Argentina’s Campaign Finance Reform Bill a Welcome Step Towards Cleaning Up Politics

The Essential – As Argentines head to the polls this year, they do so with skepticism about the transparency and fairness of the electoral process. Just 42.4 percent of Argentines expressed confidence in the country’s elections, according to a 2017 Americas Barometer report. While slightly higher than the regional average of 39.1 percent, a majority of Argentines distrust the process by which they elect their leaders.

Headline-dominating irregularities such as ballot burning and concerns about the integrity of electronic voting systems being implemented in some jurisdictions certainly play a role. However, there is general consensus among local and international experts that, at least in national elections, fraud is not the predominant concern. Instead, a less visible, but arguably more sinister, force may play an important role in eroding public confidence: an opaque campaign financing system.

A series of recent scandals implicating groups from across the political spectrum has drawn public attention to the issue. In an offshoot of the “notebooks” corruption scandal, investigators are looking to determine whether some of the large sums of money allegedly exhorted from business leaders were used to finance La Cámpora and Frente para La Victoria campaign activities in 2011, 2013 and 2015. Separately, the judiciary is investigating possible campaign finance law violations by governing coalition Cambiemos in the 2015 and 2017 elections, including into alleged aportes truchos, or false donations made in the name of individuals who claim they did not contribute.

These incidents are not unique, and national elections for years have been followed by investigations that have found significant irregularities, including misidentified donors, underreported spending and inappropriate use of public funds. Ahead of this year’s elections, Argentine think tanks and civil society organizations have renewed calls to urgently implement a new campaign financing law, a request echoed by international organizations and a diverse group of local business chambers. There are signs that these calls are being heeded, and an updated legal framework may be in place by the time Argentines vote in national primaries on August 11.

How did we get here?

Argentine law establishes a mixed system of private and public funding for political parties, with electoral campaigns intended to be primarily publicly supported. The 2006 “Law of Political Party Financing” allocates public funding to parties during non-electoral periods and allows donations from private individuals and legal persons such as corporations with some limitations (for example, donations from unions and companies with public contracts are banned, and there are limits on private donations). Partly in response to concerns about the influence of large amounts of campaign spending, the 2009 “Law for the Democratization of Political Representation, Transparency and Electoral Equity” made amendments aimed at removing corporate financing from elections and creating a more even playing field based on state support. These changes prohibited donations from companies (but not private individuals) to parties in the month preceding national elections, gave the government control over distributing advertising space, and updated the maximum campaign spending limit.

The framework regulating donations and the publication of campaigns income and spending are difficult to enforce. For one, the vast majority of documented private campaign donations are made in cash: 88 percent in 2007, 92 percent in 2011, 90 percent in 2013 and 90 percent in 2015, according to CIPPEC. This facilitates the use of diverse mechanisms to circumvent controls, such as giving false donor names to obscure donations’ origins and making lump sum deposits that include illegal corporate donations. In fact, corporations are acknowledged as the major financiers of campaigns despite legislation to the contrary.

Further, lax regulations on the use of public resources for campaigns are open to abuse by incumbents, and there is evidence that political groups consistently underreport campaign spending, representing an additional challenge to following the money trail. Ultimately, parties balances are unreliable (the National Electoral Chamber has not approved the balances of the major political groupings from the 2015 presidential elections), and the burden of enforcement falls to the Electoral Judiciary, which has limited resources and can only sanction a small number of party officials.

A new finance law for 2019?

There are signs that there is sufficient consensus and political will to advance on some of the most urgent reforms — particularly reducing cash donations to improve traceability — in time for this year’s elections. Late last year, the relevant Senate committees approved cross-party legislation backed by the government and the Peronist bloc led by Miguel Ángel Pichetto. Among other changes, the consensus bill would prohibit cash donations, allow private donations from individuals and legal persons including companies (capped per donor at 5 percent of permitted campaign donations, increase the number of auditors in the Electoral Judiciary, and extend the ban on government inaugurations of new public works and programs from 15 to 25 days ahead of elections.

Although President Macri neglected to mention the issue in his opening address to Congress, other top administration officials have said they hope to have the bill passed by early April. Senate approval seems likely in the coming weeks. The main sticking point has been whether and how much corporations should be allowed to contribute to campaigns. Both the Kirchnerist bloc and Cambiemos coalition member Coalición Cívica have stringently opposed allowing corporate donations. There also is disagreement about whether unions should be permitted to donate and over new sanctions (such as making clientelism an electoral crime and for public officials who use their position to influence elections). On Tuesday, the Senate’s Constitutional Affairs Committee met to resolve lingering differences so the bill is not subject to further modification as it advances.

By Megan Cook

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