Want to bypass our donations system? No problem

Recently I wrote about how the Standards in Public Office Commission (SIPO) assumed one of the largest political branches in the State, the Kevin Barry Cumann in UCD, was inactive. The post, which you can read here, includes one sentence which I want to expand upon…

“Unfortunately, they’re [SIPO] working with awful legislation, but doing an pretty poor job on top of that, at least in some areas, as I found out.”

To be honest, “awful legislation” doesn’t really do it justice. The rules on political donations are so terrible it seems they have been purposefully designed to make it easier for political parties to loop around their limitations, they’re that bad.

The dreamer in me has been telling for while not the write this post. “Don’t tell the good politicians how the bold ones work the system”, it screamed. The other 99% of me said, “fuck it, they all know about this anyway, it’s whether they chose to work it or not is the question”. So here, dear reader, I tell you how I understand our public representatives can work the donations system…

The legislation says once a person receives a donation worth more than €126.97 they must open a bank account solely for the purposes of lodging future donations. Remember that sentence, it’s important. The bank account is, of course, something to be avoided in case a tribunal or some other hideous hand of justice ended up looking into your financial history in a few years time. Once one donation worth more than €126.97 is lodged, records of all other donations of more than that value must be maintained in the account – even though SIPO doesn’t get access to details relating to them unless they’re worth more than €643.87, strangely. It should also be noted that there is a rule that one person cannot donate more than €2,539.48 to an individual politician and that if one person donates more than €5078.95 (in various donations to multiple politicians) they must provide SIPO with details of who they donated to and the values of each donation. However, if the donor doesn’t declare this to SIPO, there’s no way of telling they’ve broken the rule; just one example of the way the legislation is structured to appear transparent but be easily bypassed.

Now, all of the above bar the opening and closing sentences is essentially irrelevant because anonymous donations worth less than €126.97 are allowed. That rule about one person only being allowed donate €2,539.48 to a politician? They can just donate €5,000 anonymously in €126.96 installments from their personal bank account. A person wants to give more than €5078.95 in multiple donations to various candidates but doesn’t want people knowing he has done it? Do it all in batches of €126.96 – or do it from your personal account and just don’t declare it. It’s simple.

For the record: According to our files (sheet 4, “Missing TDs”) there are 60 currently serving TDs who have never declared a monetary donation of more than €648.37, and therefore may not have a political donations account. These include Michael Lowry, Bertie Ahern, Roisin Shorthall, Enda Kenny, Dermot Ahern, Leo Varadkar and Mary Harney.

Moving onto another bit of the law; there’s a maximum donation of €6348.87 per annum. That’s limiting, what if there’s is an individual who wants to donate €50,000 like Denis O’Brien did to Fine Gael, Fianna Fáil and Labour (though Labour later returned it) in 2000? No problem, because there’s anonymous donations allowed the politician can hold a collection at the church gates and put it all down as multiple donations of €126.96 from loads and loads of anonymous people. Theoretically a church collection could bring in €50,000 and the politician woudn’t even need to open the dreaded bank account.

However, shockingly, there is the odd speedbump that can force politicians to accept donations of more than €126.96. For example, if a company makes a donation from a corporate account they must disclose that in accounts filed annually with the CRO, which SIPO can then inspect. If a politician needs the money fast, and it has to come from the company accounts, then the future-Taoiseach will have to open a bank account for political donations. Thereafter they must lodge all donations of more than €126.97 in that account. However, though it sounds nice, it makes the system only an incey-wincey bit more transparent.

Why?

The donations that go into that account are not required to be declared to SIPO unless they’re worth more than €643.87. This means that while donations between €126.98 and €643.86 must be recorded, the details are unknown to SIPO, and therefore, the rest of us mere plebeians. Does this make sense to you? They have to keep a note, but not give SIPO details? It looks progressive, but is simply laughable…

At the end of each year all public representatives who have been foolish enough to be required to maintain a political donations account must supply to SIPO…

… a statement provided by the financial institution where the political donations account was opened. The statement must specify the transactions that have taken place in relation to the account during the preceding year. The member/MEP must also furnish a Certificate of Monetary Donations on which he/she certifies that all monetary donations received during the preceding year were lodged to the account and that all amounts debited from the account were used for political purposes. The Standards Commission will issue a Certificate of Monetary Donations form to each member/MEP at the beginning of January each year.

Note: the statement must “specify the transactions that have taken place”. This means it must say “€150 was debited on May 5th. €200 was credited on June 10th”, it doesn’t mean details of from whom or for what.

The certificate must be accompanied by a statutory declaration that, to the best of the member’s/MEP’s knowledge and belief, the certificate is correct in every material respect and that all reasonable action has been taken in order to be satisfied as to the accuracy of the certificate.

A statutory declaration means it’s fairly tricky to wriggle out of if someone finds out in a few years that something odd was taking place. However, never fear future tribunal witnesses an SD is not required if…

… it is the case that there were no transactions on the member’s/MEP’s political donations account during the preceding year, the member/MEP will be required only to state this on the Certificate of Monetary Donations form. He/She will not be required to complete the Statutory Declaration on the Certificate of Monetary Donations form or to provide a statement from the financial institution in which the political donations account is held.

So they can just say “ain’t nothing there, so you ain’t looking”, and they’re grand, if it turns out later they were lying, there’s no statutory declaration which leaves things open for excuses like “oh, sure I forgot…”

Seeing how opaque this yet? Let me continue.

As I have said, all companies must declare on their annual accounts if they have made a corporate donation to a party. If a donation of more than €5037 is made by one body the party must declare it to SIPO. Typically these donations are made either through the bank, by purchasing a table at a fundraising dinner, or via a ticket to a golf classic. If it is done a through the dinner or golfing methods then the party must only declare the value of the profit made from the fundraiser. But the company must declare the gross value of the donation in their accounts…

Sometimes this can cause confusion, resulting in SIPO asking the political parties why a company has said it made a donation of €11,000 in their annual accounts, yet the party made no declaration at all.

Under the current laws, if a company pays for €11,000 worth of dinner over two nights, but the potatoes cost €6,000 to prepare, the party doesn’t have to declare it. This is because the profit figure is €5,000 which comes under the €5078.95 declaration limit, so it’s not required to be made known to SIPO.

Of course, the party don’t have to supply any proof that the potatoes cost €6,000, so this, while appearing relatively transparent, is also wide open to abuse.

Sometimes, I’m sure, it may cost a party a certain amount of money to host an event, this could of course bring the profit figure below the declaration limit.

For example, the €9,400 donation Gannons made to Fianna Fáil for tickets to two dinner events in 2005. These events, the party said when questioned by SIPO last year, made just 47% and 39% profit respectively (bringing the profit total to €4,368), were undoubtedly genuine examples of how expenses incurred by a party (who incidentally also received a further donation to one of their members worth €634.87 that year, bringing Gannons total to just €70 below the declaration threshold) can make it unnecessary to declare a massive donation. That’s really not an issue, we understand these things. The issue is the fact the parties don’t have to provide any proof that the event cost a certain amount to host. In fact, they don’t even have to prove it took place.

I’m sorry to say, after all I’ve written thus far, there’s still a kicker.

In May 1999 Ireland became a member The Council of Europe Group against Corruption, also known as GRECO. Unfortunately the Government in the last decade has not found time to implement the important recommendations made by the group. SIPO themselves highlight this in their most recent annual report…

Article 11 of GRECO Recommendation (2003) 4 on Common Rules against Corruption and Funding of Political Parties and Electoral Campaigns provides that States should require political parties to keep proper books and accounts. Article 12 provides that States should require such accounts to specify all donations received by the party and to identify donations over a certain value. Article 13 provides that States should require political parties regularly, and at least annually, to make public such accounts, or as a minimum a summary of those accounts. Political parties are not required, under the Electoral Acts, to keep proper books and accounts or to make public their accounts. Neither are they required to specify all donations received by them. The Standards Commission has stated on a number of occasions that political parties should be required to adhere to Articles 11, 12 and 13 .

Note: SIPO doesn’t even have the power to fully investigate accounts, due to anonymous donations, let alone members of the public.

The Taoiseach said at the most recent Fianna Fáil ard fheis that he wanted to lower the maximum donation to €4,000 and make the lower declaration limit for parties €2,500. This though it sounds nice, if it happens, will be irrelevant unless anonymous donations are abolished. Similarly with the Green Party idea to ban corporate donations. Why ban corporate donations when people who own corporates can still donate however much they want through €126 installments?

These are the reasons we knew about where just €1.3million of the €10.1m spent by political entities in the 3 weeks prior to the 2007 general election alone, came from.

Ask yourself, is this system transparent, or is it just designed to appear so?

We should see where every penny came from and where it goes. I know there are politicians who fund their campaigns through personal loans, and some make big percentage losses on their efforts. It’s not them I want the system to keep honest, as the saying goes, one bad apple… remove the lower declaration limit and ban anonymous donations.

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For more on this type of thing I recommend Elaine Byrne’s column in The Irish Times each week and downloading a copy of Transparency Ireland’s National Integrity Systems booklet on Ireland. For an news on corruption and political transparency you can also sign up to their newsletter…

If you believe me to be incorrect on any issue at all in this post feel free to point it out in the comments.