CDT

I Evaluation of the Law's implementation

Center for Democratic Transition (CDT), as a part of the project "Money and Politics – Montenegro and the Region" and supported by the Balkan Trust for Democracy (BTD), conducts monitoring of political parties financing.

The results of the CDT monitoring indicate that, during the first three months of its implementation, the Law on Financing of Political Parties has been violated by a number of political parties and Montenegrin municipalities, and that the Law's implementation by competent state institutions is not on a satisfying level.

The majority of municipalities continue with the practice of not paying the funds for regular work of political parties on local level. In addition, political parties continue with the practice of not publishing the reports proscribed by the Law. Even when a provision of the Law is respected, the deadlines set by the Law are treated as well-intended recommendations, and not as something mandatory.

Competent state institutions continue with the practice of failing to act and with a passive approach to problems with financing of political parties. The CDT is concerned that, due to this approach, there will not be improvement in transparency of financing of political parties and introducing control in this area.

II Irregular payments on a municipal level

The CDT has monitored payments of funds for political parties from state and municipal budgets, and concluded that the majority of municipalities do not respect provisions of the Law on Financing of Political Parties.

The Law on Financing of Political Parties proscribes that political parties should be paid funds on monthly basis, no later than the 5^th in a month for the previous month.

On the state level, this legal provision is respected, and the Ministry of Finance pays funds to political parties on regular basis and within the proscribed deadlines. However, municipalities continue with the practice of irregular and overdue payments of funds to political parties.

The funds for January 2012 were paid in only six municipalities in accordance with the Law. These municipalities are: Bijelo Polje, Danilovgrad, Nikšić, Podgorica, Tivat and Andrijevica.

The funds for February were paid to political parties in only three municipalities within the proscribed deadline: Bijelo Polje, Danilovgrad and Podgorica. In seven municipalities (Andrijevica, Berane, Herceg Novi, Kotor, Mojkovac, Nikšić and Tivat) the funds for political parties were paid after the deadline set by the Law had expired. Municipalities Budva and Pljevlja have not yet provided information on transfer of funds to political parties in these municipalities for February 2012.

The CDT is still gathering information for March, but based on information obtained so far, the situation is not significantly better.

III By-laws and forms

The basis of a good quality implementation of each law are good quality by-laws which enable that the intention of the legislator and the norms aimed at enhancing a situation are applicable in practice.

On 30 January 2012, the State Electoral Commission (SEC) issued Guidelines on content of the reports on contributions of legal and natural persons to political parties during election campaign and Regulations on the method of calculating and reporting on in-kind contributions to political parties.

The form of the report on donations of natural persons does not contain any element for identifying the donor, except for his/her name. Failure by the SEC to bind political parties to more precisely identify their donors among natural persons during an election campaign disables the competent institutions in controlling the work of political parties. In addition, under an excuse of protecting personal information, the SEC is that way excluding the public from the process of controlling political parties financing, although the best practices show that the system of financing of political parties cannot function successfully without active participation of media and civil society.

Regulations on the method of calculation and reporting on in-kind contributions to political parties also leave a lot of room for misuse. The Law proscribes that the in-kind contributions to political parties are calculated based on the market value and reported as income. With its by-laws, the SEC has deviated, to a large extent, from the legal norm. According to the new solution, the in-kind contributions are calculated as a difference between the price paid for a product or a service and its market value, if the difference exceeds 30%. This solution has practically enabled political parties to have up to 30% discount, without reporting it as an in-kind contribution and without considering that a favor to political parties over other consumers, which is unacceptable.

On 22 March, the Ministry of Finance has issued Regulations on the form of the Annual Statement on Income, Property and Expenditures of a political party and Guidelines on the form of the report on the origin, amount and structure of collected and spent funds for election campaign. These acts have entered into force on 28 March and they bring certain enhancements in comparison with earlier forms.

However, the Ministry of Finance was unnecessarily late with drafting these by-laws, which brought political parties in a situation that they have only a few days to prepare statements on annual income, property and expenditures as well as annual statements of accounts, since the deadline for submitting these statements was 31 March.

IV Membership fees

According to the Law on Financing of Political Parties, all political parties were obliged to, no later than 31 January, issue the Decision on the amount of membership fee for the current year and submit it to the SEC, which had to publish it on its website within seven days since receiving it.

On 26 March, the CDT announced that the State Electoral Commission (SEC) website only had decisions on the amount of membership fee from 13¹ out of 37 political parties registered in Montenegro. The reports were also submitted by the civic lists with representatives in the Parliament of Montenegro². After we reacted, the decisions on membership fees for 11 more parties³ have emerged on the SEC website. Still, 13⁴ registered parties have not acted in accordance with the Law on Financing of Political Parties.

A political party which fails to issue the decision on the amount of membership fee and which fails to submit the decision to the SEC within the proscribed deadline, faces 10 000 € - 20 000 € of penalty. The Law also proscribes 500 € - 2 000 € of penalty for a responsible SEC official, in case a received decision is not published on their website, as proscribed by the Law.

V Annual Statements

On the SEC website Annual Statements on Income, Property and Expenditures for 2011 are published for only 20 political parties. Out of those 20 Annual Statements, 9 were submitted on invalid forms.

Ministry of Finance has issued Regulations on the form of Annual Statement on Income, Property and Expenditures of a political party. Political parties were obliged to submit their Annual Statements on the form set by these regulations.

Parties which submitted their reports on valid forms are: Democratic Party of Socialists (DPS), Social Democratic Party (SDP), New Serb Democracy (NOVA), FORCA, Democratic League in Montenegro (DSuCG), Liberal Party (LP), People's Party (NS), Democratic Serb Party (DSS), Fatherland Serbian Party (OSS), Bosniak Democratic Party of Montenegro and Party of Pensioners, Disabled People and Social Justice.

On the other hand, the following political parties failed to do that: Socialist People's Party (SNP), Movement for Changes (PzP), Democratic Union of Albanians (DUA), Albanian Coalition - Perspective, Democratic Party of Unity, Bosniak Party, Bosniak Democratic Party of Sandžak, Serb Radical Party and Croatian Civic Initiative (HGI). These parties submitted their Annual Statements on Income, Property and Expenditures on the form which had been valid before and which had been defined in accordance with the Guidelines on the content, i.e. form of Annual Statement on Property of Parliamentary Parties, and which stopped being valid once the above-mentioned Regulations came into force.

The form on which the mentioned parties submitted their Annual Statements is invalid, so in a legal sense it cannot be used for making a valid annual statement. The parties which used invalid forms did not report on the structure of their expenditures, which is unacceptable from the aspect of transparency. New statements contain information on the structure of expenditures and value of real-estate, and require more precise information on the income from membership fees and contributions by legal and natural persons, which is not the case with the old statements. This failure to meet the obligation has significantly violated transparency of financing of these parties.

In addition, even the parties which submitted their statements on the adequate form have not fully met the form's requirements, because a part of information has not been filled in. In a large number of cases, the parties have not presented their income, and especially their expenditures, in a transparent enough way.

By analyzing the statements, it is concluded that the political parties either did not want to fill in the statement forms properly, or they did not understand well how to fill in the new forms. We believe that a competent institution should have organized some kind of training for the parties' financial departments, in order to increase the quality of reporting and transparency in financing of political parties.

On the SEC website, there are only 20 Annual Statements of Accounts⁵ published.

What is happening with the statements of other parties and whether steps will be taken in order to initiate offence proceedings are the questions for the State Electoral Commission.

The parties which have not submitted their Annual Statements on Income, Property and Expenditures or their Annual Statements of Accounts could face penalty in the amount of 10 000 € - 20 000 €.

VI Conclusion

In the coming period, the CDT will do a detailed separate analysis of each party's statement and inform the public on its findings. However, as a non-governmental organization, the CDT is not in a position to verify whether what is being claimed in the statements is true, since we lack proper authorization for that.

The Law on Financing of Political Parties proscribes mandatory audit of the political parties' Annual Statements of Accounts, which is the task for the State Audit Institution (SAI). Due to controversy raised by this issue in the Montenegrin public, which negatively affects the trust of citizens in political parties, elections and democratic processes in general, we expect that the SAI will conduct audit of annual statements of accounts as soon as possible, make the audit reports available to public, and give recommendations for fixing the irregularities and taking other measures, in accordance with the law.

What is at the moment the most important for implementing the Law is an active approach of the SEC and the SAI, the institutions in charge of monitoring implementation of the Law on Financing of Political Parties. In Montenegro, the rules for financing of political parties have been violated numerous times in recent years by the majority of subjects that the Law relates to. However, nobody has ever been sanctioned for that. The CDT expects that for the mentioned violations of the Law there will finally be offence proceedings. That is the only way to show the intent of the country to introduce order and control in the system of financing of political parties.

The implementation of the Law on Financing of Political Parties is one of the preconditions for starting negotiations with the European Union. In addition, the experience of Croatia shows that this will be one of major criteria for closing negotiations related to the Chapter 23. It is time to accept that there are no more excuses and delays – financing of politics must be defined in a way that guarantees fair and democratic elections and political processes in general.

1. At that time, the website only contained decisions on the amount of membership fee for the following political parties: Democratic Party of Socialists (DPS), Social Democratic Party (SDP), Socialist People's Party (SNP), New Serb Democracy (NOVA), Movement for Changes (PZP), Bosniac Party (BS), Croatian Civic Initiative (HGI), Democratic Union of Albanians (DUA), New Democratic Forces FORCA , Democratic League of Montenegro (DSuCG), Albanian Alternative (AA), People's Party (NS) and Democratic Serb Party (DSS).
2. Albanian Coalition - Perspective (AKP), Civic Initiative of Tuzi.
3. Democratic Community of Muslims Bosniaks in Montenegro (DZMBCG), Democratic Union of Albanians in Montenegro (DJACG), Party of Democratic Prosperity (PDP), Party of Pensioners, Disable Persons and Social Justice (SPISP), Bosniak Democratic Party of Montenegro(BDPCG), Socialist Party of Yugoslavia (SPJ), Fatherland Serbian Party (OSS), Democratic Party of Unity (DSJ), Liberal Party of Montenegro (LPCG) and Bosniak Democratic Party of Sandžak (BDPS).
4. Civic Party of Montenegro (GPCG), Party of Serb Radicals (SSR), Liberal Alliance of Montenegro (LSCG), Budva Forum, People's Concord of Montenegro, Party of Justice of Montenegro, Democratic Party of Montenegro, Green Party of Montenegro, Party for Gusinje, Democratic Center of Boka, Democratic Center, Party of Serb Populists and Yugoslav Communist Party of Montenegro.
5. Democratic Party of Socialists (DPS), Social Democratic Party (SDP), New Serb Democracy (NOVA), FORCA, Democratic League in Montenegro (DSuCG), Liberal Party (LP), People's Party (NS), Democratic Serb Party (DSS), Fatherland Serbian Party (OSS), Bosniak Democratic Party of Montenegro, Party of Pensioners, Disabled Persons and Social Justice, Socialist People's Party (SNP), Movement for Changes (PzP), Democratic Union of Albanians (DUA), Albania Coallition – Perspective, Democratic Party of Unity, Bosniak Party, Bosniak Democratic Party of Sandžak, Albanian Alternative and Croatian Civic Initiative (HGI).