Sunday June 04, 2023

Lessons in party fund-raising

August 14, 2022

Probably for the first time in the country’s history, public attention has been drawn towards the critical but largely neglected subject of political finance through the recent judgment of the Election Commission of Pakistan (ECP) delivered in the prohibited funding case. No matter what opinion one may hold about the findings of the ECP in this case, the eight-year long proceedings have revealed some uncomfortable realities about the fund-raising practices of political parties and weaknesses in the oversight of political finance.

Despite weaknesses in implementation, Pakistan has almost always enjoyed a robust legal framework of regulating fund-raising by political parties. The Political Parties Act, 1962 followed by the Political Parties Order, 2002, both contained elaborate provisions about funding of political parties. With slight variations, the same provisions have been retained in the prevailing law, Elections Act, 2017, as well.

Funding by domestic corporate entities to political parties was not allowed till 2017 but, in a significant departure from the past, the ban on domestic corporate funding to political parties has been omitted in the Elections Act, 2017 as the words “domestically incorporated public or private company” used in PPA 1962 and PPO 2002 have been dropped from the prohibited sources of funding for political parties. The Companies Act may impose its own restrictions but at least the electoral laws do not prohibit corporate funding of political parties.

Foreign funding of political parties has been prohibited in all three laws but the prohibition was made more stringent in PPO 2002 compared to PPA 1962. The definition of a “foreign-aided political party” in PPA 1962 included “substantial portion of its funds from foreign nationals” but PPO 2002 and now Elections Act, 2017 omitted the word “substantial” from the relevant provisions of the law and substituted this with “any”. This was a significant change as it substantially lowered the threshold of including a political party among foreign-aided parties.

Article 17(3) of the constitution of Pakistan provides that “Every political party shall account for the source of its funds in accordance with law”. Elections Act, 2017 is the current law referred to in the constitution and its Chapter XI covers political parties. Section 204 of the law deals with funding of political parties and its sub-section 3 covers prohibition of foreign sources of funding. Section 210 of the law requires each political party to submit to the ECP every year a consolidated statement of its audited accounts certified by the party head or an office-bearer authorized by him/her.

The ECP makes photo-copies of these statements of accounts public through gazette notification every year but seldom has it tried to scrutinize these statements or even asked a political party to provide the deficient information. This is probably so because there is no express provision within the law which authorizes the ECP to scrutinize the statements and take follow-up action in case the statements are inaccurate or deficient. The apparent lack of the ECP’s capacity to undertake such a professional scrutiny is another reason for the inaction.

The recent ECP order and the preceding investigation into PTI accounts spread over approximately eight years was not because of ECP initiative; it was made possible because of a complaint filed by a founder member and former information secretary of the PTI, Akbar S. Babar, whose tenacity to follow-up with his complaint despite challenges in the courts and resistance by the PTI led to completion of the ECP investigation.

Despite the fact that the ECP order has identified a number of irregularities and violation of laws in the PTI’s financial dealings which eventually will have to be decided by the superior courts, the PTI and its Chairman Imran Khan must be given credit for being the only mainstream party besides probably Jamaat-e-Islami which created an elaborate system of fund raising especially focusing on Overseas Pakistanis and, through them, on their friends and businesses abroad. The PTI system was so successful that in 2012-13, it became the only party to ever raise more than a billion Pakistani rupees in a year. The PML-N is a distant second which could collect approximately half of this amount (Rs596 million) in the same year.

Based on the available public records, the PTI also has the distinction of collecting the highest amount of aggregate funds — Rs3.66 billion — during the past 13 years followed by the MQM which collected less than Rs2 billion and the PML-N which raised Rs1.48 billion in the same period. The PPP and JI could raise Rs0.68 billion and 0.38 billion respectively. Unless a law is violated in which case the law should, of course, take its course, the ability to raise more funds should be treated as a plus point for a political party.

Since violation of political finance laws may have serious policy and security implications for a country as the integrity of political parties, parliament and government may get compromised as a result, it is important that the ECP be empowered both legally and technically to carry out regular scrutiny of at least a random sample, say 10 per cent, of the statements of accounts submitted by political parties, legislators and candidates.

One should hope that both the ECP and political parties have learnt their lessons from the PTI prohibited funding case. The ECP needs to fortify its Political Finance Wing and political parties should learn how to maintain their books following the law — both in letter and spirit.

The writer is president of PILDAT — Pakistan Institute of Legislative Development And Transparency.

He tweets @ABMPildat and can be reached at: