This research addressing the seven parliamentary parties was an attempt to provide the basic characteristics of the most significant players on the political scene. The findings show that several common traits can be found in multiple political parties. Three out of the seven parties represented in parliament have only existed for less than two electoral terms.

Most of the political parties have a strong position in top party leadership, particularly its executive bodies. This position is usually secured in a number of ways:

- Parliamentary nominations are controlled by nationwide executive bodies in five out of seven parties. However, nominations at a regional level are only controlled by executive bodies in three parties under review. SDKÚ ranks among the parties in which constitutive bodies are responsible for nominations, but the mechanism for candidate selection ensures that the influence of executive bodies is predominant in this process. 

- Executive bodies in four out of seven parties have a guaranteed four-year term of office. In two parties their supreme constitutive bodies meet only once in four years; the other three parties hold such meetings every two years, while in only two parties under review this body meets every year. 

- Three out of seven parties make it possible for executive bodies to directly influence lower organisational bodies.

- In at least two cases under review the two-third majority of delegates is necessary to remove a party official from office, while he/she only needs to win an absolute majority to be elected.

- In one of the parties under review, it is even the top party leadership that accepts new party members.

In three out of seven parties there is a strong informal influence from the party leader on the party’s operation, which deforms instruments of intra-party democracy.

Three of the parties were found to have contradictions in their fundamental party documents. In the case of one party, these contradictions were so strong that they failed to clearly stipulate valid party rules. 

It is apparent in most of the parties that the share of party members nominated in executive bodies increases with the increasing level in the party hierarchy.

Four out of seven parties have had to face intra-party conflicts, which have led to the departure of critics from the parties on the one hand, but have not threatened the positions of leaders or top party representatives on the other. Yet, they have attracted more attention from the media and have affected the parties’ images.

The economic situation of two of the governing parties is alarming, with an inadequate volume of debts (more than SKK 50 million), which auditors also warned about in their reports. In the case of these parties we have identified their excessive dependence on state budget funds (68-90% in 2003) and decreasing member and supporter participation in party funding. It becomes apparent that party members do not contribute to party funding to a greater extent and some parties (particularly KSS and SMER) are unable to maintain even the previous level of contributions collected. The share of donations in party funding fell dramatically after the obligation to report them was introduced and political parties state very low or no gains from this source. This can be caused by several factors (high mistrust of parties in society, transfers of receipts to non-transparent categories or lack of party interest in this source of funding due to guaranteed public funds).

The public has no basic information about possibly risky factors in political parties, particularly their economies (loan sources, assumption of liabilities, explanation of fundamental economic indicators, proposals for their elimination etc.). 

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Recommendations for legislative initiatives

The analysis of the development and current condition of the social environment in Slovakia in comparison with foreign countries shows that Slovak legal norms related to the status, economy, and operation of political parties do not constitute a consistent and interconnected model which would take account of all significant problems. This system was built on the basis of a highly liberal approach to political parties, in which they were given the right to internally function as subjects of private law. Legislators have gradually extended this framework by incorporating state financial support instruments and related duties and restrictions. However, this has always been done in a partial and uncoordinated way. The impacts of such steps on the whole political environment have not yet been assessed. Yet, there has been no significant increase in the transparency of party funding and it is difficult to enforce access to information that political parties make public as required by law.

We consider the following to be the greatest shortcoming in the current system: inconsistent rules, insufficient transparency, difficult to enforce access to information, ineffective monitoring by parliament, the Ministry of Finance, and other authorities. Due to the above range of problems, we are of the opinion that the only possible solution is a comprehensive reassessment of rules for the functioning of political parties. This should result in a single law being drafted that would govern the position of political parties in society (including the relation between the state and political parties, so that their presence in the state is not negatively perceived) and the principles for their economic operation in a standard and pre-election period, and implement enforceable public access to information and effective monitoring.

Thus, we present the following concept which stems from the civic view of the position and functions of political parties and the knowledge of a group of experts that have been meeting for many years within Fair-Play Alliance’s working groups.

Concept fundamentals and proposed solutions:

a) Characteristics of the environment, position of political parties, funding methods

The modification of the legislative framework should, in our opinion, accept the fact that the existence of political parties is necessary in a representative democracy. Yet, their existence is necessary when society needs them and when there is no other, more efficient, non-partisan, and decentralised way of organising its social life. This is because the concentration of power in the hands of political parties poses too great a risk of misuse. Therefore it is much more efficient if public administration powers are divided among the greatest possible number of subjects and if public oversight of the exercise of these powers is ensured.

Political parties should be perceived as a bridge between the state and civic society. They should provide (but not exclusively) public access to elected positions and allow the citizens to participate in political life. This means that we dominantly perceive the necessary presence of political parties in the government and parliament. Yet, we believe that the influence of political parties in a sound society should be limited only to necessary public functions, which are particularly focused on their presence in the above mentioned state authorities and territorial self-government authorities. We therefore support the creation of multiple election districts, consistent professionalisation of the civil service (the definition and separation of political positions in state and public administration from specialised positions and keeping the number of political position to a minimum), professionalisation of the management of state-owned enterprises (introducing a legal obligation to use public tenders to staff managerial positions in them) and public institutions, enabling the public to participate in the law-making process, determining exact rules for lobbying, implementing codes of ethics for public officials, and an effective overview of the functioning of public administration.

First and foremost, political parties should be voluntary associations of citizens. Hence, they should represent the political interests of their members and supporters. We propose that this trait of political parties should be strengthened by creating incentives for parties to build their background in society. 

We see political parties as citizens’ associations whose legitimacy is based on two foundations: their votes by means of elections (a one-off and non-recurring act) and their members and supporters (regular, day-to-day, and repetitive activity and communication). Political parties then represent both groups in the parliament and government, where they should perform public functions (creating a quality legislative environment without giving preference to vested interests, efficient and transparent governance of the state) as well as represent the interests of their voters, members, and supporters. Thus, political parties potentially provide for the enforcement of particular interests of certain interest groups (for example their members) in the state’s policy. This potential and the possibility that the above principle might become the dominant purpose of party activities should be eliminated by means of a mechanism based on the close, everyday contact of the party with broader groups of its voters and supporters. This is why the legitimacy of political parties should result from their close contact with groups of citizens and the general public.    

The functions of political parties defined in this way will be best reflected by their financing from the state budget and private funds being divided in a balanced way. The system of funding political parties from the state budget should by no means give unfair preference to parliamentary political parties and should not contribute to the rigidity of the party system.

Note: At this point, state support for political parties also includes indirect financial and material benefits for MPs (offices, assistants, computers etc.), free broadcasting time during public media election campaigns, utilisation of service facilities, vehicles, and related benefits etc.

In order to determine the private to public funds ratio for financing political parties, it is not necessary to know and mention all of their functions. The balanced nature of the ratio results from the effort to limit the risk arising from their excessive dependence on one funding source. Political parties’ excessive state budget dependence lessens their motivation to attract public support. On the other hand, their over reliance on private sponsors poses a higher risk of such groups wielding undesirable influence on the decision-making of party representatives holding public positions.

What is more, the state will never be able to satisfy the growing needs of political parties, which are theoretically unlimited. The meaning of this support should be to create elementary conditions for the functioning of those political parties that comply with predefined criteria and to ensure the plurality of party life. The combined funding of political parties is also necessary, because political parties are separated from the state according to the Constitution of the Slovak Republic.

For the above reasons the most sound funding model is, in our opinion, what is called a “matching funds” system, which states that political parties are entitled to receive some financial support from the state only on the condition that they prove they also have a sufficient volume of private funds. Such a system works very well, for example, in Germany or in the USA. Besides the fact that it ensures balanced and multi-source funding, it also motivates political parties to admit the existence of unofficial funds that they are believed to possess and it is a much more active method of building relations with party donors, members, and supporters.

To match up with Slovakia’s needs, the system could be as follows:

Main principles:

- political parties are allowed to raise funds from private sources, state sources, and a 1% income tax allocation from individuals,

- the donation sum that political parties can obtain from individual or legal persons will not be limited by law,

- however, the amount of a donation that will be counted in the “matching funds” system (as a safeguard against the excessive dependence of political parties on large donors) will be limited.

Proposed types of state subsidies:

Per-vote subsidy

- after a parliamentary election, this one-off subsidy will be paid to all political parties that obtain at least 3% of votes and its amount will be SKK 60 per vote (determined by means of a valorisation mechanism),

- parties that obtain 0,67% (the equivalent of one seat in parliament) to 3% of votes will receive a per-vote subsidy amounting to 50% of the subsidy defined in the previous section.

Operational subsidy

- this would be paid annually to the political party that received the per-vote subsidy,

- any political party meeting the above criteria would be annually entitled to the amount of funds not exceeding the per-vote subsidy,

- the party would receive the full amount of this subsidy provided that it proved the same amount of income from donations and membership fees. If income from the above sources were lower, the subsidy would be proportionally reduced,

- to assess entitlement to this subsidy, all membership fees, donations from individual and legal persons up to the amount of SKK 100,000 (in the case of multiple donations from the same person, only the first SKK 100,000 would be taken into consideration), inheritance, and funds from the 1% income tax allocations from individuals would be taken into consideration.

Per-seat subsidy

- to be cancelled.

Example:

Political party A obtains 500,000 votes in the parliamentary elections. Therefore, it would receive a per-vote subsidy of SKK 30 million as a one-off sum for the whole electoral term. As the party attracted more than 3% of voters it would be entitled to receive an annual operational subsidy of no more than SKK 30 million during the whole electoral term. The party would receive this amount of subsidy only if it proved that it collected at least SKK 30 million from donations, membership fees, and 1% income tax allocations in the year preceding the year in which the subsidy is paid out. However, the party only collects SKK 7 million from its members, individuals allocated SKK 2 million to it from their income tax and the sum of all donations from individuals and legal persons, which were below SKK 100,000, is SKK 10 million. Altogether, these funds totalled SKK 19 million in the previous year, so it would only receive an operational subsidy of SKK 19 million for this year.

b) Transparency of funding, overview, sanctions

>In our opinion the top priority in this field is to significantly increase the transparency of economic management in political parties, which should be ensured in particular via the active disclosure of their economic data. 

We are aware that political parties are the subjects of private law. Political parties are guaranteed by law to act freely in their organisational and personnel matters, in the area of their operation and programme. Yet, this principle should be abandoned in the sphere of economic management. The reason behind this conviction is that the exercise of power (not only by their direct involvement in the process, but also by their presence in various committees and supervisory bodies) places political parties in a position where there is a high risk of them misusing their access to information and decision-making powers. Such misuse may have widespread consequences and the public should therefore be informed about the factors that might enable it to happen.

>Therefore, we recommend implementing three parallel levels of public overview for political party financing that would include the active disclosure of information, independent audit, and the permanent operation of a supervisory body.

Disclosure of information

We propose that the law should precisely define what information political parties must actively and regularly submit to a state authority in charge of maintaining an overview of a political parties’ economy. Public access to exactly specified pieces of information should be guaranteed by their immediate publication on the supervisory body’s web page. Furthermore, the public would also have guaranteed access to this information on the basis of the Freedom of Information Act.

Publicly available information on political parties’ economic management should cover all risky factors. The most frequently used form is the obligation to produce an annual report that should contain the following:

- financial statements with an explanation of significant economic indicators,

- information about the party’s financial situation for at least two previous accounting periods,

- information about facts of special importance that appeared after the end of the accounting period described in the report,

-information about how the party intends to settle generated losses or how it will use generated profits,

- information on donations accepted, including the amount of each donation, receipt date, the identification and address of the donor (the same would apply to non-cash contributions),

- the number of party members at the end of the year described in the report,

- the amount of collected membership fees, including the sum that the party stipulated as a fee per member,

- the overview of received loans and credits including the identification of the creditor, loan amount, re-payment schedule, and re-payment terms,

- an overview of overdue liabilities,

- financial statements of the business company set up by the party.

In the pre-election period, political parties face the need to raise funds to finance election campaigns that are increasingly extensive and expensive. At such a crucial stage parties should transparently disclose information about their economic systems to electors so that they can judge what obligations the party has taken on and from whom it has accepted financial contributions. Therefore, we recommend that prior to the elections, political parties should disclose information about the financial sources they have obtained and all their election campaign expenditure. Since such a report cannot cover the whole pre-election period, political parties should publish a summary report with the same structure shortly after the election. These documents should be made available to the public without delay.

Independent audit

We recommend that the instrument of independent audit of political parties’ financing should be retained. However, this instrument cannot only be limited to verifying annual financial statements (part of the annual report) as it is at present. A new law should precisely specify the objectives and focus of the audit, its essentials, including the pre-requisites of an auditor’s report. Such an independent audit should serve to warn supervisory authorities and the public of any critical moments in a political party’s financial situation and their economic management and assess if the party’s economic operation complies with the laws.

Supervisory authority  

The inspection of political parties’ funding should by no means be in the hands of a parliamentary committee made up of MPs (who are members of political parties). Given current experience in this respect, such inspections fail to fulfil their roles. Therefore, we recommend that the inspection of political parties should be transferred under the authority of the Ministry of the Interior, which is also responsible for the registration of political parties. An adequate inspection model should be continual, it should collect, check, and publish all reports produced by political parties in connection with their economic management and penalise any breaches of duties and the law.

An effective inspection authority requires sufficient human resources and powers to ensure that it can act independently and in cooperation with other authorities and verify suspected breaches of the Political Parties Act or initiate criminal prosecution in necessary cases. The public should be able to propose a motion to verify suspected breaches of the law and to address the supervisory authority in such cases.

We are of the opinion that one of the essential requirements for the proper conduct of inspection is its own transparency. The officials responsible should therefore publish a list of all proceedings in progress, penalties awarded, and decisions adopted. The supervisory authority should annually publish reports on its operation. 

The system to be implemented through legislative change should significantly increase the probability of discovering and penalising those political parties that are in breach of the law.

As an optimal long-term solution, it seems that the inspection of political parties should be concentrated in an independent supervisory authority. We do not have positive experience of such supervisory authorities in Slovakia, because, in spite of guarantees of independence and created conditions for the conduct of their work, their activities are often significantly limited due to their management, whose members are unable to guarantee the fulfilment of the institution’s objectives. Therefore, in this situation, the question of who will conduct such inspections is not a high priority. What is more important is to define the framework, powers, and public supervision over the inspection of political parties in such a way that there is room for its qualitative growth, so that civic pressure can be exerted to ensure its improvement.

c) Making stricter rules for the economic management of political parties

- Political parties should employ double-entry book keeping. This is the only way to ensure the transparency of their economic management and to provide an overview.

- Political parties should only accept donations and non-cash contributions on the basis of donation deeds, which would prevent attempts to circumvent the requirement of transparency of donations and permit the verification of suspected breaches of the law.

- The amount of membership fees for political parties should be limited, so that there is no room to evade the law (funds are received as membership fees instead of donations, whose details must be disclosed). Political parties should keep a separate record of membership fees received.

- The permissible use of state budget subsidies should be clearly defined to prevent political parties from lending or donating funds to third parties, using them to pay penalties or as a guarantee for a third party’s liabilities.

- The law should introduce a system stipulating that any political party in breach of its duties required by law cannot receive state budget subsidies.  

- Political parties that decide to set up a business company and perform commercial activities should not be allowed to take on other subjects for their commercial activities.

These recommendations for legislative changes result from an analysis of the deficiencies in the present environment and its key players. They reflect principles based on the civic concept of party democracy. In our opinion, amendments to legislation regarding political parties cannot only follow the opinions of political representatives. Therefore, we welcome any comments on improving our proposals, which we will subsequently seek to present to political parties and MPs.

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