Friday, 8 February 2008

Audit the parties

The popularity of both socialists and conservatives is falling so steeply that political observers in the Greek press are beginning to wonder whether the two-party system established in 1974 is at an end. For four years now, the losses of New Democracy have not become the gains of Pasok; and for the first time since it was founded, the Left Coalition is ratcheting up higher approval ratings than the Communist Party thanks to defections from Pasok, making it a possible political force of the future.

The inexorable attrition is beginning to fray tempers in both power parties. Defence Minister Vangelis Meimarakis has become a voice of conservative conscience by pressing for the dismissal of MP Costas Koukodimos and Special Audits Service chief Spyros Kladas, clashing with Finance Minister George Alogoskoufis over the latter. In Pasok, former public order minister Mihalis Chrysohoidis and former defence minister Yannos Papantoniou have been trading barbs over who was responsible for assigning a controversial Olympic security contract to a US-led consortium which included Siemens. The German technology giant has been mired in internal and judiciary probes over at least 1.3 billion euros' worth of bribes over several years, 100 million euros' worth of which came to Greece.

A nascent judiciary probe into the Siemens scandal and an ongoing probe into the financial and sexual dealings of former culture ministry general secretary Christos Zahopoulos will likely exacerbate the public perception of its politicians as essentially corrupt.

Since the polls show a bleeding of Pasok and New Democracy voters to the Left Coalition, to Laos and to indecision, the time is right for both George Papandreou and Costas Karamanlis to declare a general cleaning of their own houses. Karamanlis has begun to do this in the state sector, declaring that the discretionary spending accounts given to each ministry will now come under the finance ministry supervision. He has also declared that public hospitals, possibly the fastest-rising segment of state spending, will begin to declare audited accounts.

This is all fine and good, but the time has come for a deep self-cleaning of the political system, and particularly the two major parties.

In 2001 New Democracy and Pasok collaborated to stiffen the wording of article 29 of the constitution, which governs the functioning of parties. The revised article introduces the penalty of dismissal from parliament for concealing sources of funding as well as the notion of a limit to campaign spending. Most importantly, it introduces representatives of the country's three top courts ­ the Supreme Court, the Council of State and the Court of Audit ­ in an Audit Committee that checks the annual financial declarations of parties and their deputies (previously it was peopled exclusively by party appointees).

The renewed article 29 laid the foundation for law 3023 the following year, which gave parties 0.102 percent of budget revenues annually, increased since then to 0.137 percent, and a further 0.022 percent for elections. Assuming 2008 will not be an election year, parties garnering more than 1.5 percent of the popular vote in the last general election will be entitled to a share of some 76 million euros from the state budget, projected to net 55.4 billion euros. (A small allowance is separately awarded to party-affiliated think-tanks).

The lion's share of the money - 60 percent - is distributed to the parties entering parliament or the European Parliament in proportion to their share of the popular vote. This amounts to a fair sum. In 2006, for instance, Pasok received 19.7m euros from the state.

The law also obliges "political parties and coalitions in receipt of state funding [to] publish annual balance sheets showing income and expenditure." These balance sheets, published in summary form in the first two months of each year, are subject to review by parliament's Audit Committee, which employs the services of chartered accountants from the private sector.

The 2002 law also declares illegal any donations from private companies (state companies had already been excluded by previous laws for the obvious purpose of preventing incumbents from milking them dry). That leaves stocks, properties, member subscriptions and individual donations not exceeding 15,000 euros per party per year as the sole remaining sources of revenue.

In theory this legal panoply guarantees transparency; and the generous state funding fortifies parties against excessive private donations that could influence policy.

In fact, however, the system remains vulnerable to massive fraud for reasons both cultural and legal. The Audit Committee may only work on the basis of documents submitted by the parties and MPs; lacking prosecutorial powers to raid offices and open bank accounts, it can only check the internal consistency of what it is given. A second weakness of the committee is that it may not prosecute legally. In those few cases where an MP has been foolish enough to trip themselves up, plenary sessions of parliament, to which the Audit Committee reports, have pardoned them.

Under Miltiadis Evert, New Democracy proposed handing oversight of political finances to the Court of Audit, which is constitutionally empowered to audit the state and the companies and bodies it controls, and to render legal opinions on parliamentary bills. After the conservatives proposed the creation of a constitutional court in 2006, the Court of Audit proposal was duly commuted to the constitutional court.

Transferring authority, however, is not an answer by itself. Whoever carries out oversight will require a legal amendment giving them power to initiate investigations, solicit documents and follow money trails; and merely the provision that the auditor's report, and possibly its minutes, should become a matter of public record, would provide a powerful bulwark against mollification.

Even thus strengthened, it would be difficult to imagine the Audit Committee - or any prosecutor - initiating an uncompromising probe under a political climate that reeks of collegiality. In the name of party unity and professional solidarity, honest MPs are forced to become accessories to their indiscreetly dishonest peers.

Ultimately, not even the judiciary is a guarantee against such behaviour, because power centres can seduce each other. Addressing the problem of today's political culture - which for many politicians is the culture of building a lucrative career on the popular vote rather than serving a constituency - will require the party leaderships to demonstrate a real commitment to transparency for their own sakes.

Political finances require greater transparency through legal amendments and the casting out of those who are demonstrably corrupt. Failure to shore up principle and build institutional depth will have greater costs for the socialists and conservatives than all the upheaval of change. If the inducements of high office are irresistible, they are also self-destructive.

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