Chile's Bachelet announces new legislation on Political Parties and secures transparency goals
As part of our weekly monitoring on Country Risk Chile's top 5 political risks 2016, we bring a full analysis on new legislation to regulate political parties, the way in which they will be financed and the new audit powers which are given to SERVEL (Servicio Electoral) to supervise and oversee compliance with the new rules. In January this year, President Michelle Bachelet set up an Ethical Committee made up of experts and academics whose task would be to deliver high-impact recommendations to reform political parties. The task was critical given the climate of political attrition and cases of corruption in the wake of 25 years of transition to democracy. Malpractice had surfaced in papers nationwide and beyond on cases of irregular campaign financing, false invoices, and tax fraud. The probes and investigations eventually led to the indictment of key political figures and entrepreneurs this year. On April 12th, Bachelet announced the Act with "exemplary sanctions" for those MP's in breach of the new law.
The new law comprises a set of 2 bills - announced by Bachelet herself on TV on April 12th related to Democratic Consolidation and Transparency, and the Public role of institutions. They have been hailed as a milestone in the history of political party formation in terms of transparency and regulation. Policy makers believe "forced" transparency and severe sanctions will act as necessary deterrents in rent-seeking. Espacio Publico think tank's Eduardo Engel - president of the Ethical Committee that submitted the new rules to Michelle Bachelet early this year - hailed the Act as a turning point on high standards in transparency and a new ethical code of behavior. Engel highlighted the sanctions such as jail sentences for those politicians and MP's breaking the law. Ever since the committee handed out the recommendations to Bachelet, Eduardo Engel has become a relentless ombudsman overseeing the deliberative process in the Chambers - praising the accomplishments and denouncing the MP's reluctance to embrace the new rules as part of his Anti-Corruption Observatory website
In our weekly monitoring of Country Risk Chile's Blind Justice (Risk Nr 4) we value the Act passed on April 12th last week as a significant step to secure transparency and accountability. The new law has been correctly formulated to decrease the risk of rent-seeking and bribery in the Chambers. The new deterrents fulfill the need to consolidate democratic practice. SERVEL has been granted fully-fledged auditing and regulating powers to oversee that the new legislation is enforced. According to Espacio Publico's Eduardo Engel - the new powers given to SERVEL will help reach the targets of transparency and accountability and minimize and eventually eradicate rent-seeking and bribery practices. Private funding coming from companies or from private firms is strictly prohibited; breaking the law will cost losing the seat permanently. Expulsion from political parties is binding on evidence of malpractice or in breach of ethical standards independently of court's proceedings. Mr.Engel is confident that the recent cases we have heard of private money flowing into parties' arch and the phony invoices given back to such companies - which was the "modus operandi" in tax fraud - will be strongly deterred by the new regulations and the exceptional sanctions.
Details of the Act and its significance:
The Act establishes a limit to electoral spending highlighting the public role of political parties. Parties (old and new) will have 6 months to register their supporters and sympathizers and apply the female participation quotas before the municipal elections commence this year. They will be mandated to upload the names of the registered sympathizers and voters on their websites. Money flowing from private companies is absolutely forbidden under the new law, however, an ordinary citizen wishing to contribute to a given political party or candidate could do so up to a maximum amount of USD 1.500,00 (roughy Ch$ 1 million). According to experts such as Espacio Publico's Maria Jaraquemada such a tiny amount could hardly co-opt a politician or MP.
The law stipulates a state-funded political system; therefore a total of USD 8.7 million (Ch $ 6 million) will be given to the different political parties and subject to SERVEL's supervising powers. The first allowance of a quarter of that total (roughly Ch $ 1.500 million) will be granted within 150 days as announced on April 13th and the rest will be distributed during the year. Amidst the climate of deteriorated confidence in political parties, suspicions run high in the population who find difficulties in coming to terms with the public announcement on these allowances. According to Espacio Público's Maria Jaraquemada, a state- funded political party is in the citizens' best interest. The Chilean taxpayer will make the parties accountable. This reform "closes the door to malpractice" as Bachelet explained herself on TV.
The new law seeks to strengthen democracy; politically viable parties are needed to consolidate Chilean transition to democracy at the end of a 25-year political cycle that was beginning to show signs of attrition. When comparing the old system with the new law, we observe a paradigmatic change based on the extent of the sanctions (MP's in breach of the law are subject to losing their seat permanently) which had not been seen in Chilean political history before.
One inconvenience of the new legislation is that long-established parties will receive bigger allowances and small parties, less. This sparked controversy and resulted in hard criticism coming from new leaders forming new parties. It is clearly a necessity in today's political system to renovate the highest spheres, incorporate new faces and give fresh air to new styles in leadership. However, Espacio Publicos's Maria Jaraquemada argues that established parties that fill more seats in Congress are certainly more eligible to increased resources.
For that, they will have to re-enchant the electorate. In turn, small parties will have to attract voters to pull their way into Congress and fill more seats. That way the institutional architecture is avoiding multiplicity of parties and their disruptive factor. Transparency will force long-established parties to pay their bills, encourage female participation, carry out their training programs. The money will be spent according to new regulations, not based on what the parties wish. This will help strengthen the public role of the political system which is deemed necessary to modernize the political system in Chile. Out of the Ch. $ 6 million, 20% will be distributed to all parties without distinction and 80% in accordance to their representativeness in Congress. Claudio Fuentes (academic and director of the Political Science department at Universidad Diego Portales) argues the shift from private funds to state-funded is a positive one.
The political parties in Chile have 180 days since the Act was announced on TV by President Bachelet so that parties can make the necessary changes as mandated by the law, adjust new policies, register their members, incorporate female quotas, upload their registered voters on their websites along with their bylaws. Once the National Comptroller's Office has approved the bill, it will be published in the Official Newspaper to announce the law has come into effect.
April 18th, Soledad Soza
