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Money and politics – linking public resources to the illicit financing of political parties

EFOR organized the international conference on Money and politics – linking public resources to the illicit financing of political parties  on the 7th and 8th of September 2017, at the Athénée Palace Hilton Hotel, Diplomat Hall (1-3 Episcopiei, Bucharest).

During the debate, we explored the link between political party funding and public procurement, respectively the risk of public resource abuse. The topic is widely debated in Europe, especially since there are trending concerns about good governance, transparency and the ways in which the funding of political parties can be reformed.

Expert Forum released a report (see below) concerning the politicisation of European and national public funding for infrastructure, covering both Romania and Croatia.

The event was attended by more than 60 party financing experts, prosecutors, investigative journalists and public procurement experts from countries such as Romania, Croatia, Bulgaria, Lithuania, Estonia, the Czech Republic, Poland, Austria, Latvia, Moldova, Ukraine, Georgia, Belgium, France, Italy or Spain and representing international institutions such as GRECO, OSCE / ODIHR or IDEA International.

Agenda ^

Day I – 7th September 2017

Connecting the dots: European perspectives over consolidating good governance and fighting misuse of public goods

Moderator: Laura Ștefan, anticorruption expert, EFOR

Mihaela Virginia Toader, Secretary of State, Ministry of Regional Development, Public Administration and European Funds (MDRAPFE)

Inguna Kramina, Policy Officer, European Commission, DG Regional and Urban Policy, Competence Centre Administrative Capacity Building

Christopher Speckbacher, Head of Section, GRECO Secretariat

Jacopo Leone, Democratic Governance Officer at OSCE, Office for Democratic Institutions and Human Rights (ODIHR)

Main conclusions of the report

Moderator: Sorin Ioniță, President, Expert Forum

Septimius Pârvu, Project manager, Cezara Grama, Legal expert, Expert Forum
Munir Podumljak, Executive Director, Partnership for Social Development, Croatia
Prof. Dr. Dacian Dragoș, Public procurement expert, Babes Bolyai University, Cluj Napoca

Abuse of state resources and vulnerabilities related to the EU and national funds

Moderator: Otilia Nuțu, Expert Forum

Paul Silviu Dumitriu, Deputy Chief Prosecutor, Section for Combating the Offences Assimilated to those of Corruption, National Anticorruption Directorate (DNA)

 Artem Sytnyk, Director of the National Anti-corruption Bureau of Ukraine (NABU)

 Gheorghe Oană, Vicepresident, Audit Authority, Romania

 Constantin Lica, Councillor, Fight against Fraud Department (DLAF), Romania

Regulating money and politics: administrative and criminal tools. What works better?

Moderator: Septimius Pârvu, Expert Forum

Magnus Ohman, IFES Senior Political Finance Adviser and Director, Regional Europe Office

Peter Wardle, Political Finance consultant, former President of the Electoral Commission, the United Kingdom

Lina Petroniene, Head of the Division of Political Parties and Campaigns Funding Control, Central Election Commission of Lithuania

Bogdan Toma Costreie, Director, Department for control of financing of political parties and electoral campaigns, Permanent Electoral Authority, Romania

Inga Zeltiņa, Senior Inspector of the Division of Control of Political Parties Financing, KNAB, Latvia

DAY II – 8th September 2017

Technology and transparency of political funds

Moderator: Septimius Pârvu, Expert Forum

Samuel van der Staak, Senior Programme Manager, International IDEA

Zurab Aznaurashvili, Head of Financial Monitoring Service of Political Parties, State Audit Office of Georgia

Märten Veskimäe, Supervisory Committee on Party Financing / Researcher of party financing policies at the University of Tartu, Estonia

Attila Biro,  Investigative journalist, Rise Project, Romania

Civil society and citizens monitoring the abuse of state resources

Moderator: Laura Ștefan, expert anticorupție, EFOR

Oleksandra Ustinova, Expert, Anti-Corruption Action Center, Ukraine

 Stefan Karaboev, Analyst, Center for Study of Democracy, Bulgaria

 Vít Šimral, Consultant, Frank Bold, Czech Republic

 Nicolae Panfil, Program coordinator, Promo-LEX Moldova

Public funding, companies and organized crime in financing political parties and electoral campaigns

Moderator: Cezara Grama, Expert Forum

Bogdan Stan, President, National Integrity Agency

Francesco Curcio, Assistant Prosecutor, National Anti-mafia and Counterterrorism Directorate

 Giorgi Lomtadze, Research Direction Lead, The Institute for Development of Freedom of Information (IDFI), Georgia
Denis Cenușă, Program Director, Expert Group, Moldova


Download the full agenda

Report and conclusions ^

Some of the findings of the research:

  • the highest value of donations was recorded in 2008-2009, and 36% of all donations ever received by the parties went to the Liberal Democratic Party
  • although companies legally donate to parties, and the amounts are recorded in the Official Gazette, there is a significant component of illegal funding of political parties and electoral campaigns, through rigged public procurement, fictitious or overrated contracts, abuse of public resources, and clientele calls that can facilitate rigged purchases; 1724 companies donated from parties between 2006 and 2015, 616 won public procurement, and 303 signed contracts with European money
  • politicians use their public position to raise money for personal use, and only a small part of the money reaches the party
  • companies with political support prefer Romanian money, as control mechanisms are lighter; however, there are also significant vulnerabilities in terms of European money
  • although the law does not allow, companies that have contracts with the state donate to political parties less than 12 months before election day
  • the market is dominated by large companies that have the capacity and resources; however, historically speaking, much of it have grown because of political ties
  • a significant number of top 30-40 firms as construction contract values ​​ (Vega 93, Confort, Delta ACM 93, Tancrad, Spedition UMB, Dimar, UTI Group, Iridex Grup Constructii, Cast, Tel Drum, Victor Construct, Selina, Romenergo, Concas, Tehnodomus etc), consultancy (Fichtner Environment, Ramboll South East Europe, Integroup Engineering etc), feasibility studies or advertising services (Media Investment Communication, Romair Consulting, Expert One Research etc) are directly or circumscribed by political parties or have criminal files for fraud, tax evasion or money laundering
  • regarding the Romanian money, there are indications that the distribution of funds is directly related to the political colour of the party in power
  • in terms of criminal convictions, most of the cases are related to frauds with EU funds or abuse of power; the decisions in cases such as  Adrian Năstase, Sorin Frunzăverde sau Florin Popescu show how powerful are the political leaders in the county or at the national level and how they use the entire institutional system for the electoral cause; also, a frequent situation is the bribe (usually 10%) of the contracts either for awarding or for paying the company for the works
  • some of the main risks related to the analyzed procurement procedures are: conflicts of interest, systematic contracting of consulting companies by several mayors in a certain areal, people from public institutions (or who have worked in public institutions) facilitating the winning of contracts , over-valued or fictitious consulting contracts, large differences between the contract value and the final amount with additional costs, direct contracts that are systematically granted to companies with political ties, companies with camouflaged real owners (who control the company but are not included in documents).
  • the databases produced by different Romanian institutions (SEAP, fonduri-ue.ro, etc.) do not communicate and contain significant errors that prevent any professional analysis; this report required more time for database cleaning and arranging than for the actual analysis. Data on party financing or company ownership is difficult to obtain or involves high costs

Some of the illegal client financing mechanisms, fraud and potential identified funding mechanisms identified:

  • paying a commission (typically 10-20%) of the contract value by a company to the contracting authority in order to win a public procurement; in some cases part of the money goes from the decision-maker (county council president, minister, etc.) to the party
  • requesting bribes by decision-makers (eg mayor, county councilor) to approve payments for works already executed by companies
  • the use of false or overrated consultancy contracts to mask the illegal campaign funding
  • obtaining funds in situations of conflict of interest
    – the decision-maker is the shareholder, administrator or is controlling the firm in any other form and uses the public office to directly or indirectly get contracts for the company
    – the existence of firms whose leaders are decision-makers who work or worked at public institutions such as CNADNR or MDRAP – institutions that manage funds and procurement procedures
  • soliciting from companies various products or services for electoral campaigns (campaign materials electoral, consulting or advertising services, food, etc.)
  • determining the local decision-makers (mayors, for example) by a county council president or other political leader to cast votes in exchange for approving funds (for example, from the National Program for Local Development).
  • obtaining funds illegally under the pretext of organizing events, by paying participation fees
  • overestimating contracts illegally, although there is no justification for works or services (consultancy, feasibility studies, etc.)
  • appointing people close to political parties in key posts (for example at the head of state-owned companies) to facilitate the procurement of public procurement contracts; part of the money to get to the party

See the event ^

Day 1

Day 2

Photo Gallery ^

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This project is supported by the European Union Programme Hercule III (2014-2020). This programme is implemented by the European Commission. It was established to promote activities to combat fraud affecting the EU’s financial interests, including cigarette smuggling and counterfeiting (for more information see http://ec.europa.eu/anti_fraud/about-us/funding/index_en.htm).

This notice reflects the author’s view and the European Commission (OLAF) is not liable for any use that may be made of the information contained therein