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Managing Political Party Finances, the Idea of the Philippine Senate

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The Philippines is currently discussing a State Fund Subsidy for Political Parties bill. This bill was drafted with the aim of strengthening political parties in the Philippines.

Reading the three drafts of the Political Party Finance Bill proposed by three Philippine senators, namely Franklin M. Drilon, Francis N. Pangilinan, and Leila M Liivia, the bill is loaded with the intention of preventing “political turncoatism” or the actions of a member or party administrator who changes political party affiliation after being nominated by the old party.

It is hoped that with the existence of State Fund Subsidies for political parties, political turncoatism behavior can be ended, and the transparency and accountability of national political parties can be more collectible. This is because every national political party accredited by the Commission of Election (Comelec) can be financed by the state, and because it uses state funds, political parties will be obliged to be responsible for these funds.

State Subsidy Fund

The State Subsidy Fund allocated by the National Treasury Fund is P 350,000,000.00 or 350 million pesos. The funds will be withdrawn no later than January 15 each year.

All funds will be managed by Comelec. Comelec and the Department of Budget and Management (DBM) will announce guidelines to facilitate the provision of a State Subsidy Fund to any accredited national political party.

The State Subsidy Fund itself is intended as additional operational funds for national political parties that have received accreditation from Comelec. These funds must be specifically for party development and campaign spending.

The following are the suggestions made by senators regarding party development activities that are allowed to use the State Subsidy Fund.

  • Party administration, recruitment and civil education
  • Policy research and development
  • Education and training of party members
  • Institution development and constituent outreach program
  • Reasonable logistical and other operational costs, which are important in strengthening the party.

Of the three senators who submitted the draft, there were two different suggestions regarding the general criteria for parties that could receive the State Subsidy Fund. The following is a table of differences in question.

Franklin M. Dilon Francis N. Pangilinan and Leila M Liivi
a.     Political representatives, consisting of the incumbent president, vice president, members of the congress, governors, deputy governors, mayors/regents, and deputy mayors/regents. a)      In accordance with the constitution and the law it is registered as a national political party which will then register: a government platform or program, register all its management and members (national, regional, provincial, regency/city level); has the Articles of Association, By-laws and Certificate of Registration issued by the Securities and Exchange Commission, if registered with them.
b.      Has organizational strength and mobilization capability, including political organization and identifiable power as evidenced by the political history of the party; the number of political representatives, national organizations, the number of active and permanent members of the party; and the number of elected officials, 90 days before the election date. b) Political representatives, consisting of the incumbent president, vice president, members of the congress, governors, deputy governors, mayors / regents, and deputy mayors / regents, members of sangguniang, members of panlalawigan, members of sangguniang bayan, and members of sangguniang bayan.
c.     Showing performance and track record of the party, which may include an established record of the party, taking into account, among other things: the length of the party’s standing, performance in previous elections, and the party’s ability to submit candidate lists from municipal level to senatorial positions in previous national elections. c)      Has organizational strength and mobilization capability, including political organization and identifiable power as evidenced by the organized history of the party; the number of branches and political organizations throughout the country; the number of active and permanent members of the party; the number of incumbent officials elected 90 days before the election date; and include proof of an oath of existence of the party in the area that is claimed to be represented.
d)      Same as point C proposed by Franklin.
e)      Have a coalition agreement, if any, and a detailed list of affiliates that are part of the coalition, including the coalition agreements signed;
f)      Membership and participation of women in national political parties.
g)      Other information required by Comelec.

The annual State Subsidy Fund proposed by the three, 10 percent for monitoring, dissemination of campaign information, and voter education; 30 percent is shared proportionately according to seat ownership in the Senate based on the number of seats won in the last election; 30 percent is distributed proportionally according to the number of Congress seats the party has, and 30 percent is distributed proportionally based on the number of seats won in the local elections, the Sangguniang Panglungsod Election, and the Sangguniang Bayan Election.

Disbursement of the State Subsidy Funds during the non-election year will be used exclusively for party development activities. The State Subsidy Fund issued in the election year are determined to be 75 percent for campaign spending and 25 percent for party development activities.

Obligations of parties receiving State Subsidy Fund

There are several obligations for accredited national political parties, whether they receive the State Subsidy Fund or not. The first obligation, accredited national political parties that utilize the State Subsidy Fund must have separate bank accounts for each of the funds used to fund campaign activities and party development.

The second obligation, officials from each accredited national political party must submit sworn statements of their assets and liabilities to Comelec, and these statements must be made available to the public.

Third, all accredited national political parties and candidates are required to disclose to the public all contributions and expenditures incurred in the use of the State Subsidy Fund. Disclosures must be made through the official Comelec website and reported in a newspaper that is publicly circulated in the Philippines.

Fourth, each accredited national political party is obliged to submit a detailed program of activities as well as details of expenditures taken from the Subsidy Fund at the end of December of each fiscal year to Comelec. Political parties are also not allowed to use subsidies for purposes other than those stated in the draft law.

In addition, accredited national political parties are also required to produce several other financial reports, namely as follows.

  1. A report containing the amount of the donation, the date of receipt by the bank, and the full name and address of the donor.
  2. Complete reports of expenditures and receipts that occurred during the campaign, including funds drawn from the State Subsidy Fund.
  3. Details of expenditures for party development activities that are charged to the State Subsidy Fund. Financial reports covering party development activities are submitted annually, at the end of each fiscal year. Subsidies for the following year will not be disbursed without the submission of the previous year’s report.

 

The above reports are required for every accredited national political party and its candidates, regardless of the election result.

Post-election campaign fund disclosure statements must also be submitted to Comelec within thirty (30) days after Election Day. Deliveries made after the specified deadline will be deemed late and will be subject to a penalty in the amount determined by Comelec.

Financial report of accredited national political party on the use of the State Subsidy Fund will be audited by the Commission on Audit (COA). Meanwhile, other contributions to accredited national political parties will be counted separately, because they are recorded in different books, which will be open to review by the COA.

Violations and sanctions related to party finances

The failure of accredited national political parties to comply with the provisions of the law currently being discussed is proposed to have an impact on disqualification in the receipt of the State Subsidy Fund. The funds will be returned to the state.

There are five forms of violation of party financial rules. One, misuse of funds received by national political parties, either from the State Subsidy Fund or from voluntary donations.

Two, giving donations that exceed the amount permitted by existing law.

Three, the inability to account for all contributions coming from any source.

Four, failure to submit pre-election as well as post-election disclosure statements to Comelec. Any disclosure submissions that pass the filing period will be considered a failure to disclose. Therefore, it is punishable under this Law.

Five, false reporting or misrepresentation of financial reports.

The proposed sanctions are as follows.

Franklin M. Dilon Francis N. Pangilinan Leila M Liivi
a.    Candidates or national political party officials who violate any provision in this law are punished with imprisonment of not less than 6 years, but not more than twelve (12) years, or a fine ranging from P50,000 (IDR 14,647,000) to P500,000 (IDR 146,470,000), or both. 

Political party candidates or officials will also be disqualified from holding public office.

Same as point a proposed by Franklin Candidates or national political party officials who violate Articles 33 (a), (c) and (e) of this Law will be punished with imprisonment of not less than 6 years but not more than 12 years, or a fine ranging from P100,000 to P500,000, or both.

 

The candidate or official will also be disqualified from holding public office.

b. National political parties that violate the provisions of this law will pay a fine of not less than P 100,000 but not more than P 1,000,000. Any donor who violates Section 33 (b) of this law will be sentenced to imprisonment of not less than 6 years but not more than 12 years, or a fine ranging from P500,000 to P5,000,000, or both. Same as point b proposed by Francis.

 

c.      Every national political party that fails to fulfill one of the document requirements stipulated in this law will be subject to administrative sanctions by Comelec, which include temporary or permanent cancellation of party registration, as well as payment of fines in accordance with applicable regulations. Same as point c proposed by Franklin. Same as point c proposed by Franklin.
d.     National political parties proven to be directly responsible for the accommodation of political turncoats will be deprived of their rights as recipients of the State Subsidy Fund after due notification and examination before Comelec. Any National Political Party which violates Articles 33 (a), (c) and (e) of this Law will pay a fine of not less than P500,000 but not more than P5,000,000.
There is no similar rule There is no similar rule Any bank that does not comply with the submission of the checking account of any political party with a balance amount according to Article 15 of this Act will be punished with a fine ranging from P100,000 to P1,000,000.

 

Political turncoatism or political transfer and sanctions for such behavior

The Draft Law on Political Party Finance also regulates sanctions for political turncoatism actors. Franklin proposed in his draft that political transfer be sanctioned as follows.

  1. Immediately disqualified from running in any political party, any coalition, for any position elected in the next election.
  2. It is prohibited to hold executive or administrative positions in a new political party.
  3. Return any and all funds received from the old political party, plus a fine of 25 percent of this amount.

Francis agreed to two points on Franklin’s proposal. However, on the third point, the proposed fine is 50 percent of the amount of funds received by the old political party.

Quite different from Franklin and Francis, Leila suggested that four sanctions be arranged. One, the perpetrator of a political transfer will be deemed to have lost political office (which he won from the election he participated in from his old party) if he changes his political party affiliation in the year preceding the next election or within one year after the last election.

Two, it is prohibited to be appointed or hold any position in any public or government office for three years after the end of the term of office. Three, it is prohibited to hold executive or administrative positions in new political parties.

Four, to return any and all funds received from old political parties, or funds used for political transfer purposes, plus a fine of 50 percent of this amount.

The three senators shared that citizens who have the right to vote, any candidate, political party, and coalition of parties can petition to disqualify a candidate who has made a political move. Petitions can be sent to Comelec after a certificate of nomination has been submitted to Comelec and before public notification.

Francis and Leila even proposed in their respective drafts that national political parties that accept political transfer actors be subject to direct disqualification as parties that receive the State Subsidy Fund.

The disqualification will continue until the politician is expelled from the political party or after showing the contrary facts to Comelec.

These proposals are now being discussed in Congress. Not only members of the Senate have proposed their own version of the draft, but also members of Congress. It is believed that party financial regulation can reform the opportunistic behavior of political parties and promote party accountability.

The proposal which was also approved by the three senators was that each national political party could only spend 20 pesos or IDR 5,858 per voter in the Fixed Voter List in the candidate electoral areas. This amount can be readjusted by Comelec based on the Consumer Price Index every three (3) years after the enactment of the law currently being discussed.

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