006 (Chişinău: Parliament, 2006), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/28.12.2006/. 26 Statement of Dumitru Braghiş, MP from OMA. Parliamentary Minutes (Chişinău: Parliament, 2006), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/28.12.2006/.
11
to improve the quality of government.27 Other shortcomings and ambiguities were related to the
definition of recipients and implementation of clauses specifying the provision of subsidies.28
Interestingly, parliamentary debates focused exclusively on state subsidies, overlooking other
aspects of the draft. Nobody raised any question regarding bans, limits on private contributions, limits
on spending, transparency, oversight and control etc.
After the first parliamentary reading, the bill has been submitted for expertise to the Council of
Europe. The main objections related to financial aspects of the draft referred to the ambiguous
provisions on tax exemption of party income, and several contradictions between different clauses on
the economic activities that parties are entitled to carry out. Moreover, experts have drawn attention to
the provision that banning unconditionally Moldovan citizens living abroad from contributing to
parties would violate Art. 11 of the ECHR.29
The revised draft has been proposed for the second reading approximately one year later.
Parliamentary debates revealed a deep disagreement between the party in power and opposition over
several key issues. On the one hand, the communists suddenly tightened the requirements related to
private contributions by lowering the upper limit for the total amount a party could receive from
private donations from the equivalent of 0,2% to 0,1% of the budgetary revenue foreseen for the next
fiscal year. In the same vein, PCRM tightened the eligibility criteria for state subsidies by increasing the
number of mandates a party would have had to obtain in the local elections in representative bodies of
territorial-administrative units of the second level from 20 to 50.30 On the other hand, they increased by
fourfold the aggregate value of public funds to be allocated to parties, from 0.05% to 0.2% of the
scheduled budgetary revenue. These shifts were perceived by opposition as clear attempts of the
governmental party to design a law that advantages only the PCRM and restricts the opposition’s access
to private funds. Consequently, the bill was seen as failing to ensure a level playing field, particularly in
a pre-election year.31 Despite the oppositions’ protest the draft law was adopted by the parliamentary
majority, thus laying down a new regime on party and campaign funding. Yet the profound split
between power and opposition will have far reaching repercussions upon the enforcement of
provisions regarding public funding. To what extent the new law established a clearly distinct and more
restrictive regulatory regime remained, however, an open question which is addressed in the next
section by analysing the most controversial and ambiguous aspects of the LPP.
27 Statement of Anatol Țaranu, MP from OMA. Parliamentary Minutes (Chişinău: Parliament, 2006), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/28.12.2006/. 28 Statement of Vladimir Filat, MP from DPM. Parliamentary Minutes (Chişinău: Parliament, 2006), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/28.12.2006/. 29 Hans-Heinrich Vogel, Comments on the Draft Law on Political Parties of Moldova (Strasbourg: Venice Commission, August 6, 2007), accessed 20 May 2014, http://www.venice.coe.int/webforms/documents/?pdf=CDL-AD(2007)025-e. 30 Legislative proposal of PCRM fraction expressed by Anatolie Zagorodnîi, MP from PCRM. Parliamentary Minutes (Chişinău: Parliament, 2007), accessed 23 May 2014, http://old.parlament.md/news/Plenaryrecords/21.12.2007/. 31 Statement of Dumitru Diacov, DPM Chairman. Parliamentary Minutes, Statement of Vitalia Pavlicenco, MP from OMA. Parliamentary Minutes (Chişinău: Parliament, 2007), accessed 24 May 2014, http://old.parlament.md/news/Plenaryrecords/21.12.2007/.
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3. DRAWBACKS OF THE REGULATORY REGIME
In order to assess the changes of regulatory regime of party/campaign finances we look at
provisions of the LPP pertaining to the following aspects: income, spending, reporting/disclosure, and
oversight/sanctions. This will allow us to observe whether there are some changes and, if yes, to what
extent they are relevant and significant.
3.1. Regulation of party/campaign revenue
Among the provisions regulating the sources of funding, the LPP contains several completely
new clauses that were meant, on the one hand, to diversify the sources of party income, aiming to
reduce their dependence from private sponsors and, on the other hand, to impose a harsher control
on private money by capping both the aggregate and individual contributions to political parties.
Neither the LPSPO, nor the Electoral Code have had incorporated any of these provisions. The
diversification of financing sources would have been achieved by providing state subsidies, while the
control of private income should have been accomplished by capping donations. However, the
eligibility and allocation criteria chosen by the PCRM to deal with public funding targeted exclusively
parliamentary parties. For the one half of subsidies foreseen to be distributed to parties, the
communists chose the number of mandates instead of votes, thus automatically excluding non-
parliamentary parties from the access to public funding. Likewise, for the second half of subsidies,
they chose as distribution criterion the number of votes obtained by parties in representative bodies of
administrative units of second level provided that they obtained at least 50 mandates of counsellors.32
In this way they totally excluded from access to public money parties that would have achieved a good
score in representative institutions at the first territorial-administrative level. In fact, by setting the
number of mandates at 50 as mandatory criterion for gaining access to public funding, based on the
results of local elections, the communists raised the eligibility threshold, which now was higher than
4% used for the parliamentary elections.33
Initially, public funding was scheduled to be distributed starting from 1st July 2009 after regular
parliamentary elections would have been held, thus offering the possibility to earmark one half of
subsidies based on the elections’ results. The allocation of the second half of public funds would have
had to enter into force starting from 1st July 2011 on the basis of the local elections’ results. However,
none of these controversial provisions have been implemented either by communists, or by their
successors. Parliamentary elections held on 5 April 2009 resulted in an overwhelming victory of the
PCRM who obtained 60 out of 101 mandates, yet falling short to reach one more mandate to elect the
32 Representative institutions of the territorial-administrative units at the second level represent district level which is one of the two administrative levels. The first territorial-administrative level is represented by the elected institutions of villages, cities and municipalities, except municipalities of Chişinău and Bălţi which are of the second level. 33 Sergiu Lipcean, Evaluarea Finanţării Partidelor Politice şi Campaniilor Electorale în Republica Moldova, Politici Publice, no. 5 (Chişinău: IDIS ‘Viitorul’, 2009), 26, accessed 25 May 2014, http://viitorul.org/doc.php?l=ro&idc=295&id=2175&t=/STUDII-IDIS/Politica/Evaluarea-finantarii-partidelor-politice-si-campaniilor-electorale.
13
president. Elections results gave rise to civil unrest against alleged falsification of votes, labelled as
“Twitter revolution”, followed by violent repressions of many participants.34 The failure to elect the
president has led to early elections held on 29 July 2009, resulting in a joined but tight victory of the
opposition over the communists. Even though the PCRM lost 12 mandates, they would have still
been entitled to receive the lion’s share of state subsidies. The new officeholders, however, prevented
the implementation of the article concerning public funding by amending the LPP twice. New terms
foresee the provision of public funding starting as of 1st July 2015 and 1st July 2017 based on the
results of the local and parliamentary elections respectively (Art.32).
As one can see, the failure to reach the consensus over public funding during the drafting
process ended up in a repeated delay of enforcement. Former opposition, who expressed its
disagreement with the current terms of public funding throughout the drafting process, postponed the
allocation of subsidies, aiming to weaken communists, who otherwise would have benefited mostly.
The delay also meant preserving the status-quo, i.e. relying only on private contributions.
However, legal provisions on donations hardly can be regarded as restrictive. Indeed, the LPP is very
precise with respect to identity of potential donors, clearly specifying who is entitled and who is
banned from contributing to parties. Nonetheless, it is very permissive with respect to the amount a
single sponsor can pour into party coffers. The law stipulates that an individual can donate to one or
several parties, during one budgetary year, the equivalent of up to 500 average salaries. What concerns
corporate donors (legal persons) this equivalent must not exceed 1000 average wages (Art. 26). When
converted into real money we obtain an impressive sum. Since the campaign for the parliamentary
elections held on 05 April 2009 was the first one carried out under the new requirements, an example
would be useful to gauge the value of a single donation a sponsor was entitled to contribute to one or
several parties. Thus the upper limit for individuals was set at MDL 1570000 (≈ € 110000), while the
same cap for legal persons amounted to MDL 3140000 (≈ € 220000).35 When the average salary
amounts to roughly € 220 in the poorest country of Europe, such limits might be regarded as highly
permissive. Moldova holds the second position, after Russia, among post-communist countries
relative to the permissiveness of donations to parties.36 But it also has a GDP per capita about seven
times lower. Capping donations in such a way hardly affects parties’ fundraising strategies, nor will it
mitigate the potential influence of vested interests. Moreover, if one correlates the value of individual
donations with the total amount of private income a party is authorised to receive during one
budgetary year, then we observe that the legal framework creates conditions for a party to be financed
34 Alina Mungiu-Pippidi and Igor Munteanu, “Moldova’s ‘Twitter Revolution,’” Journal of Democracy 20, no. 3 (July 2009): 136–42. 35 ‘Ghidul Partidului Politic în Domeniul Finanţării Campaniilor Electorale pentru Alegerile Parlamentare din 5 Aprilie 2009’ (Comisia Electorală Centrală, 2009). Note: the average monthly wage projected by government for the 2009 was MDL 3140 (≈ € 220), € 1= MDL 14.24 36 ‘Political Finance Database’ (Institute for Democracy and Electoral Assistance, 2012), accessed 27 May 2014, http://www.idea.int/political-finance/index.cfm
14
approximately by four legal persons, by eight individuals, or by a combination of both if each of them
provides the maximum amount permitted by law.37 Obviously, this example illustrates an extreme
case, but it clearly reveals how much leeway parties reserved for themselves. Although the LPP
stipulates caps on aggregate income and individual donations, their interaction creates an incentive
structure that does not stimulate parties to diversify their income sources. It is not surprising why
there was no disagreement, as well as no debates over donations during the law-making process.
3.2. Regulation of party/campaign spending
Unlike the regulation of income, spending represents a more sensitive issue since it may affect,
first and foremost, challengers not incumbents. Therefore capping spending is likely to disadvantage
the former as against the latter. A key feature of the Moldova’s legal framework towards spending is
the lack of ceilings on aggregate spending explicitly specified for regular and campaign activity.
However, there is an expenditure ceiling that overlaps with the total cap on income. Additionally, the
CEC is empowered to set a spending cap for every election campaign. Therefore, capping party
expenditures during campaign is the result of an ad-hoc decision of the central electoral body. As in
many post-communist states, campaign spending in Moldova grew up rapidly as did so the ceilings on
campaign spending that appear to be rather a function of party needs than being driven by other
rationales like ensuring an even playing field to all electoral contestants, or applying a certain
methodology. The CEC came up with a clear and explicit methodology to cap campaign spending
only recently. It already employed it in the parliamentary campaign of 28 November, 2010 and local
campaign of 5 June 2011. Parties and electoral blocks are allowed to spend the equivalent of 50
eurocents for one registered voter, while independent candidates 5 eurocents per voter. Accordingly,
the upper limit will now vary contingent on the fluctuations in the number of registered voters.
Table 2 reveals that ceilings on campaign expenditure for the last ten years increased by more
than 20 times the nominal value of national currency (MDL) for parties and electoral blocks.
Table 2: Ceilings on the financial resources electoral contestants were entitled to collect through the “Electoral Fund” bank account
Electoral contestants → Political parties & electoral blocks Independent candidates
Currency → MDL € MDL € Elections date ↓ 25/02/2001 1000000 85360 50000 4268 06/03/2005 2500000 153166 100000 6127 03/06/2007* 7500000 448712 Various Various 05/04/2009 12000000 842762 500000 35115 29/07/2009 7500000 474993 500000 31666 28/11/2010 21664445 1334683 2166444 133468 05/06/2011* 22142345 1328961 Various Various Source: The CEC decisions No.1363 of 12 January, 2001; No. 672 of 14 January, 2005; No. 500 of 12 April, 2007; No. 2067 of 6 February, 2009; No.2590 of 20 June, 2009; No. 3566 of 25 October, 2010; No.84 of 5 April, 2011.
37 0.1% of aggregate income a party is entitled to receive, represented roughly MDL 13099881 (≈ € 920000), the equivalent of the budgetary revenue for the 2009 fiscal year.
15
Note: The amount in Euro is estimated on the basis of the average exchange rate from National Bank of Moldova one month before elections. * Are marked local elections otherwise parliamentary.
However the problem with campaign expenditures does not lie only in the upper limit of the
aggregate spending. It also lies in the vague delimitation of expenditure items parties are obliged to
report. Therefore, it is a joined problem of spending and reporting. The LPP prescribes only the
purposes for which parties are allowed to spend the budgetary money (Art. 29), without saying anything
about private resources. The Electoral Code is much more punctual in delimiting purposes for which
spending is prohibited. Natural and legal persons are forbidden to spend money in favour or on behalf
of electoral contestants by avoiding the “Electoral Fund” account, which is a special bank account that
every electoral contestant must open exclusively for electioneering purposes, being obliged to execute
all financial operations only through that account. Furthermore, electoral candidates are prohibited to
offer voters money, gifts and free goods, including humanitarian aid or other charity (Art.38). Apart
from the aggregate cap on spending, there are limits on some expenditure items such as paid TV/Radio
and outdoor advertising.38 Despite these limits and prohibitions parties manage to circumvent them by
not reporting and, therefore, not disclosing significant amounts of financial resources employed in
electoral contests. As shown in the section analysing parties’ spending strategies, the problems related
to spending are closely associated with reporting and disclosure issues.
3.3. Regulation of reporting and disclosure
Transparency is often perceived as remedy when it is difficult to reconcile struggling parties on
other controversial issues. In this case political actors are left with a larger room of manoeuvre in
exchange for a higher degree of transparency over fundraising and spending. A full transparency over
party finances offers voters the possibility to identify the relationship between parties and their
sponsors. Citizens will be able to withdraw their support if a party is too receptive to sponsors’
demands on the expense of larger social interests. But, does transparency always act as a countercheck
towards lax rules regarding income and spending?
In Moldova’s case, a preliminary answer would be rather positive. Yet, the expected healing
effects of a fully-fledged regime on reporting and disclosure turned out to be quite dangerous for
political parties. Therefore they chose to cancel it out by finding legislative loopholes and undermining
the capacity of civil society and media to inspect their financial activities.
Prior to the adoption of LPP, both the LPSPO and the Electoral Code had incorporated
provisions on reporting and disclosure. However, they were quite generalist in nature, referring only to
the aggregate items on income and expenditures. The LPSPO required to publish annual reports on
the income sources and expenditures and to present a declaration on party financial activity to
competent bodies (Art. 24). Likewise, the Electoral Code compels electoral contenders to publish in
38 The concrete limits on these spending items are examined in the 5th section.
16
media the information on revenue and other material support within a month after the campaign’s
starting. Electoral contestants are also obliged to present every two weeks financial reports to electoral
bodies, containing information on income and spending (Art. 38). But only with the enactment of the
LPP parties were obliged to keep a register of donors by indicating the name, residence and the value
of each donation (Art. 27). The LPP (Art. 31) confirmed public status of information pertaining to the
campaign funding, by demanding that parties submit standardized reports to the CEC. In turn, the
CEC is entitled to lay down the specific criteria on how the reports should look like in displaying the
detailed information on income and expenses.
Two points have to be underlined. First, according to the LPP not parties themselves but the
CEC is compelled to disclose parties’ financial declarations by publishing them on its own webpage.
Similarly, banks, not parties, are compelled to inform the CEC and other electoral bodies about the
financial means wired in the “Electoral Fund” account. Second, the law requires parties to keep a
registry of donors but it does not oblige them to make it publicly available.
Although transparency rules appear to be less ambiguous compared to income and spending
provisions, they proved to be quite fragile and interpretable when confronted with actual campaign
practices. Their vulnerability surfaced when media investigations questioned the payment capacity of
certain donors from parties’ financial declarations submitted to the CEC. A full disclosure of income
sources meant the requirement to indicate the name, fiscal/identity code, birthday, residence,
workplace, type of income, and the amount. Some of these items are of highest sensibility. Identity
code and the residence fall under the incidence of the Law on Protection of Personal Data and their
use by the media to check out the payment capacity of donors was quickly noticed by parties, who
tried defending themselves from the outside inquires by claiming privacy for their sponsors. The
conflict that emerged between legal provisions of the LPP, the Electoral Code, and the Law on Access
to Information, on the one side, and clauses embedded in the Law on Protection of Personal Data, on
the other side, was solved in favour of the latter, despite strong arguments to keep a fully-fledged
transparency regime.
The LPP explicitly states that data on campaign funding represents information of public
interests and, therefore, has to be disclosed. Similarly, the Law on Access to Information contains a
‘public interest’ clause, meaning that disclosure of information with limited access (like personal data) is
permitted if public interest in knowing the information prevails over the potential damage produced by
disclosure. Nevertheless, the Law on Protection of Personal Data took over and the protection of
donors’ identity was deemed superior relative to the disclosure of their identity as a public interest issue.
As consequence, all data identifying party sponsors, except the name and the amount of donations,
have been erased from the parties’ financial reports. Even prior to the removal of identity data, there
17
were some parties that did not respect the reporting requirements imposed by the CEC, without
incurring any costs in terms of sanctions.39
The depiction above shows that parties were very reluctant in accepting stricter rules on
transparency. Besides this open setback, one could observe many instances of non-compliance with
respect to reporting. The regulatory framework does not specify exactly what kind of items are to be
reported. This creates a huge leeway for parties regarding campaign spending. As will be shown, on the
basis of actual expenditure data, parties report almost exclusively only the expenditures related to paid
advertising on TV, radio, print media, and billboards, i.e. items that can be checked by
monitoring/oversight bodies.
The lack of compliance is closely related to an important dimension of the PFR accounting for
the effectiveness of rules in place – oversight and sanctions.
3.4. Regulation of oversight and sanctions
Enforcement is found to be one of the weakest points of the PFR in post-communist space.40
Moldova is not an exception from this general rule. On the contrary, the way how oversight is
undertaken proves that the entire mechanism is doomed to be ineffective or to be used selectively to
intimidate and harass political opponents. Its ineffectiveness derives from several sources. The first
one is rooted in the institutional design of monitoring that is split between several institutions entitled
to check party finances for different time spans and distinct financial activities. The second comes
from the poor delimitation of jurisdictions that may overlap, or because a given institution has no
leverage (powers, resources, expertise) to act independently, thus being forced to ask assistance from
other institutions. The third stems from the lack of appropriate sanctions for financial wrongdoings,
i.e. sanctions that are proportional and dissuasive towards offences related to party and campaign
funding.
Institutional design of monitoring/supervision seems to create rather confusion than
transparency and clarity. There are four institutions authorised to deal with party finances: CEC,
Ministry of Justice, Ministry of Finance/State Tax Service, and the Court of Accounts. Each of them
may be involved at different stages and for different purposes to oversight party finances, therefore
the process may become highly fragmented. Although the CEC is the only institution authorized to
investigate funding activities during election campaigns, virtually it can do nothing if detects any kind
of irregularities. In this case it may request the Court of Accounts or the Tax Service to check the
lawfulness of money and its sources. The very process is slow and cumbersome under circumstances
when it must be speeded up. The issue became more complex by the involvement of the Centre for
Combating Economic Crimes and Corruption (currently National Anticorruption Centre) which does
not hold formal oversight jurisdiction over party finances. Yet, based on the CEC requests it carried
39 For instance, communists did not mention the workplace of their donors. 40 Ikstens et al., “Political Finance in Central Eastern Europe: An Interim Report.”
18
out investigations on the alleged frauds related to the existence of fictive donors. It is not clear why
the CEC summoned the Centre for Combating Economic Crimes and Corruption to undertake
investigations instead of addressing this kind of requests to the Tax Service given the specificity of the
alleged violations touching upon tax evasion, not corruption.
The oversight is even more problematic between campaigns. If the CEC is the only institution
entitled to perform this task during campaigns, then regular party financing activity is monitored by
several institutions. According to the LPP (art.30), parties are required to submit yearly financial
reports to the Court of Accounts, Ministry of Finance, and Ministry of Justice. Here the task of
verifying financial reports is split between the Court of Accounts, who has to check whether the
public money is spent properly (Art. 29), and the Ministry of Finance, who is in charge with
scrutinizing other income sources.
This brief sketch shows that oversight of party funding seems to be an institutionally
overcrowded area, however lacking efficiency. Furthermore, enforcement is likely to be plagued by the
lack of institutional autonomy. Clearly, all of these institutions are not politically independent,
although the appointment procedures of the CEC’s and the Court of Accounts’ members make them
slightly more autonomous and remote from the immediate political pressure.41
This makes the entire mechanism of monitoring rather a suitable repressive tool against
political opponents, then as an effective mechanism to hold parties accountable.
Finally, the inefficiency of control is caused by the lack of actual sanctions for violations
concerning financial wrongdoings. Punishment mechanism consists of only two extreme sanctions
explicitly envisaged by the regulatory framework: warning and cancelling of candidates’ registration.42
The harshest penalty has never been applied in respect to any electoral contender, at least not for
parliamentary contests. Thus, the only sanction the CEC can use against electoral contenders is the
warning, which is the softest possible penalty. Indeed, the CEC applied it whenever there were
identified financial wrongdoings regardless of their severity. Despite of the softness of warning it had
certain effects on disciplining parties, but only forcing them to comply with formal requirements.
Consequently, the nature of violations changed, from the lack of compliance to respecting
some basic rules, like opening the “Electoral Fund” account or submitting financial reports to the
CEC,43 towards employing more sophisticated strategies by disguising the real value of campaign
spending. As formal compliance with general and formal rules was becoming an accepted behaviour
41 The appointment procedure of the Court of Accounts’ composition envisages that the Chairman and the members are elected by the Parliament for a term of five years through a majority vote. The appointment procedure of CEC’s members stipulates that eight members are elected by the parliament by respecting the proportional representation of the parliamentary majority and the opposition, whereas one member is appointed by the President for a five year term. 42 It should be mentioned that LPP foresees the canceling of public subsidies if a party is discovered to have breached the rules on financing. However, since the provision of public subsidies is not in place yet I do not consider it here as an effective tool of sanction mechanism. 43 CEC decision No. 671 of 26 May 2007 on the financial reports concerning revenues and expenditures of electoral contenders in electoral campaign for general local elections of 3 June 2007.
19
by parties, the strategy of electoral struggle has shifted towards mutual denouncing with respect to
misuse and abuse of financial resources. The bulk of contestations addressed to the CEC by different
contenders on grounds related to campaign funding were exactly of such nature. The CEC had the
only mission to arbitrate between conflicting claims and to make requests addressed to other
institutions to undertake additional investigations. However, regardless of the severity of
misbehaviour, the ultimate verdict still remained the same – notification of the respective electoral
contender to remove irregularities and prevent further deviations concerning financial activity.
There is an obvious asymmetry between prescriptive and punitive sides of the PFR. The
Electoral Code and the LPP do incorporate clauses on prohibited activities concerning
party/campaign finances but they do not envisage deterrent and credible sanctions for the violation of
those provisions.
Overall, the shortcomings concerning the regulation of income, spending, transparency and
enforcement mirror a faulty regulatory regime. These deficiencies entail many negative repercussions
on real party/campaign funding which are explored below.
4. PATTERNS OF CAMPAIGN REVENUE
There are two strongly intertwined issues concerning party fundraising strategies which are
pertinent for the analysis of campaign budgets. The first issue relates to the extensiveness and nature of
donors’ networks. Here we look at the dynamics of donors’ networks and the problems associated with
the identity and credibility of parties’ sponsors. The second issue pertains to the composition of
campaign revenue, i.e. how the electioneering costs are shared among different categories of donors.
4.1. The nature and extensiveness of donors’ networks
Parties’ financial declarations, albeit incomplete, are useful in shedding light on parties’
fundraising strategies, thus providing valuable insights pertaining to the identity of those who bear the
burden of electioneering. Scholars working on party finances use several criteria based on which
sources of income can be assessed. A common typology of income sources distinguishes between
private, public and illegitimate funding with various subcategories44. Some pay a particular attention to
the financing strategies of parties by looking at the value of private contributions, whether parties rely
on grass-roots or plutocratic financing45. Another distinction is usually made between individual and
corporate donations.
In this respect Moldovan parties display rather plutocratic than grass-roots features in terms of
financing strategies. The analysis of several properties of parties’ revenue such as the source of income,
44 Casas-Zamora, Paying for Democracy, 18. 45 Karl-Heinz Nassmacher, “Introduction: Political Parties, Funding and Democracy,” in Funding of Political Parties and Election Campaigns, ed. Reginald Austin and Maja Tjernström (International Idea, 2003), 8; Karl-Heinz Nassmacher, The Funding of Party Competition: Political Finance in 25 Democracies (Baden-Baden: Nomos, 2009).
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the extension of donors’ networks, the identity of donors, and the distribution of financial burden
among contributors allows us to examine the ways how parties carry out fundraising activities.
The available data on parties’ revenues reveals one striking features regarding the income
sources – the entire pool of money amassed throughout the last four election campaigns consists
almost exclusively of private contributions. None of the parties reported other kinds of income but
private donations.46 To a certain extent this finding should not come as a surprise since political parties
are not yet entitled to receive direct state subsidies and have to rely on their own skilfulness in
attracting resources. Nevertheless, the lack of membership dues appears to be rather surprising,
regardless of their share in the overall campaign budget. Membership fees have never been a reliable
source of income for Moldovan parties. Even though the registration requirements for political parties
are relatively demanding (at least 4000 members), membership fees are treated chiefly as a symbolic
matter and not as a stable source of income. Findings about the relevance of membership fees are
rather mixed. While party functionaries believe that membership contributions represent an important
source of party income, then independent experts regard them as insignificant in the aggregate party
budget.47
Another intriguing issue touches upon the extensiveness of donors’ network. Here we can
observe a wide variation both at the party level across different election campaigns, and between parties
during the same campaign. Table 3 illustrates this dynamics on both dimensions for three parliamentary
and one local election campaigns. Overall, political parties display a quite narrow network of donors.
Yet we could observe a sudden jump in the number of donors for DPM, LDPM, and LP and it is
linked to their access to government after the early parliamentary campaign of 29 July, 2009. In
contrast, one can see a huge drop in the number of PCRM donors for the same period, which coincides
with their loss of office, although data shows that communists were still able to mobilize their
contributors for the local campaign. The number of donors is also shrinking in the case of OMA,
CDPP and SDPM. OMA is the party which together with DPM, LDPM and LP formed the majority
coalition, but its electoral fortune vanished and it failed to pass electoral threshold in the parliamentary
campaign of 28 November 2010, a failure that pushed the party to merge with LDPM. Similarly, the
failure of CDPP to pass the threshold in April, 2009 seems to have affected the willingness of previous
donors to contribute. The case of SDPM is somehow different since the party was struggling to get into
parliament, but the narrowing of contributors’ network is rather caused by the change in the party’
leadership.
46 The only exception is the PCRM who reported a contribution wired to the “Electoral Fund” account for parliamentary elections of 5 April 2009. 47 Oleh Protsyk, Igor Bucătaru, and Andrei Volentir, Competiţia partidelor în Moldova: ideologie, organizare internă şi abordarea conflictelor etno-teritoriale (CEP USM, 2008), 142–152; Oleh Protsyk and Ion Osoian, “Moldova: Party Institutionalization in a Resource-Scarce Environment,” in Public Finance and Post-Communist Party Development, ed. Steven D. Roper and Janis Ikstens (Ashgate Publishing, Ltd., 2008), 95–111.
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Table 3: Number of donors that contributed to political parties during election campaigns
Elections → Electoral Contenders ↓
Parliamentary elections of 5
April 2009
Parliamentary elections of 29
July 2009*
Parliamentary elections of 28
November 2010*
Local elections of 5 June 2011
DPM 21 21 292 595 LDPM 28 21 141 140 CDPP 94 90 80 28 PCRM 889 648 76 460 OMA 81 49 40 ** LP 7 46 31 48 EAM 37 35 18 *** HPM 18 SDPM 117 26 5 22 Source: Compiled by author based on the financial records of political parties. * Parliamentary elections of 29 July, 2009 and of 28 November 2010 are early elections due to the incapacity of the legislative to elect the head of the state. ** OMA merged with the LDPM *** EAM merged with the LP
The access to or the loss of public office represents a reasonable explanation of either the
expansion or the shrinkage of donors’ networks. The figures above seem to confirm this tentative
finding, but it pertains only to an extremely short interval. Additionally, the sharp expansion and
contraction of donors’ networks occurred in a highly unstable and uncertain political environment. Yet,
there might be an alternative (but not necessary contradictory, rather complementary) explanation of
these changes. It is the pressure of civil society and media who largely benefited from the new
transparency requirements and whose pressure might have driven the adjustment of fundraising
strategies. NGOs and media outlets now have a full and direct access to parties’ financial records.
Through their investigations, they demonstrated that the financial burden of electioneering is borne
only by a few “fat cats”. Consequently, some parties were somewhat forced to adapt their behaviour,
attempting to clean up their image and trying to distance themselves from labels like ‘oligarchic’ by
multiplying the number of donors. The problem is that they were too careless in managing this issue
without generating even more suspicions about the identity of many donors and their payment capacity.
Probably the most striking example is illustrated by DPM whose financial records for the parliamentary
campaign of 28 November 2010 were overcrowded by unemployed and pensioners representing
roughly 10.3% of donors. Their aggregated contribution amounted to MDL 1342 thousands (€ 82683),
i.e. approximately 11.5% of the total income collected throughout the campaign.48 The average of
donation for these contributors amounted to MDL 44737 (€ 2756). Communists found themselves
even in a worse position when some media investigations identified some allegedly fictive donors on
48 Sergiu Lipcean, ‘Finanţarea Campaniilor Electorale Parlamentare prin Prisma Rapoartelor Financiare’, in Finanţarea Partidelor Politice: între Transparenţă şi Obscuritate, vol. 8, Politici Publice (Chişinău: IDIS ‘Viitorul’, 2010), 14.
22
party financial records who poured extremely large sums to party treasury.49 The attention was driven
by the fact that very young individuals with quite low social-economic background were able to
contribute by MDL 250 thousands (€ 15400). Others donors were found to have contributed by MDL
150 thousands (€ 9200), despite the fact that they had not reported any income to the Tax Service.
Although, Centre for Combating Economic Crimes and Corruption has undertaken a series of
investigations, it has not discovered any irregularities in the financing of the PCRM. In fact, almost all
political parties, particularly the big ones with larger networks of sponsors, have had their own
“Achilles’ heel”. Still, the lack of enforcement mechanisms made them feel enough safe in terms of
avoiding punishment. This applies equally to parties in office and to challengers like the PCRM. An
eventual sanction of the PCRM would have created a dangerous precedent.
One last remark on the identity of donors that is quite specific in Moldova’s case. There are
quite a few corporate donors, or at least their identity is not reported and disclosed by parties. But
when they are present their contribution is significant. For instance, the joint contribution of two
corporate donors amounted to 37% of the PCRM’s total income in parliamentary campaign of 5 April,
2009, while the aggregate income of five companies to SDP coffers, for the same campaign, reached
59%. These cases are rather exceptions and the usual practice was to fill up financial declarations with
individuals.
It seems that a silent agreement emerged out among all political forces. It was a common rule to
harass and to discriminate to a certain extent against the opposition. However, nobody went so far by
eliminating even a dangerous contender form electoral contest relying on financial wrongdoings, since
all of them were aware that they are in the same boat concerning the cleanness of financial flows. The
only price parties had to pay was to tidy up their siphoned reputation, which might have been pretty
high in the middle of electoral battle.
These evidences reflect only a few uncovered instances of problems associated with the quality
and reliability of information about the identity of donors. Even though some parties have tried to
create an artificial feeling of being financially backed by many people, the structure of campaign
budgets reflects another reality with respect to the distribution of financial burden among sponsors.
4.2. The composition of campaign revenue
Despite of a largely shared opinion according to which financial data disclosed by parties do not
match with their real level of funding, the official financial declarations submitted to CEC still provide
useful information on their sponsors and how the campaign costs are divided among them. There are
some reasons why these data, even being flawed, are nevertheless indicative. Particularly during the
campaign parties are highly sensitive to any kind of information that may damage their reputation.
49 Victor Moşneag, ‘Politica Neagră Din Moldova’, Ziarul de Gardă, No. 299, 4 November 2010, http://www.zdg.md/politic/politica-neagra-din-moldova; Cornelia Cozonac, ‘Cât Costă Fotoliul de Deputat?’, Centrul de Investigatii Jurnalistice, accessed 10 June 2014, http://www.investigatii.md/index.php?art=473.
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Given the informational wars among electoral contenders, financial data appear to be of a paramount
relevance and parties, at least, are expected to reduce the likelihood to being attacked by the their
opponents. Therefore, one may assume that they will deliver as clean data as possible. For the same
reason they are expected to lower the probability of being assaulted by the media and civil society, who
are eager to scrutinize parties’ financial dealings, especially under the new disclosure rules that offer a
full access to financial data. Accordingly, the impact of regulations, combined with the screening by the
political rivals, civil society and media, might have induced parties to adopt a more prudent behaviour
in gathering and spending money. To a certain extent, parties’ self-discipline and self-censorship proved
to be effective even under an almost complete lack of legal enforcement. But, as examples above on the
allegedly fictive donors illustrate, these kinds of checks, without being supported by dissuasive
sanctions, are not sufficient to hold them fully responsive and accountable.
At any rate, financial declarations of parties barely, if at all, hide the plutocratic character of
party funding. Looking at the value of donations and the number of sponsors, one can easily notice
that the bulk of financial resources have been collected from a handful of wealthy donors. There are
some notable exceptions, such as the communists, who were able to collect large sums from the grass
roots, but even in their case doubts hover over the mass support in terms of financing. Once the party
was ousted from office we could noticed a sudden and huge drop in the number of sponsors.
Figures 1, 2, and 3 depict the structure of revenue for the highest spenders based on the share
of different types of donations in the overall income for three election campaigns.50 They are
constructed on the data from the annexes 1, 2, and 3 that provide in details a full account on the
amount of money poured into party coffers based on the value of donations, the share of each category
in the total, the number of donors per category, and the average value of the individual contribution in
each category.
Two fundraising patterns emerge out of these data looking at the weight of donations and the
extension of sponsors’ network for each category (see also annexes particularly for the donors’
network).
Firstly, the aggregate share of money amassed in the campaign’s coffers from VLD and LD
represents almost 80% and 90% for the April, 2009 and November, 2010 parliamentary campaigns
respectively. For the June, 2011 local campaign the share is slightly lower but still amounts to roughly
70%. It is clear that the financial burden was highly concentrated on the first two categories of donors
50 I divided donations in four categories: very large donations (VLD) – above MDL 100 thousand (≈ € 7000), including; large donations (LD) – MDL 50 thousand (≈ € 3500) – below MDL 100 thousand (≈ € 7000); medium donations (MD) – above MDL 10 thousand (≈ € 700) – below MDL 50 thousand (≈ € 3500); small donations (SD) – up to MDL 10 thousand (≈ € 700), including. The amounts of donations expressed in euro may vary depending on the exchange rate. This is rather a conventional classification both with regard to the number of categories and in respect to the value of donations assigned to each category. Yet it helps to distinguish among different types of donors as well as to look at their joined contribution to the campaign budgets. Any other delimitation of categories in terms of donations’ value for each category may produce a different configuration, however I consider this classification to be rather conservative if one takes into consideration living standards of the country and the average monthly wage.
24
with a clear tilt towards VLD. The share of LD is relevant only in the case of some outliers such as
DPM (parliamentary campaign of 28/11/2010) or SDPM (local campaign of 05/06/2011). Hence, the
weight of MD and SD in the overall campaign budgets, on average, is very insignificant. Yet there are
some exception like PCRM who gathered more than 44% of the revenue from grass-roots donations
(parliamentary campaign of 05/04/2009), or CDPP who collected almost 2/3 of income from MD and
SD (parliamentary campaign of 05/04/2009). In some cases the weight of MD accounts up to 1/5 of
the campaign revenue. Nevertheless, the share of SD donations in the overall campaign budgets is
insignificant and the phenomenon of the grass-roots donations is almost absent.
Figure 1: Income structure by categories of donations for the parliamentary elections of 05 April. 2009.
Source: Elaborated by author based on the financial records of parties.
Figure 2: Income structure by categories of donations for the parliamentary elections of 28 November 2010
Source: Elaborated by author based on the financial records of parties.
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
PCRM SDPM OMA LDPM EAM DPM LP CDPP
MD
L
Very large donations Large donations Medium donations Small donations
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
DPM LDPM PCRM LP HPM OMA EAM FNCP
MD
L
Very large donations Large donations Medium donations Small donations
25
Figure 3: Income structure by categories of donations for the general local elections of 05 June 2011
Source: Elaborated by author based on the financial records of parties.
Secondly, the number of donors who carried mostly the campaign burden is extremely low. In
contrast, the majority of grass-root contributors turned out to have provided only a tiny share of the
total income. This finding becomes very clear when looking at the proportion of MD and SD as well as
the number of donors in each of these categories. As highlighted above, even though the grass-roots
contributions are unusual, there are some striking exemptions. The communist party stands apart as an
eloquent case with respect to collecting the grass-roots contributions, but it seems to be a problematic
one as well, due to the potentially mandatory character of donations. The party amassed a large portion
of income from its extensive network of local branches which served as eventual sources of grass-roots
donations. But the identity of donors raises doubts on the voluntary character of the money infusions.
Since many donors appear to be either employees of the local branches of central public institutions or
hold various administrative positions51, one may assume the existence of a clientelistic and/or
patronage relationship as catalysts of grass-root payments. Once the PCRM lost office the party could
not use anymore the administrative leverage to mobilize these potential donors for its fundraising
activities. It by no means implies that other parties did not employ similar strategies, but the scope of
this approach was more limited. For instance, financial records of LDPM and, especially, DPM abound
in public servants employed in various state institutions at various administrative layers. Interestingly,
the donors’ network of DPM expanded from 21sponsors (parliamentary campaign of 05/04/2009) to
595 sponsors (local campaign 05/06/2011), coinciding with a shrinkage of communist donors’ network
and the defection of many local branches of PCRM towards DPM. Therefore, the loss of power had
certainly a negative impact on PCRM’s sources of funding.
What regards to other parties that spent less, the pattern of collecting donations is quite similar.
In some cases only party leaders and their close affiliates have borne the entire costs of campaign
spending.
51 “Cine a finanţat cele doua campanii electorale ale comuniştilor?,” Timpul - Ştiri Din Moldova, accessed June 24, 2014, http://www.timpul.md/articol/cine-a-finantat-cele-doua-campanii-electorale-ale-comunistilor-5519.html.
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
DPM PCRM LDPM LP SDPM
MD
L
Very large donations Large donations Medium donations Small donations
26
This short overview highlights that fundraising strategies of parties matched pretty well with the
softness of regulations on donations. In the same way, the permissiveness of regulations is mirrored by
the real practices of campaign spending explored in the section below.
5. PATTERNS OF CAMPAIGN SPENDING
As in many post-communist polities, the cost of electoral campaigns in Moldova went up
substantially over the last decade. From the parliamentary election in 2001 to the parliamentary election
in 2010, the aggregate campaign spending grew up by more than 10 times nominal value of the national
currency. Even if one takes into account inflation, still, the total amount of spending increased by
almost 6 times. Figure 4 depicts the dynamics of spending for both, the nominal value and the real
value after adjusting for inflation.
Figure 4: Dynamics of the aggregate campaign spending in nominal value and adjusted for inflation
Source: Author’s estimations based on the CEC information and dynamics of Consumer Price Index retrieved from National Bureau of Statistics: http://statbank.statistica.md/pxweb/Dialog/varval.asp?ma=PRE0121&ti=IPC+pe+grupe+majore%2C+decembrie+anul+precedent%3D100%2C+1991-2014&path=../Database/RO/05%20PRE/PRE01/serii%20lunare/&lang=1 (Accessed 29 May, 2014)
Furthermore, even when we control for the size of electorate, which according to the official
data increased from 2001 to 2010 by more than half million voters, the cost of elections turned out to
have grown up significantly. If in 2001 the aggregate money spent by all electoral contenders for one
registered voter amounted to MDL 1.9, then in 2010 the amount spent for one voter was already MDL
16.3. Hence, there is an increase by about 8.6 times. Looking at the same relationship adjusting for
inflation we obtain an increase by 4.6 times in real terms. Table 4 displays data for the aggregate
spending of electoral contenders and the cost for one registered voter in nominal value and adjusted for
inflation. Basically, the figure 4 illustrates data from the table below. It should be emphasized that the
cost for a single registered voter would follow exactly the same trend as the aggregate spending for
every election campaign.
0
10000000
20000000
30000000
40000000
50000000
2001 2005 2007 Apr. 2009 Jul. 2009 2010 2011
MD
L
Nominal value Inflation adjusted
27
Table 4: Aggregate campaign spending and cost for one registered voter in nominal value and adjusted for inflation
Nominal value of spending
Spending adjusted for inflation
Cost for one registered voter nominal value
Cost for one registered voter
adjusted for inflation
Currency → Elections ↓
MDL € MDL € MDL € MDL €
2001 4284900 365759 4284900 365759 1.90 0.16 1.90 0.16 2005 9701500 594375 7316365 448246 4.30 0.26 3.20 0.20 2007 13742509 822191 8769948 524691 6.20 0.37 3.90 0.23 April 2009 28736886 2018196 16226361 1139580 11.20 0.79 6.30 0.44 July 2009 16108589 1020196 9095759 576056 5.90 0.37 3.40 0.22 2010 45716842 2816481 24631919 1517501 16.30 1.00 8.80 0.54 2011 36897013 2214521 19078083 1145047 13.70 0.82 7.10 0.43 Source: Author’s estimation based on the CEC information and dynamics of Consumer Price Index taken from National Bureau of Statistics. Note: The exchange rate for each campaign is retrieved from the National Bank of Moldova and represents the average for the last month before the elections day: http://bnm.md/md/medium_exchange_rates (Accessed 29 May, 2014)
At a first glance, when inflation and the size of electorate are taken into consideration, the cost
of politics, assessed through the lenses of campaign spending, does not look so prohibitive anymore.
This appears clearer by looking at the spending for a single registered voter after adjusting for inflation.
Looking back at the last decision of the CEC pertaining to the ceiling on spending (€ 0.50 per one
registered voter) we can conclude that, on average, the joint spending of parties floats around this level
for the last two elections under provisions that every individual competitor is permitted to spend this
amount for a single voter. Thus, it might create the impression that, although in relative terms we
observed a quite sizable jump in party spending, in absolute terms it is not so large. However, this is
only the part of the story reported by parties themselves. One problem with this story lies in its
incompleteness and the lack of credibility. As shown below, parties do not fully declare their spending
items. But before delving into party spending strategies, we briefly focus on the distribution of
spending among electoral contenders.
Available data on party spending allow us tracking accurately the share of individual parties in
the aggregate spending only after 2007 local election campaign. This is possible because in 2008
communists amended the Electoral Code by prohibiting the formation of pre-electoral alliances, a
typical phenomenon of Moldovan politics since the first democratic elections in 1994. Figure 5
illustrates the dynamics on individual party spending among for the largest spenders (see annex 4 for
the data based on which the figure is constructed). There is a wide variation even among the highest
spenders; however it is not necessarily tied to the electoral success. The leadership is held by DPM who
registered the sharpest increase by more than seven times during the last four elections, but it also had a
much lower starting level than LDPM, PCRM and OMA whose share in the overall spending game is
also substantial. Yet this jump is clearly seen starting from the parliamentary elections of 5 April 2009.
Prior to this election campaign, the level of spending was much lower and even the top spenders had
spent much less compared to what followed. This growth, however, might be caused not only by the
28
larger amounts of money thrown into electoral battles, particularly by the opposition parties, but also
by the new requirements, which forced all competitors to report and disclose a larger share of their
money. In the words of Gel’man, the tip of the iceberg became just larger but still hiding the bulk of
party expenditures.52
Figure 5: Dynamics of campaign spending for selected electoral contestants.
Source: Elaborated by author based on the CEC data.
In order to better understand why we are dealing only with the visible part of the iceberg, we
shall look at parties’ spending strategies, i.e. what are the items they spend the money for. This provides
clues why self-reporting is incomplete and to a large extent flawed. The difficulty consists in the
impossibility to gauge the extent to which data on spending is underreported, therefore leaving too
much space for potential speculations about the actual financing level. Despite these shortcomings, it is
possible to identify the spending holes, i.e. items parties do not report at all or, at best, drastically
underreport. Figures 6 and 7 depict the expenditures structure of parties in descending order for two
parliamentary campaigns, but the patterns displayed in details here are likewise common for other
elections (See annexes 5 and 6 for data on every category of spending shown in the figures).
These figures highlight two important features of campaign spending. On the one hand, they
reveal parties’ preferences of spending. On the other hand, they hint at potential covert areas of
spending that are not disclosed by parties.
What concerns the first feature, one may notice that TV and outdoor advertising are placed on
the top of spending hierarchy. Although there is high variation among individual contestants, the
average share of TV and outdoor advertising amounts to approximately 42% and 35% for the 2009
elections, and represents roughly 60% and 31% for the 2010 elections respectively. Print press is the
52 Vladimir Gel’man, “Russia: Public Offices, Private Money and Biased Contests,” in Public Finance and Post-communist Party Development, ed. Steven D. Roper and Janis Ikstens (Ashgate Publishing, Ltd., 2008), 11–27; Vladimir Gel’man, “The iceberg of Russian political finance,” in Funding democratization, ed. Peter J Burnell and Alan Ware (Manchester; New York: Manchester University Press, 1998), 158–179.
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
2001 2005 2007 5/4/2009 29/07/2009 2010 2011
MD
L
DPM
LDPM
PCRM
LP
OMA
EAM
CDPP
SDPM
29
third item, accounting for almost 11% in 2009, but its proportion drops below 4% in 2010, while the
weight of other items is negligible.
The lower share of campaign spending for TV ads (34%) in the case of PCRM, compared with
more than a half for main opposition parties, is explained by the heavy reliance of communists on
public broadcasting company. They had an overwhelming domination in terms of frequency and length
of appearance in the newscasts on public TV (frequency – 71%; length – 63%) and radio (frequency –
85%; length – 87%), while the coverage of other individual contenders represented only a tiny share out
of the total varying between 1% and 7%.53 In this respect is needless to stress the positive coverage of
the incumbents, and the negative coverage of the opposition.
Figure 6: Structure of campaign spending by items for the parliamentary elections of 05 April, 2009
Source: Elaborated by author based on the financial records of parties
Figure 7: Structure of campaign spending by items for the parliamentary elections of 28 November, 2009
Source: Elaborated by author based on the financial records of parties
The overwhelming proportion of TV and outdoor advertising in the aggregate spending is
caused by two factors which explain parties’ heavy reliance on these communication tools. The first
factor is the widespread popularity of television perceived by 87% (on average) as the most important
53 Lipcean, Evaluarea Finanţării Partidelor Politice şi Campaniilor Electorale în Republica Moldova, 54.
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
PCRM SDPM OMA LDPM EAM DPM LP CDPP CUM
MD
L
Other
Events
Outdoor
Print press
Radio
TV
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
DPM LDPM PCRM LP HPM OMA EAM Stati G. FNCP
MD
L
Other
Outdoor
Print press
Radio
TV
30
source of information during the last ten years. Moreover, TV is regarded as the most credible source
of information by 55% (on average) of respondents.54 Outdoor advertising performs a similar function
through the ‘seizure’ of space and by creating a widespread visual coverage. The second factor relates to
the high prices on billboards and TV ads. In the 2009 campaign prices on TV advertising ranged
between about € 250 – € 450 per one minute, depending on the TV channel’s coverage and audience.
In the 2010 campaign, however, some TV channels, closely affiliated to DPM, charged prices ranging
from € 2000 to € 5000 for one minute, while the average for other TV channels went up only slightly.55
The prices on large billboards could reach up to € 500 per unit for a month depending on
location/agglomeration. To mitigate the effects of financial disparities, CEC imposes limits on both.
TV advertising is capped at 2 hours throughout the entire campaign and maximum 2 minutes on each
broadcasting outlet daily for each electoral contender.56 Likewise, CEC imposes limits on billboards,
allowing advertising agencies to provide maximum 10% of their posting space to a single contender.57
Having looked at the visible part of campaign spending we shall now turn to the invisible one,
which represents the second feature that might be derived from parties’ self-reported information. This
side of campaign spending accounts for the underwater part of the iceberg.
The bulk of spending items displayed in the financial declarations of parties are chiefly reported
simply because their reporting cannot be avoided. At best, they may be underreported but not totally
circumvented. There are, however, certain items that can be deliberatively overlooked by parties. A
common property shared by all electoral contenders is their unwillingness to report many of such items
that can be hardly, if at all, found in the financial records submitted to the CEC.
Paradoxically, these expenditures do not represent something peculiar, which would be hard to
detect, rather they are usual, well known and, what is more important, observable items. Without this
kind of spending any electoral campaign is inconceivable and impossible to run. Hence, what is missing
in the spending structure of figures 6 and 7 represents expenses on electoral staff from various layers,
transportation, and organization of electoral events, meetings, and concerts of different scale. They are
only incidentally presented in the official reports. There are more sensitive items of spending, to be
observed at the street level, like image making and campaign research costs and they, alike, are
completely missing from financial declarations. Finally, there is a category of spending that, by default,
cannot be accounted for since it is totally unlawful. It includes electoral gifts of any kind explicitly
54 Institutul de Politici Publice, “Barometrul de opinie publică /,” April 24, 2014, accessed 29 May 2014, http://www.ipp.md/libview.php?l=ro&idc=156&id=681. 55 ‘Postul de Televiziune Prime Solicită de la Clienții Săi cca 5000 Euro Pentru 1 Minut de Publicitate Electorală - de 10 Ori Mai Mult Decât Alte Posturi TV’, UNIMEDIA, accessed 8 June 2014, http://unimedia.info/stiri/-25278.html.; Partidul Umanist: “Dezbaterile electorale la posturile de televiziune ale lui Plahotniuc sunt o profanare. PUM nu va participa la aceste dezbateri”, accessed 8 June 2014, http://www.e-democracy.md/elections/parliamentary/2010/docs/pum/201011211/ 56 CEC, Regulamentul Privind Reflectarea Campaniei Electorale la Alegerile Parlamentare Din 5 Aprilie 2009 în Mijloacele de Informare în Masă din Republica Moldova, 2009, accessed 8 June 2014, http://cec.md/index.php?pag=alegeri&opa=view&id=244&d=5&sd=25&start=&l=. 57 CEC, Regulamentul Privind Modalitatea Plasării Publicităţii Electorale pe Panourile Publicitare în Perioada Electorală, 2010, accessed 8 June 2014, http://cec.md/index.php?pag=alegeri&opa=view&id=212&d=1&sd=7&start=&l=.
31
forbidden by the Electoral Code. Notwithstanding, it is a widely employed practice, mainly by the
wealthiest parties that attempt bribing economically vulnerable social categories.58 Given the widespread
poverty, especially in rural areas, these electoral gifts usually take the form of basic products like rise,
pasta, flour, oil, and sugar, usually having been delivered as ‘food packages’ to potential voters.
Consequently, the cumulative value of these items accounts for large unreported amounts.
Despite of the difficulty to gauge the value of non-reported spending, some local experts have tried to
offer alternative estimations of the aggregate spending. The findings on the non-official campaign costs
revealed that actual level of aggregate spending might range from 2 – 3 times59 up to 4 and a half
times60 higher than officially reported expenses for the relevant parties. Some argued that only for
political consulting and image making services the biggest parties spent about 15% – 25% of their total
campaign spending. These costs have never been reflected in parties’ financial declarations.61 This state
is generated by the loopholes in the regulatory framework that lacks any provisions specifying what
kind of spending parties ought to report. Since nothing is explicitly laid down, the only concern of
political actors is to avoid being caught offering electoral gifts. But, as already stressed, the lack of an
operational sanction mechanism reduces even this risk.
Underreporting and non-reporting of the campaign money have many implications, but the
most troublesome relates to the potential impact of the non-declared resources, as well as their origin,
on the development of party system, the nature political competition, and the intraparty democracy. All
these issues are closely intertwined but they do not constitute the object of this analysis.
6. CONCLUSION
This paper sheds light on party and campaign funding in Moldova as a specific case among
post–communist polities by inquiring the developments and nature of regulatory framework, as well as
the actual patterns of funding, treated as direct consequences of regulatory regime. Several findings
ought to be underlined.
First, the developments of regulatory framework revealed a deep disagreement between
different political forces upon the terms of PFR. The repeated but failed attempts to come up with
updated and more restrictive rules towards party financing indicate that political parties could not reach
a common denominator relative to this issue for a long time.
58 Monitorizarea Alegerilor Locale Generale Din 5 Iunie 2011: Perioada de Monitorizare: 5 aprilie–25 Iulie 2011 (Promo-Lex, August 30, 2011), accessed 15 June, 2014, http://www.promolex.md/upload/publications/ro/doc_1314693764.pdf. 59 Cornel Ciurea, ‘Costurile neoficiale de campanile ale partidelor politice importante în alegerile locale generale din 5, 19
Iunie 2011’, în Finanțarea Partidelor Politice în Alegerile Locale Din 2011: O Mostră a Relațiilor Medievale, vol. 6, Politici Publice
(Chișinău: IDIS ‘Viitorul’, 2011), 24–35. 60 Cornel Ciurea, ‘Costurile neoficiale de campanie ale partidelor politice importante în alegerile din 28 Noiembrie 2010’, în
Finanțarea Partidelor Politice: Între Transparență și Obscuritate, vol. 8, Politici Publice (Chișinău: IDIS ‘Viitorul’, 2010), 33–40. 61 Leonid Litra, ‘Consultanții politici și remunerarea lor în Republica Moldova’, în Finanțarea Partidelor Politice: Între
Transparență și Obscuritate, vol. 8, Politici Publice (Chișinău: IDIS ‘Viitorul’, 2010), 44.
32
Second, even when political elites were forced to enact a new regime on party finances, the way
how it was carried out hardly demonstrate a genuine commitment to constrain political parties in their
fundraising and spending behaviour. New regulations were tailored in a manner that allows parties
precisely to overlook the most problematic areas of their finances. Hence, parties were still left with a
considerable leeway with respect to financial activities. Despite the fact that regulatory regime
incorporates provisions that apparently confine party behaviour by imposing more specific bans and
limits on income and spending, the analysis of these provisions highlighted their permissiveness and
futility, entailing no changes for real party funding habits and practices.
Third, parties turned out to be extremely reluctant and defensive namely towards those legal
provisions that were perceived as truly dangerous for their operation. On this point, we could observe a
tacit agreement and coordination among all electoral competitors, materialized in a backlash against a
fully-fledged transparency regime.
Fourth, the lack of consensus over the allocation rules and eligibility criteria concerning direct
public funding to parties resulted in freezing the provision of state subsidies through postponing the
enforcement of those clauses referring to the supply of public money.
Fifth, the permissiveness of legal environment is almost perfectly mirrored by the actual
patterns of campaign funding. The investigation of parties’ fundraising strategies displayed a common
pattern characterised by a high concentration of campaign costs borne by a handful of sponsors. It also
revealed the existence of several problems associated with the reliability of financial declarations and
credibility of donors’ payment capacity. The analysis of campaign spending, on the other hand,
exhibited many shortcomings related to the underreporting and/or non-reporting of many spending
items.
By now Moldovan political elites avoided tackling the issue of party and campaign funding in a
rigorous manner. The regulatory framework turned out to be devised in a way that does not constrain
harshly political parties. Needless to say that compliance with formal requirements does not touch the
core of the problem. It seems that disagreement over the terms of a tougher regulatory regime ended
up in designing a porous one, resulting in a high capacity of political parties to pump unaccountable
money into and from party coffers.
Even though Moldova does not meet the requirements to fit the ‘standards’ of cartelisation
thesis in its classical interpretation, there might be another kind of collusion among parties, that is to
maintain the PFR as permissive as possible. Yet, the general dissatisfaction with the current state
regarding party and campaign funding, accompanied by the increasing pressure of external stakeholders
pushes this issue up on the institutional agenda. But a potentially new solution is more likely to be
endorsed only after the next parliamentary contest.
33
7. ANNEXES
Annex 1: Income structure of political parties by financial indicators for the parliamentary campaign of 05 April, 2009. Donation type → Very large donations Large donations Medium donations Small donations Total
Party ↓ / Currency → MDL € MDL € MDL € MDL € MDL € Party of Communists of the Republic of Moldova Revenue by category 3303863 232031 446200 31337 3002908 210895 6752971 474262 Share out of total 48,9 6,6 44,5 100
Number of donors 3 27 859 889 Average of donation 1101288 77344 16526 1161 3496 246 7596 533 Social Democratic Party of Moldova Revenue by category 2994000 210269 355000 24932 705500 49547 256000 17979 4310500 302727 Share out of total 69,5 8,2 16,4 5,9 100 Number of donors 8 6 32 71 117 Average of donation 374250 26284 59167 4155 22047 1548 3606 253 36842 2587 Our Moldova Alliance Revenue by category 2426000 170378 901650 63323 591605 41549 234100 16441 4153355 291691 Share out of total 58,4 21,7 14,2 5,6 100 Number of donors 12 17 25 27 81 Average of donation 202167 14198 53038 3725 23664 1662 8670 609 51276 3601 Liberal Democratic Party of Moldova Revenue by category 3739300 262612 150000 10535 240000 16855 15500 1089 4144800 291090 Share out of total 90,2 3,6 5,8 0,4 100
Number of donors 14 3 9 2 28 Average of donation 267093 18758 50000 3512 26667 1873 7750 544,28 148029 10396 European Action Movement Revenue by category 1615760 113475 487926 34267 463400 32545 14797 1039 2581883 181326 Share out of total 62,6 18,9 17,9 0,6 100
Number of donors 10 8 16 3 37 Average of donation 161576 11348 60991 4283 28963 2034 4932 346 69781 4901
Democratic Party of Moldova Revenue by category 1576700 110732 100000 7023 150000 10535 40516 2845 1867216 131135 Share out of total 84,4 5,4 8,0 2,2 100
Number of donors 8 2 6 5 21 Average of donation 197088 13841 50000 3512 25000 1756 8103 569 88915 6245
Liberal Party Revenue by category 1481840 104070 62460 4387 1000 70 1545300 108527 Share out of total 95,9 4,0 0,06 100 Number of donors 5 1 1 7 Average of donation 296368 20814 62460 4387 1000 70 220757 15504 Christian Democratic People’s Party Revenue by category 504060 35400 478760 33623 395908 27805 1378728 96828 Share out of total 36,6 34,7 28,7 100
Number of donors 4 23 67 94 Average of donation 126015 8850 20816 1462 5909 415 14667 1030
Source: Estimated and compiled by author based on official financial records of political parties. The exchange rate € 1= MDL 14.24, retrieved from the National Bank of Moldova and represents the average for the last month before the elections day: http://bnm.md/md/medium_exchange_rates (Accessed 20 May, 2014) Note: Table reports only the revenue structure of political parties that collected more than MDL 1Million (≈ € 70200).
Annex 2: Income structure of political parties by financial indicators for the parliamentary campaign of 28 November, 2010 Donation type → Very large donations Large donations Medium donations Small donations Total
Party ↓ / Currency → MDL € MDL € MDL € MDL € MDL € Democratic Party of Moldova Revenue by category 1547000 95306 7177206 442167 2407547 148322 574900 35418 11706653 721213 Share out of total 13,2 61,3 20,6 4,9 100 Number of donors 9 92 98 93 292 Average of donation 171889 10590 78013 4806 24567 1513 6182 381 40091 2470 Liberal Democratic Party of Moldova Revenue by category 7260000 447267 1172600 72240 1374800 84697 269700 16615 10077100 620821 Share out of total 72 11,6 13,6 2,7 99,9 Number of donors 33 20 57 31 141 Average of donation 220000 13554 58630 3612 24119 1486 8700 536 71469 4403 Party of Communists of the Republic of Moldova Revenue by category 3011700 185542 461555 28435 896650 55240 93905 5785 4463810 275002 Share out of total 67,5 10,3 20,1 2,1 100
34
Number of donors 16 8 38 14 76 Average of donation 188231 11596 57694 3554 23596 1454 6708 413 58734 3618 Liberal Party Revenue by category 3183030 196097 583200 35929 51200 3154 3817430 235181 Share out of total 83,4 15,3 1,3 100 Number of donors 16 10 5 31 Average of donation 198939 12256 58320 3593 10240 631 123143 7586 Humanist Party of Moldova Revenue by category 2906130 179038 619452 38163 3525582 217201 Share out of total 82,4 17,6 100 Number of donors 9 9 18 Average of donation 322903 19893 68828 4240 195866 12067 Our Moldova Alliance Revenue by category 1890000 116437 680000 41893 200048 12324 55000 3388 2825048 174043 Share out of total 66,9 24,1 7,1 1,9 100 Number of donors 15 13 6 6 40 Average of donation 126000 7762 52308 3223 33341 2054 9167 565 70626 4351 European Action Movement Revenue by category 1763260 108629 197200 12149 114000 7023 2074460 127801 Share out of total 85 9,5 5,5 100 Number of donors 11 3 4 18 Average of donation 160296 9875 65733 4050 28500 1756 115248 7100 For Nation and Country Party Revenue by category 935770 57650 236100 14545 45000 2772 1216870 74968 Share out of total 76,9 19,4 3,7 100 Number of donors 5 8 8 21 Average of donation 187154 11530 29513 1818 5625 347 57946 3570
Source: Estimated and compiled by author based on official financial records of political parties. The exchange rate € 1= MDL 16.23, retrieved from the National Bank of Moldova and represents the average for the last month before the elections day: http://bnm.md/md/medium_exchange_rates (Accessed 20 May, 2014) Note: Table reports only the revenue structure of political parties that collected more than MDL 1Million (≈ € 61600).
Annex 3: Income structure of political parties by financial indicators for the general local campaign of 05 June, 2011 Donation type → Very large donations Large donations Medium donations Small donations Total
Party ↓/ Currency → MDL € MDL € MDL € MDL € MDL €
Democratic Party of Moldova
Revenue by category 950000 56934 3926083 235293 6876000 412084 1505000 90196 13257083 794508
Share out of total 7,2 29,6 51,9 11,4 100
Number of donors 6 64 302 223 595
Average of donation 158333 9489 61345 3676 22768 1365 6749 404 22281 1335
Party of Communists of the Republic of Moldova
Revenue by category 4291000 257163 1110000 66523 1448200 86792 1577970 94569 8427170 505047
Share out of total 50,9 13,2 17,2 18,7 100
Number of donors 28 17 64 351 460
Average of donation 153250 9184 65294 3913 22628 1356 4496 269 18320 1098
Liberal Democratic Party of Moldova
Revenue by category 4260950 255362 2028100 121546 1626100 97454 182100 10913 8097250 485275
Share out of total 52,6 25,1 20,1 2,3 100
Number of donors 15 37 67 21 140
Average of donation 284063 17024 54814 3285 24270 1455 8671 520 57838 3466
Liberal Party
Revenue by category 2143460 128459 1445000 86600 457200 27400 4045660 242460
Share out of total 53,0 35,7 11,3 100
Number of donors 12 22 14 48
Average of donation 178622 10705 65682 3936 32657 1957 84285 5051
Social Democratic Party of Moldova
Revenue by category 200000 11986 689050 41295 210081 12590 1099131 65872
Share out of total 18,2 62,7 19,1 100
Number of donors 2 11 9 22
Average of donation 100000 5993 62641 3754 23342 1399 49961 2994
Source: Estimated and compiled by author based on official financial records of political parties. The exchange rate € 1= MDL 16.69, retrieved from the National Bank of Moldova and represents the average for the last month before the elections day: http://bnm.md/md/medium_exchange_rates (Accessed 20 May, 2014) Note: Table reports only the revenue structure of political parties that collected more than MDL 1Million (≈ € 59900)
35
Annex 4: Campaign spending per selected electoral contestants (currency MDL)
2001 2005 2007 5/4/2009 29/07/2009 2010 2011
DPM 394800 1532384 1867216 3753386 11707025 11552250 LDPM 4140869 2202045 10077076 7917023 PCRM 516400 1477000 3429972 6764115 3885248 4323810 5970877 LP 453920 1674102 1319504 3817379 2941585 SDPM 27700 1020500 686450 4367444 190700 775034 1099131 CDPP 577300 355800 3092106 1389227 1094230 835215 180122 OMA 1269048 4153305 3088938 2825048 EAM 2581883 520000 2074460 HPM 216606 3514396 Stati G. 2063559 FNCP 1216744 PSDM 1871963 PRCM 498600 BAEB 762200 PCDP 44000 1688100 DMEB 2135700 PREB 418200 CUM 1059900 Others 1463900 1546300 1190059 1798725 54538 2487096 1836164 Total 4284900 9701500 13742509 28736886 16108589 45716842 31497152 Source: Compiled by author on the basis of Protsyk & Osoian62 data for the 2001-2005 elections and CEC data for the 2007-2011 elections. *Note: MDEB is an electoral bloc constituted by AMN, PD and PSL
Annex 5: Campaign spending by items for the parliamentary elections of 09 April, 2009 PCRM SDPM OMA LDPM EAM DPM LP CDPP
TV MDL 2318042 1169153 2205520 2579129 958130 1017253 968265 460534 € 162796 82110 154894 181133 67290 71442 68001 32343 Radio MDL 312378 58715 253871 396101 123782 122450 168114 5760 € 21938 4124 17829 27818 8693 8600 11807 405 Print press MDL 500774 1211619 737272 353067 215594 96682 170859 0 € 35169 85092 51779 24796 15141 6790 11999 0 Outdoor MDL 2569081 1764157 390130 637023 825184 612823 212859 893895 € 180427 123897 27399 44738 57953 43039 14949 62778 Events MDL 735698 77734 86797 100157 126242 0 15660 0 € 51668 5459 6096 7034 8866 0 1100 0 Other MDL 328143 85263 565665 80056 333001 18008 11928 29038 € 23046 5988 39727 5622 23387 1265 838 2039 Total MDL 6764116 4366641 4239256 4145534 2581933 1867216 1547685 1389227
€ 475045 306670 297724 291141 181330 131135 108694 97566 Source: Author’s calculations on the basis of official records of parties submitted to CEC for the parliamentary campaign of 05 April, 2009.
62 Protsyk and Osoian, “Moldova: Party Institutionalization in a Resource-Scarce Environment.”
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Annex 6: Campaign spending by items for the parliamentary elections of 28 November, 2010. DPM LDPM PCRM LP HPM OMA EAM Stati G.
TV MDL 9878761 5140040 1307899 1746364 1720051 1748833 1431893 1223232 € 608602 316663 80576 107588 105967 107741 88215 75360 Radio MDL 203418 452044 85965 25925 254267 117935 88798 122425 € 12532 27849 5296 1597 15665 7266 5471 7542 Print press MDL 138776 581029 229014 79390 222910 286992 13660 € 8550 35796 14109 4891 13733 17681 0 842 Outdoor MDL 1359149 3516806 2568066 1882268 1200828 638889 509374 648816 € 83733 216660 158211 115961 73979 39360 31381 39972 Other MDL 136302 450105 134997 68528 16327 32398 44398 55426 € 8397 27730 8317 4222 1006 1996 2735 3415 Total MDL 11716404 10140024 4325939 3802475 3414382 2825048 2074463 2063559 € 721813 624697 266508 234259 210350 174043 127802 127130 Source: Author’s calculations on the basis of official records of parties submitted to CEC for the parliamentary campaign of 28, November, 2010.
