Problem

Improper financing of political parties

Other Names:
Illegal funding of political parties
Misuse of political campaign funds
Corrupt financing of electoral campaigns
Clandestine financing of political parties
Vulgar political economy
Nature:

Political parties may be financed by individuals or corporations with a vested interest of keeping a certain party in power. Bribes may be accepted by politicians on a local or national basis. The party in power may misappropriate public funds for its own use. Unjust financing of political parties may lead to elite control, political dictatorship, apathy, alienation and stagnation, or to political conflict and revolution.

Incidence:

[France] In the early 1990s there were a number of scandals surrounding the financing of both right and left-wing parties, notably through the use of bogus consultancy companies as a channel for campaign funds from corporations.

 

 

[Spain] In 1993 a major scandal emerged around a bogus consulting company, run by senior officials of the ruling Social Party, which obtained funds from large corporations in return for industrial research that was never done; the funds were used for election campaign expenses in the late 1980s. A similar scandal had emerged in 1991. In 1990 an investigation was opened into the financing of the Partido Popular for charging construction companies illegal commissions; two former treasurers were tried for corruption. In 1993 there were allegations that the payment to political parties of a percentage on public contracts had become common practice; one publicized example was £1 million commission to the Socialist Party for a construction contract in Seville.

[USA] In 1992 it was revealed that in the previous election the president had accepted public funds for his campaign whilst accepting large contributions from corporate CEOs, investment bankers, savings and loan executives and real estate developers whose interests the government was considering. In 1988 nearly US$25 million was raised in, this way from 249 individuals and then laundered through state parties. The same process was used for the 1992 elections. A scandal surrounded the raising of presidential election funds in 1992 from property and banking tycoons who were accused, with the president's son, of forcing taxpayers into bailing out the savings and loan industry at a cost of US$200 billion. Politicians at all levels made some use of such campaign donations for personal purposes in ways which constituted a flagrant abuse of the congressional ethics rules; one estimate in 1992 gave at least 94 House members as having bought or leased a car with campaign funds in 1989 and 1990; such funds were also used to pay for meals, clothes and club memberships. Both main political parties failed to observe the congressional ban on acceptance of corporate contributions in federal campaigns, arguing that this money had nothing to do with federal campaigns and office holders; in the three years up to 1992 four major companies were estimated to have contributed more than US$2.5 million. Money for political parties was also obtained from political action committees in exchange for billion dollar tax exemptions; for example, the US$5 billion real estate tax shelter restored to the industry by an overwhelming majority of members was matched by a US$5.6 million series of donations by the real estate industry in the five years up to 1992. The national finance chairman of one party launched a major campaign to obtain contributions of US$200,000 from wealthy individuals despite legal prohibition of this practice as being conducive to corruption, or the appearance of corruption, of federal office holders.

Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 16: Peace and Justice Strong Institutions
Problem Type:
E: Emanations of other problems
Date of last update
06.05.2019 – 19:23 CEST