Implementing the political party financing legislation : an analysis of the aftermath

Abstract

Purpose: The primary aim of this study is to provide a summary of the arguments raised and controversies that happened after the implementation of the Political Party Financing Legislation and to identify the perceptions of the stakeholders about the state of current affairs in the local scenario. Moreover, this study is also focused on providing a number of recommendations to improve the effectiveness of this legislation in terms of transparency and accountability, with the objective of enforcing the act so that similar controversies would not arise. Design: The objectives of this study are achieved by the implementation of five semistructured interviews with pre-identified stakeholders of this legislation. Two interviews were carried out with high ranking officials within major political parties in Malta, while another two interviews were carried out with high ranking officials within two minor political parties. The last interview was made with an auditor who is independent and autonomous from all the parties. Findings: This study finds that political parties should be viewed as public interest entities and that another institution should take the place of the EC as the supervisory body of the legislation. In addition, a limitation on campaign expenditure should be imposed in order to level the playing field among all the parties, and systems of cash inflows other than donations such as loans should be allowed but also strictly regulated by the supervisory body. Conclusion: This study concludes that the enactment of this legislation was an important milestone for Malta, however there are still various areas that can be improved. This study concludes that financial reporting requirements should be in accordance with a full IFRS system, and for those parties that own other controlling interest entities, there should be the requirement for consolidation. Moreover, the individuals acting as treasurers of such parties should be in possession of a warrant of a Certified Public Accountant. Furthermore, this study emphasises the importance of donations and cash inflows to political parties as there is not a state funding system in place, however it also highlights the importance for the party to be accountable and fully transparent in relation to activities regarding finance. Value: Political parties are amongst the most important entities for the public in the local scenario. Thus, it is very important to have a sound and adequate legislation with regards to political party financing to enhance the transparency and accountability of such parties towards the general public.