Political donations: "It's clean - trust me"

No quid pro quo - ergo, no need for public accounting

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By Riku Siivonen and Annamari Sipilä
     
      Supporters of the Centre Party love art. Before the recent Parliamentary elections, candidates of the Centre Party sold more than EUR 200,000 worth of paintings. The campaign coffers of Tuomo Puumala of Kokkola alone got more than EUR 30,000 from the sale of paintings.
      Whose art brings in so much money?
      "They were non-depictive works by Jaakko Valo of Central Ostrobothnia. It is quite a modern style of painting. I bought them from him and sold them", Puumala says.
      According to Puumala's campaign finance declaration, the buyers were mainly companies. What companies?
      "I don't want to go and name them, even though the companies have not asked me not to. But I have nothing against disclosing them."
      So why don't you?
      "Not without their permission."
     
The new law on election financing was supposed to guarantee that the people know the linkages of their representatives. This has not happened.
      Members of Parliament were supposed to submit reports by Monday last week on where their election campaign funds came from.
      And they did, indeed, give an accounting. So what did we find out? That the reports were pure evasions. Now we know that election funds came from art sales, as well as from vague supporters' associations, admission fees to seminars, and in the case of Kyösti Karjula, "from the proceeds of a quiz".
      It is also something of a guessing game as to how the supporters' associations got their money, what happened in a seminar, or which companies supported which candidates.
     
In the second week of June a group of international inspectors will arrive in Helsinki to spend five days examining Finnish party financing, and the extent to which corruption exists in Finland.
      No problem: after all, Finland is known to be the least corrupt country in the world. Therefore, there will not be anything for them to criticize - or will there?
      There might be, and it is most likely that there will be.
      "Finland is one of the few Western European countries in which political financing is not completely public", says Antti Pihlajamäki, chairman of the Finnish section of the anti-corruption organisation Transparency International.
      In speaking about the openness of political financing, Finland is, in fact, one of the most secretive countries in Europe. Even many East European countries require their parties to submit more detailed reports on their cash flow. Pihlajamäki says that things are at the same level, or even worse as in Finland in Albania, Bulgaria, Spain, Austria, Croatia and Belarus.
     
The inspectors who arrive in Finland in June represent the Greco group of countries in the Council of Europe, dedicated to fighting corruption. Pihlajamäki, who has taken part in such inspections, is one of the many Finnish experts who will be heard by Greco representatives.
      The June visit is not directly linked with Finland's fresh Parliament. Country inspections hit each member state of the Council of Europe in turn. "Finland is not being specially singled out", says Ministry of Justice Official Helinä Lehtinen. She has made preparations for the visit of the Greco inspectors.
      But perhaps Greco might be very interested indeed in the Centre Party's art sale.
     
Hopefully Greco will reveal the financiers of the campaigns of Finnish Parliamentarians. The MPs themselves are not disclosing them.
      Paying for Social Democrat Maria Guzenina-Richardson's election campaign was an association that was set up for Guzenina's campaign for the European Parliament. Later someone suggested to the candidate that the support association would be a handy way to raise funds for the campaign for the national Parliament.
      And it was quite convenient. The money is funnelled through an association, whose books are not in the public domain. It is not necessary to disclose who originally donated the money.
      The association, Euroopan Magu raised EUR 24,150 for Guzenina, which was nearly 90 per cent of her entire campaign budget.
      The money for the association came from two seminars, whose participation fees were below EUR 1,700; under Finnish law, contributors of less than EUR 1,700 do not have to be disclosed.
      So who bought tickets to the seminar?
      "I cannot reveal the names of the donors, but they were basic labour union people", Guzenina-Richardson answers.
      Would it not have been possible to ask for permission to make the names public?
      "As a first-time Parliamentarian, it did not even occur to me."
     
Centre Party MP Juha Rehula got a combined EUR 24,770 for his Parliamentary election campaigns from various companies.
      None of the donations exceeded the EUR 1,700 hurdle, and none of the names of the donors were published in Rehula's campaign finance statement.
      According to Rehula, only a few of the approximately 30 companies that donated money to his campaign, asked for the name not to be published. The others did not place conditions on making the name public. However, Rehula does not want to disclose the names of a single donor. Why not, especially, if they have nothing against it?
      "It is a matter of trust", Rehula says.
      Trust - between the candidate and the financier? Some might naturally imagine that it is more important for citizens to trust politics. But in the view of our politicians, the size of a minister's housing loan - which they are obliged to report - is significantly more important than who finances the minister's election campaign.
      The support association of Pekka Ravi of the National Coalition Party, collected EUR 42,250 for the candidate. Where did the money come from?
      "From private individuals and companies. I do not want to specify them in greater detail", Ravi says.
      Not a single donor reportedly demanded that the name be kept a secret. Why then can't he reveal the names of the donors to the voters?
      "This is the correct way", Ravi says.
      What about correctness toward the voters? Surely it would be proper to say where the money came from. Otherwise the voters might suspect that companies and individuals expect special favours from MPs.
     
The Parliamentarians' campaign finance reports reveal a very active support organisation. It is interesting, that the association, called "Finland of Developing Regions" donated money across party lines. National Coalition Party MP Sauli Niinistö, Social Democrat Lauri Kähkönen, the Centre Party's Paavo Väyrynen, Anne Kalmari, Juha Mieto, Matti Vanhanen - and the Greens' Merikukka Forsius.
      The association was registered with Finnish authorities in January. Its stated purpose is to "maintain the lure of Finnish regions, to activate public debate, and increase voter turnout". The chairman of the association is Pekka Lind, a Vaasa lawyer.
      "There are different people involved who want to strengthen the provinces. We are national and politically non-aligned. I do not wish to disclose the details of our finances", Lind says.
      According to the newspaper Iltalehti, one of the financiers of the association is North Karelian businessman Kyösti Kakkonen, CEO of the Tokmanni chain of retail stores, along with an entourage of businessmen.
     
In Pori, first-term National Coalition Party MP Sampsa Kataja received EUR 54,200 from an association called "The Future of Satakunta 2011". What is this association all about?
      "It is a non-profit organisation, which is not directly linked with me. It can give support to other candidates as well", Kataja says of the association that donated over EUR 50,000 to his campaign. So who is behind it?
      "I know that its chairman is Juha Vasama, who is my campaign manager."
      Where does the association get its money?
      "I cannot say."
      You don't know, or you don't want to say?
      "Both."
      Do you feel that it is compatible with the spirit of democracy that the people are unaware with whose money an MP has been elected?
      "I operate on the basis of existing legislation and established practice. I myself feel that the law should be changed so that the bookkeeping of election campaigns should be made public. And that supporters should be specified by name."
      But you are not doing that now yourself?
      "No. I do not want to make my life more difficult, if the rules are not the same for everyone. Raising funds is so difficult anyway."
     
But if fund raising is hard for individual politicians, it is also hard for the parties. Party secretaries were moaning already at the turn of the millennium that party subsidies need to be raised.
      The idea of state party subsidies, which have been distributed since 1967, is that it is "clean" money. When there is no need to raise funds from outside, there are no linkages with donors.
      Parliamentarians did not have the courage to vote too much extra support for themselves in 2001, lest the people get upset. But the means were found elsewhere. Instead of their party offices, the parties started increasing the size of the personnel and the budgets of their Parliamentary groups.
      The number of special aides of ministers has also grown constantly. Members of Parliament had previously been given funding with which they were able to hire aides of their own. Or they were supposed to. Instead, some of them bought "assistant services" from the regional associations of their party. The same organisations then later made campaign donations to the Parliamentarians.
      No wonder the Parliament's own budget has increased by more than 50 per cent during this decade.
      No wonder that the so-called transparency of the financing of politics is a problem.
      No wonder political financing in general seems to be confused.
     
For instance, in 1999 the parties invented information subsidies for the European Parliament elections. The Finnish Parliament decided to give the parties EUR one million in taxpayers' money for election campaigns. The official reason was to promote civic activity.
      Since then, subsidies have been given for other elections, and the sum has grown. In the Parliamentary elections this spring, the subsidies were EUR 2.5 million.
      Even that money will not help if the elections are not successful, because party subsidies are tied to the number of Parliamentary seats that a party has. There was a threat of temporary layoffs in the Social Democratic Party office in the spring. The Centre Party is also suffering economically, reeling from the costs of last year's Presidential election, among other costly ventures.
      "More money is constantly needed, even though the only beneficiary of the arms race in campaign financing is the media. It is a bit like in a legal battle, where the lawyers reap the biggest rewards", says Pekka Korhonen, head of societal relations at the Centre Party.
      But fortunately for politicians, they have a licence to print money. When things get tough, there is always a way. The first thing that the new government did was to give party subsidies a good boost.
     
Party subsidies from the state comprise 70-80 per cent of the income of most parties. The rest has to be collected from elsewhere. Where that comes from, the citizens are not allowed to know.
      Parties are required to submit the closing of their accounts to the Ministry of Justice each year. The purpose of this is to make sure that public subsidies are used for purely political work, and not for business activities, for instance.
      However, the statements are so vague, that it is not possible to draw any significant conclusions on outside funding for the parties.
      The Greco inspectors will soon learn about how lax the Finnish practice is.
      For instance, the SDP annual report for 2005 celebrates the fact that "the success of the party's own fund raising in several different sectors has been significant".
      Fund-raising had yielded EUR 1.2 million. More than half a million of this was "other income".
      So where did the money come from, administrative chief Risto Salonen?
      "About one fifth of the money comes from companies, and the rest from associations, such as our own member organisations. However, I am not able to itemise the companies in any greater detail."
      Half a million is a fairly large part of a total "turnover" of four million. Why will you not give a more specific accounting of your linkages?
      "The donors do not want us to."
      Salonen says that the proportion of the party's own fund raising will certainly increase in the finances of the Social Democrats. The same has been considered among the Greens, who managed to collect EUR 36,000 through their own fund-raising. "We have expanded our fund-raising permit. Now it is possible to support us through monthly donations, for instance", says Antti Virmasalo, financial secretary of the Greens.
      The party now has 67 monthly donors. It does not get direct donations from any companies.
      "Except for a donation from OKO Bank in 2003, and EUR 1,000 from the Central Union of Agricultural Producers and Forest Owners (MTK) for the elections this spring. But if there were corporate money I would say it to whoever asks."
     
Parties have been unwilling to tighten scrutiny of their income. According to National Coalition Party administrative head Jarmo Pekkala, who is responsible for the party's financing, full transparency would dry up the flow of money.
      He has also noticed that few companies want to make much noise about donations to politicians. The reason is said to be that public support will bring others to the door with their hands stretched out for money.
      "This could then interfere with business and annoy the customers", Pekkala says.
      He would also not want to bring down the disclosure threshold of EUR 1,700.
      "It is such a small sum that it is childish to imagine that anyone would buy opinions with it."
      Another National Coalition Party member, Timo Eerikäinen, chairman of the board of the Helsinki Electoral District, says that tighter rules would lead to an increase in bureaucracy.
      According to Eerikäinen, the 1,700 level could be cut in half, but even then, many donations would fall below the new EUR 850 level.
      "Greco is looking for a single entity that could give orders to [politics] in Finland. But there is no such entity", says Erikäinen, who will be questioned by Greco in June.
      Erikäinen feels that the Finnish election funding practice works well. It is said to be a compromise between transparency and bureaucracy.
     
No such compromise is ever mentioned in speeches. On international arenas Finnish politicians fall over each other to praise the openness that prevails here. It is offered as a model for others as well.
      However, Finland's reputation as an open and uncorrupted country also goes against openness. People think that in an open and incorruptible society, tough rules are simply not necessary. They are for others, who are in greater need of discipline. After all, nobody in Finland commits immoral acts, and surely, nobody breaks the law!
      For instance, bribing an MP and taking bribes as an MP were made illegal only about five years ago. The tougher legislation would probably not have passed, if the Parliament's Legal Affairs Committee would not have appealed to the country's reputation abroad.
      Very telling about this attitude is the draft response submitted by the Finnish cooperative network to Greco last year.
      It initially stated, that Finland has never had a case in which corruption would have been involved in party funding or election campaign donations. In January the text was amended to state that no such cases have been seen since the early 1980s.
      How will the Finns respond to the questions after the June inspections?
      Perhaps it is already time to say that we cannot know the answer to this.
     
Few politicians will rock the boat by demanding more public scrutiny of political financing. There is an unwillingness to jeopardise the generosity of donors.
      Chairman Pihlajamäki of the Finnish section of Transparency International sees the matter from a different perspective.
      He feels that reluctance on the part of a donor to be identified is always suspicious.
      "If someone stops donating money because the name will be disclosed, one must ask why money has been forthcoming in the first place", he points out.
      It is not a problem for a candidate to have supporters: labour unions, private individuals, or corporations. The problem is, if the supporters are not known, because if the supporters are not known, another thing that will be concealed is whose cause an MP is supporting. Finding that out is, well, guesswork.
      Kyösti Karjula, what were the questions that were asked in your quiz?
      "People were asked to guess show many votes I would get. One guess cost five euros, and there were 2,000 who submitted answers."
      The right answer was 6,016. The prizes included a scooter, a grill, a tool set, a traditional wheelbarrow for carrying milk containers, a weekend at a cottage, pulse meters for joggers, a year's supply of potatoes.
      We're not even asking who donated the prizes.
     
Helsingin Sanomat / First published in print 27.5.2007


Previously in HS International Edition:
  MPs´ statements on campaign financing reveal little on origin of contributions (22.5.2007)

RIKU SIIVONEN AND ANNAMARI SIPILÄ / Helsingin Sanomat
riku.siivonen@hs.fi, annamari.sipila@hs.fi