ARAB OR NOT, DONATIONS FROM FOREIGNERS SHOULD BE BANNED - G25 tells Najib on political funding

We in G25 would like to support the Prime Minister Dato’ Sri Najib 's call for all political parties to declare their sources of funding, saying that he is ready to do so for his party if the opposition parties agree to also declare where their funding comes from. Since his challenge, many politicians have responded with their support for the proposal.

We believe the proposal is a positive one, as it can help to clean up our politics, which has gone from bad to worse over the last thirty years.

We recognise that political donations are common in all countries, and Malaysia is no exception. Although there is nothing wrong about political donations, there is also a need to address public concerns whether the donations are a genuine show of support from the donors and if these donors are companies and powerful corporate individuals, there is always the suspicion fairly or unfairly, that their donations are linked to cronyism, favouritism and worse, corruption. And if the donors are foreign, there is a question whether they have a sinister agenda in getting involved in our politics.

The integrity of the elections can be seriously impaired if there is a general perception that the winning party had an unfair advantage as it was able to throw a lot of money to get the voters to support its candidates. The party that won the right to rule will be placed under a shadow of doubt about its legitimacy.

PM Najib

The whole purpose of holding elections will become a farce if the public sees it as a meaningless ritual in democracy, which is manipulated by the rich and powerful to serve their own interests. There is great danger that the whole population may lose faith in the electoral system.

Thus, we must not allow political donations to be the cause of the death of democracy in our country. The proposal to have a law making all political parties declare their source of funding should be welcomed as an urgent need to save the legitimacy of elections and the survival of democracy.

At the same time, it is also necessary to review the electoral rules to make the election process free and fair for all so that when political parties and election candidates are able to compete on a level playing field, such as having equal access to the mainstream media, it makes it easier for them to campaign with a small budget. The less need for them to spend big money in campaigning, the less are the chances of them getting donations from dubious sources.

G25 recommends the following measures to legitimise contributions to political parties:

The proposal below is adapted from the regulatory and disclosure regime for political contributions based on the Australian model, where the Federal-State Westminster system of Government closely resembles that of Malaysia.

The following sequence of action plans is recommended in setting up the regime:

1. Establish an umbrella legislation that legitimises political contributions. Tentatively named the Political Contributions and Financing Act (PCF Act), it will be modelled after the Australian Electoral and Referendum Amendment (Electoral Integrity and Other Measures) Act 2006 and the British Political Parties, Elections and Referendums Act 2000.

This proposed Act will specify the various disclosure requirements and limits on political contributions from both public and private sources. It will define terms such as ‘contribution’ (which includes cash, benefits in kind as well as payments for nominal consideration such as the right to sit at a particular candidate’s dinner table) and ‘associated entities’ which could include businesses owned by the political parties and foundations set up in their names.

This Act differs from, but will be consistent with the existing Election Offences Act 1954 in that the PCF defines elements of legal political contributions, while the latter Act legislates against illegal electoral behaviour, including money politics. The nexus that could be drawn is that any political contribution which does not comply with the requirements of the PCF could be ruled as a transgression under the Election Offences Act.

2. Empower the Election Commission. The Election Commission (EC) should be empowered to investigate and prosecute alleged breaches in election laws, particularly illegal political contributions. Such powers currently are fragmented amongst the EC, Malaysian Anti-corruption Commission (MACC) and the Attorney-General’s Chambers, hence hampering efforts in conducting speedy and efficient investigations.

The EC should be staffed with professional auditors as well as investigating and prosecuting officers to enable it to discharge its duties in enforcing the proposed PFC Act.

3. Provide public campaign funding for political parties. To reduce reliance on private contributions, which makes political parties more susceptible to wealthy interest groups, and level the playing field for smaller parties and independent candidates, a mechanism should be instituted which provides public funding to all political parties regardless whether they are in the Government or the Opposition.

Funding could be given in terms of post-election rebates for campaigning costs, provided that the candidates meet certain criteria, such as garnering a minimum percentage of eligible votes in the election. Certain benefits in kind also should be provided, such as free air-time on television and radio for political advertising.

4. Institute disclosure rules and donation limits. All parties and related entities should be mandated by law to submit the following information to the Election Commission on an annual basis:

• All contributions received (cash and in-kind) which exceed RM1000 and the source(s) of the funds, be it public or private, and;

• A detailed breakdown of expenditure towards which the contributions are utilised.

The accounts will be audited by the Election Commission and made public on its website. This enables the public to scrutinise material sources of political funding which could enable identification of potential conflicts of interests and improves accountability of fund utilisation.

Limits also should be imposed on the amount of donations that could be given by both individuals and bodies corporate. Capping the quantum of individual contributions mitigates the risk of regulatory capture and forces parties to seek funding from a wider support base.

To address potential evasion of the limit, donations to local branches of political parties should be treated as contributions to its parent entity and disclosed/capped accordingly if they exceed the applicable thresholds. Donations channelled via interposing fund-raising managers or foundations also must disclose the original donors’ identities rather than be treated as a single sum. Political contributions are not recommended to be tax-deductible.

5. Donations from foreign individuals and minors should be banned. Foreign nationals and corporations should not be allowed to make political donations as it could afford them undue influence over the Government’s decision-making powers at the expense of legitimate citizens’ best interests.

As a corollary, the Parliamentary entitlements of elected representatives also may only be used for the benefit of their respective electorates and not for campaigning.

Citizens and permanent residents under the age of 18 also should not be allowed to contribute to avoid coercion and potential circumvention of donation limits by older family members.

We believe the Malaysian society has now matured and the above suggestions from G25 should be welcomed as they are meant to restore the credulity of our democratic constitution. We need to avoid the victors and losers in an election continually accusing each other of improper practices.

We believe that through transparency of political funding, the people’s faith in the electoral system can be enhanced. This will strengthen the forces of moderation and contribute to the social and political stability of our beloved country.

G25, a group of individuals dedicated to the cause of a moderate Malaysia.