New Challenges to Political Party Financial Supervision in Portugal

Abstract

After a decade of successive changes to its political financing regulatory framework, and a cumbersome dual monitoring system, Portugal has decided to adopt a single supervisory body – the Entity for Accounts and Political Financing (EAPF). Notwithstanding these improvements, the diffused perception of the existing political financing regulatory and supervisory arrangements remains overall negative. This article discusses the scope and impact of the new Portuguese political financing supervisory body, by focusing on its format, location, mission, competences, composition, resources and performance and proposes alternative integrated solutions for improving its enforcement capacity.

Keywords::

• Political Financing
• Supervisory Bodies
• Political Parties
• Regulation
• Democracy
• Portugal

Acknowledgement

A special thanks to Fábio Soares, Lisbon University Institute (ISCTE-IUL), for his assistance in putting together part of the material for this article.

Notes

^1. The National Elections Commission's board now included a distinguished person from civil society, even if appointed via party consensus.

^2. Article 37 of the new Organic Law of Political Parties (Law 2/2003 of 22 August) stipulates that the regulation of political financing is to be dealt with exclusively by special law: the new Law of Political Financing (Law 19/2003 of 20 June).

^3. Law 55/2010 of 24 December.

^4. We have excluded campaign accounts from this analysis, because only a few decisions are made by the Constitutional Court for each type of election. Annual party accounts give a more longitudinal perspective of the infractions incurred by political parties.

^5.http://www.tribunalconstitucional.pt/tc/acordaos/20070371.html

^6.http://www.dgpj.mj.pt/DGPJ/sections/leis-da-justica/livro-v-leis-sobre/pdf2215/l-19-2003/downloadFile/file/L_19_2003.pdf?nocache = 1182265210.21

^7.http://www.publico.pt/Pol%C3%ADtica/tribunal-constitucional-psd-recebeu-financiamento-ilicito-da-somague-em-2002-1302787 (accessed 8 August 2013).

^8.http://expresso.sapo.pt/ministerio-publico-poe-de-lado-caso-somague = f111144 (accessed 8 August 2013).

^9. ‘Submarines affair’ refers to a case of corruption in Portugal concerning the process of a public tender for acquisition of two Trident-class submarines held in 2004 by the XV constitutional Government of Portugal and awarded to the German Submarine Consortium. This case is related to corruption, influence peddling and illegal financing of political parties, in which the contract of sale, worth €880 million, was allegedly achieved by using bribes and a fake consulting business. The first news about ongoing investigations by the judicial police (PJ) regarding €24 million paid by the German Submarine Consortium to Escom, a company of the banking sector Espírito Santo Group (GES) based in the United Kingdom, came out in the press on the eve of the midterm elections to the Local Council of Lisbon in 2007. The investigation had been triggered by phone conversations intercepted by the PJ, between the then Defence Minister and the former treasurer of the CDS-PP, Abel Pinheiro (who was already involved in another illicit party/campaign financing case, the Portucale affair). The 2005 campaign bank accounts of CDS-PP were opened in the Espírito Santo Bank (BES).

^10. The MP inquiry was opened in the early days of 2005, after the BES Agency warned that 105 cash deposits had been made to the CDS electoral accounts, in amounts that varied between €5,000 and €12,500 – up to a total of around €1 million. The deposits had been made by a party official. The judicial authorities decided to wiretap Abel Pinheiro's cell phone, at the time he was party treasurer and CEO of the Grão-Pará Group. These phone recordings revealed that Abel Pinheiro had contacted several CDS ministers and made various assurances to senior managers of the BES that the construction of the Portucale investment would go ahead as planned before the new government came in. Allegedly, several CDS officials had falsified receipts for donations, writing nonexistent names, to justify the origin of the money deposited in the BES accounts.

^11. On 22 May 2012, Alan Perkins, a Freeport manager between 2005 and 2006, said, under oath in court, that illegal payments had been made to the Minister of the Environment. At the time, the Minister of the Environment was José Sócrates, later prime minister for two consecutive terms. According to the former administrator of the Freeport shopping mall, some of these payments were allegedly destined for party financing. These allegations have never been properly investigated. The MP decided to dismiss the allegations without even consulting the EAPF. The opening of a judicial inquiry on allegations of illicit political financing can only take place following a formal report by the political financing supervisory body. This is a very limiting provision, which contradicts the duty of collaboration and communication of public bodies expressed in Law 2/2005. It is a clear case of lack of coordination between two bodies with preventive and investigative capacity, the EAPF and the Central Department of Investigation and Penal Action (DCIAP) respectively. Although the allegations of illicit party financing were never proven, during the court proceedings involving the only two defendants of this case these were extensively addressed by the prosecution.

^12.Special Eurobarometer 374 on Corruption. Conducted by TNS Opinion & Social at the request of Directorate-General Home Affairs. Survey coordinated by Directorate-General Communication. Fieldwork: September 2011. Publication: February 2012.

^13. Comissão Eventual para o Acompanhamento Político do Fenómeno da Corrupção e para a Análise Integrada de Soluções com Vista ao Seu Combate, from 6 January 2010 until 1 August 2010. The Committee's final report is available online: http://www.parlamento.pt/sites/COM/XILEG/CEAPFCAISVC/Paginas/RelatoriosActividade.aspx. Several of these recommendations were included and further developed in the Portuguese National Integrity System assessment (http://integridade.transparencia.pt) carried out by TIAC under my coordination and discussed with the major stakeholders (including the current President of the EAPF) during the public presentation of the final report.

Additional information

Notes on contributors

Luís de Sousa

Luís de Sousa got his PhD in social and political sciences at the European University Institute, Italy in 2002. He is currently Professor of Political Science at Aveiro University, Portugal. He is also co-editor of European Political Science. His work, mostly on corruption control and political financing, has been published in West European Politics, Crime Law & Social Change, Journal of European Integration and Perspectives on European Politics and Society.