by Tricia Yeoh. First published in The Edge 13 July 2015

The recent revelation in the Wall Street Journal alleging that US$700 million was transferred directly into Prime Minister Najib Abdul Razak’s personal bank accounts only unveiled the fundamental problem at the heart of political patronage in Malaysia, that is the messy, disorganised way political parties and election campaigns are financed.

This came on the back of an earlier report claiming that US$10 million was donated by Genting Plantations to the Yayasan Rakyat 1Malaysia charity, money that was then used during the election campaign.

Calls for transparency in political funding are not new. In 2010, Transparency International Malaysia (TI) published a report with recommendations, amongst which include the need for a Political Parties Act to monitor parties’ electoral spending and transparent publication of all donations to parties. Two years later in 2012, Najib himself announced that government would soon regulate political financing where funds would be channelled to an official party account. These proposals have not seen the light of day since.

In response to the unfolding crisis surrounding the Prime Minister, a new coalition GIAT (on governance, integrity, accountability and transparency), which includes IDEAS, TI, C4 and several other NGOs, in its statement earlier this week added to these calls the demand for an Asset Declaration Act, for political funds to be independently audited and publicly disclosed, and for the Elections Commission to autonomously and independently regulate all political parties.

These are well and good coming from civil society, but just how seriously would parties on either side of the political divide take any of these proposals?

The reality is that political parties need funds to operate, carry out their election campaigns, distribute funds to their grassroots personnel, and perhaps more importantly, give donations themselves to the hundreds of constituents who come knocking at their door incessantly. From where then, political parties may ask, would they get their money, if not from willing and well-oiled corporate donors?

The intricate nexus between corporations and political parties will likely always exist as long as there is a shortage of funds. Unless they are millionaires themselves prior to entering politics, it is likely that politicians themselves eventually become susceptible to the generous donations of companies.

There is nothing essentially wrong with corporate funding, since contributors may donate to political parties because they believe in their ideologies and belief systems, but companies have an incentive to do so in order to obtain certain favours like contracts or licences, or simply to establish access if they were to form government. This leads to all sorts of potential corrupt deals between the buyer and supplier.

To solve this conundrum where parties need money to survive, what needs to happen simultaneous to the demand for transparent disclosure of political funding is perhaps an alternative source of financing parties and campaigns.

In more advanced democracies, parties get their funds from various sources. Apart from the usual sources of income like membership fees and donations, state funding is an option in some countries. Germany practices state funding of parties, where the amount of state funding received is determined by the parties’ performance in elections and the level of individual contributions received.

Of course, a criticism of state political funding is that taxpayers’ money should not be used to support parties that they may not have individually supported nor voted for in the elections. A strong alternative would be for the state to increase lawmakers’ salaries, or fund the basic operational costs needed to run an office.

The United Kingdom practices this system, where the state provides an allowance to only Opposition parties in Parliament to help them with their office, research and travel costs. This is called ‘Short Money’ in the House of Commons, and ‘Cranborne’ money in the House of Lords. Apart from this, public funds are also available to any party via Policy Development Grants to help parties develop their policies. These grants are professionally applied for and approved by the Electoral Commission.

Both countries practise transparent disclosure of all funds received by their political parties. A quick search on the UK Electoral Commission website reveals lists of donors’ names classified by individuals and corporations, the amounts contributed to each party, and the corresponding date of each transaction.

An overhaul of the political financing system is needed in this country, and promptly too. Without reforming the system, any coalition replacing the current one would face the same challenges of funding their parties and election campaigns, and possibly slide down the slippery slope into the corrupt mess the current ruling coalition has so dangerously landed itself into.

In short, governance and oversight mechanisms must be put in place to monitor how political parties receive and spend their money. At the same time, government could consider allocating state funds to especially opposition parties for operational purposes. Members of Parliament should also be paid well, and provided sufficient resources, so they are not forced to obtain unreasonable amounts of funds from elsewhere.

The system of regulating political financing needs to be dealt with now, before the next general elections is upon us, perhaps sooner than we think.

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Tricia Yeoh is the Chief Operating Officer of IDEAS

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