Prague-based sociologist Michael L. Smith on party funding and transparency

Following the recent election, there has been a renewed focus on party sponsoring, including an expected shift by some donors to newer political parties following poor results by more traditional ones that held the playing field until now. The shift is being studied by politickefinancovani.cz, headed by American sociologist and teacher at Prague’s Institute of Sociology, Michael L. Smith. He told me more about his role in the project and how the major focus continues to be the need for greater transparency.

Photo: Barbora Kmentová

“This is part of a larger three-year project called ‘Reducing Security Risks from Corruption/Organised Crime’ that focuses both on political parties’ financing as well as the problem of lobbying. We’ve been working on – ‘we’ meaning the Institute of Sociology in combination with partners from the NGO sector especially Transparency International – have been working on legislative recommendations on how to improve the transparency of political party financing and how to introduce proper regulations of lobbying. On top of that, we realised that information needed to be made available to the public, public administration and scholars, so that last two years we gathered information about the funding of parties based on their annual reports.”

Corruption was a priority for the last government and appears to be one of the top issues facing the country. There were financing scandals before, most notably the one that brought down Václav Klaus’s government in 1997. Are we now heading in the right direction, will things improve?

“First, let’s make a distinction: there is of course nothing wrong with funding political parties per sae, or making political contributions: you can have both individuals or corporations contributing and ultimately strengthening parties and there is nothing wrong with that. The problem begins, like in 1997, when you have a lack of transparency. At all levels. Parliament has the responsibility to oversee and audit political parties’ financial records but they do almost nothing, certainly not anything like a substantial audit. When we go over the records, we uncover no shortage of mistakes, form corporations being treated like individuals to individuals being treated like companies, wrong identification numbers and so on. Really fundamental mistakes.

“There are mistakes throughout. In expenditures... in how transparent companies are. This was a problem in a number of corporations in the past. I want to see how that changes following changes preventing the holding of bearer shares. Will companies be more transparent or will they try and make contributions through other vehicles... The problem becomes more and more apparent with more available information and that is one of our goals: to give the public something to think about.”

Photo: Kristýna Maková

Regarding political donors: have they generally been loyal to particular parties?

“That is something we have observed. Certainly you would have big corporations that would contribute regularly to some of the established parties, including the Civic Democrats but also TOP 09. I don’t know if that will necessarily continue following the recent election. Generally you had firms or individuals who were loyal to different parties; at the same time, some would support more than one. As case in point is businessman Zdeněk Bakala who we know supported several parties on the political right at the same time. You may want to support a single party or you might be backing a specific ideology over the other. Bakala wanted to generally strengthen the political right.”

“You have this in the U.S. often: bigger corporations may support both sides in an election, or give a little more to one than the other...”

Are they hedging their bets?

“To a degree. There is nothing wrong, on the other hand, with wanting to try to get a larger voice on some issues.”

How fine a line is it? I imagine that they want to be at an advantage, if they can?

“What is important is to differentiate between what is illegal versus what is immoral or a conflict of interest. There is nothing wrong with having a larger voice but what is crucial is for there to not be a conflict of interest. We have been trying to identify potential conflicts and certainly alarm bells should be ringing and greater scrutiny should follow if there are firms that donated suddenly winning all kinds of public tenders. At politickefinance.ca we have information about donors and also public tenders so they are easily comparable. Again, what is crucial is to make the process more transparent.”

How pertinent is the question of transparency when you consider Andrej Babiš, a major magnate and the head of ANO 2011 which appear set to take part in the next government?

Andrej Babiš, photo: Šárka Ševčíková

“I am personally concerned with potential conflicts of interest he has. On the other hand, we know there were plenty of politicians in the past that had all kinds of unknown connections to businesses, which we had no idea about thanks to bearer shares. By comparison, at least we known what Andrej Babiš’s business interest are and it is possible to discuss about them or limit them. His party is also a supporter of very robust anti-corruption legislation, strongly supporting the Reconstruction of the State coalition of NGOs, to which we have also provided recommendations. So it is not possible to say that the movement’s presence in government would necessarily be a bad thing. The situation is changing and it is difficult or early to predict how things will develop at the moment.”