# Sectoral Perspectives on Corruption

*November 2002*

# Corruption and Political Parties

Verena Blechinger

The views and interpretations represented in this paper belong solely to
its author and should not be attributed to USAID or to MSI.

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Political parties are often seen as actors who abuse their powerful
position to extort bribes, to supply members and followers with
lucrative positions in the public sector, or to channel public resources
into the hands of party leaders or supporters. Party corruption is
especially problematic in developing and transitional countries where
political and economic institutions are not yet fixed. In the long run,
party corruption can undermine public trust and threaten the viability
of democracy. Democratic parties in a competitive political framework,
however, can perform valuable political and social functions as links
between citizens and government, in voter representation and
information, policy-making, and human development. What is the link
between party activities and corruption? Under what conditions and in
which forms can we find corruption in the area of political parties?
What measures should be taken to eliminate party corruption?

This paper addresses corruption in the context of political party
activities. It focuses party corruption in the contexts of election
campaigns, party activities in parliament, and party control over public
assets and institutions. Opportunities for corruption are identified and
illustrated by short cases from industrialized, developing and
transitional countries. Anti-corruption measures and strategies that
affect the work and role of political parties are introduced and
evaluated. While campaign finance regulations and anti-corruption laws
are important in the fight against corruption, they need to be embedded
in a broader strategy that promotes intra-party democracy, party
competition, transparency, and monitoring by a free press, an informed
public and an active civil society.

## 

## I. Introduction

Both in industrialized democracies and in the developing world,
political parties are often seen as part of the corruption problem.
Discourses on corruption and anti-corruption strategies have identified
parties as key actors who abuse their powerful position in the political
system, among else, to extort bribes, to supply their members and
followers with lucrative positions in the public sector and related
corporations, to shape political and economic institutions to the
benefit of affiliated interest groups, or to channel public resources
into the hands of party leaders, members, or supporters. Party
corruption can especially be seen as a problem in newly democratizing
and developing countries where political and economic institutions are
not yet fixed. The redistribution of public assets, which is a necessary
part of democratic transition, is often disturbed by corruption. In the
long run, party corruption and related scandals can undermine public
trust and lead to voter cynicism and disillusionment with the political
system, thus threatening the viability of democracy. Long-term
high-level corruption may also provide a powerful incentive for
political parties to secure political power, thus producing
authoritarian regimes, one-party monopoly states, and non-democratic
governments. The prospect of gains from corrupt practices might also
tempt opposition parties to try to overthrow democratically elected
governments, or might make existing governments more resistant to
further democratization.

While current international anti-corruption regimes such as the OECD
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions have not yet included party
corruption into their framework, U.S. and international policy-makers
and anti-corruption NGOs such as Transparency International point out
the importance of party corruption, especially with regards to political
contributions, for future anti-corruption work (see for example,
Transparency International 2000).

While corrupt parties can thus stall or even destroy processes of
democratization, political parties that are not distorted by corruption,
but which are part of a well-institutionalized and competitive political
framework can play a vital role in democracies and perform valuable
political and social functions. Parties provide a link between citizens
and government. Parties mobilize voters on behalf of certain goals and
interests, select and train candidates for public office, organize
election campaigns, send representatives to parliament, organize
legislatures, formulate political agendas and policies, manage policy
processes and steer or, as opposition parties, monitor government
activities. By publicizing and promoting their programs, parties also
provide voters with substantial information about current political
issues, the general workings of government, and citizens' democratic
rights. They thus actively contribute to voter education and human
development, and can function as builders of social capital. This role
of political parties can become even more important in developing and
transitional states which are in the process of defining and stabilizing
the rules and institutions of democratic government and market
economies.

What are the temptations for political parties and their representatives
to engage in corrupt behavior? What areas of party activity are
especially vulnerable to corruption? What measures should be taken
prevent corruption in the area of political party activities, or to make
parties more resistant to corrupt offers? How can parties be reformed to
stay within the bounds of law and the rules of good politics, while at
the same time still efficiently representing the interests of their
supporters? What lessons can we learn from previous experiences with
party corruption? These are the questions we will address in this paper.

First, we will analyze various areas of party activities and identify
incentives for corruption. These incentives will be illustrated by brief
case studies from various developing, transitional and industrialized
countries. In a second step, we will introduce and evaluate strategies
and initiatives to eliminate those incentives for corruption and will
point out possible avenues for further reform.

## II. Manifestations of corruption in the area of political parties

### Elections and election campaigns

The key functions of political parties in modern democracies include the
mobilization of voters in support of political agendas, the selection of
candidates for public office, and the organization of election
campaigns. To win a majority of seats and to thus control government,
parties compete with each other for votes. Election campaigns are
costly. Parties and candidates need money to print posters, brochures
and leaflets, or to pay TV and radio adds to make their message known to
voters. They have to pay staffers and equipment to organize and run
campaigns and to finance campaign-related travel of candidates and party
leaders. Therefore, campaign finance is an important issue in political
competition. In their struggle to win, parties and individual candidates
often try to outspend each other, and under financial pressure, both
candidates and party leaders might be willing to accept payoffs or
illegal donations offered by wealthy donors in exchange for promises of
future favors.

In developed and developing countries alike, politicians are therefore
tempted to spend as much money as possible on their campaigns, often in
excess of official campaign spending limits. In Japan, for example,
election laws prescribe a limit for the amount of money candidates can
spend during the campaign period. The spending limit depends on the
number of registered votes per seat and the total voter population of
the electoral district. In the 1980s and early 1990s, candidates of the
long-term ruling Liberal Democratic Party (LDP) exceeded the legal limit
by at least six times and as much as thirteen times (Fukui and Fukai
2000, 23-24). Most of these funds come from corporate donations. The
workings of the system were illustrated, for example, in the course of
investigations of the 1992/3 Sagawa Transport scandal. In order to
secure a good position in the deregulating transport sector in Japan,
the company Sagawa paid about 2.5 billion Yen (approximately 25 million
US\$) in illegal campaign donations to 200 Diet members and leading
local politicians of the LDP and opposition parties (Kikuchi 1992).
Similarly, in India, legal limits of campaign expenditures are regularly
exceeded by ten to fifteen times (*Loksatta Times* 2, 3, Mai-June 2001,
3).[^1] In South Korea, most candidates exceed the legal limit on
campaign expenses of approximately 90 million Won (around 112.000 US\$)
per candidate. During the April 2000 National Assembly elections, Korean
media reported that candidates had to spend about 3 billion Won (about
3.75 million US\$) to win their local constituencies (*Korea Herald*, 20
March 2000). Routine violation of legal spending limits suggests that
more than laws are required to control politician and party behavior and
to minimize excessive campaign spending.

In political systems with weak party competition, or in states with
long-term one-party rule and party control over the public sector and
society, parties also might be tempted to extort contributions from
businesses. Under authoritarian rule until 1993, political fund raising
in South Korea crossed the borderline to extortion. All South Korean
presidents during this period, from Park Chung-Hee to Roh Tae-Woo, set
up private foundations and forced big business to pay regular
contributions as membership fees in proportion to their revenues. Those
who refused encountered problems when applying for government credit,
licenses or business loans, and they also could expect regular tax
audits by financial authorities whose personnel was often appointed on
the basis of their party connections. Similarly, regular campaign
contributors could expect lenient treatment of their tax declarations
(Koh 1996; Kim 1997; Moran 1999).

To fill their campaign chests, parties not only accept donations from
wealthy donors or extort them from the business community, but often
also demand contributions from individual candidates and
parliamentarians. While the payment of contributions to one's own party
can be seen as a politician's legitimate support for building a strong
party organization and thus invest in the party's future, they come
close to corruption and extortion when they are demanded in the context
of candidate selection and nomination for national or regional elections
or as the 'price' for a promising ranking on a party's list of
candidates. Similarly, it is a corrupt practice when party leaders
extort contributions from candidates by threatening to remove their
names from the party proportional list, to assign them to a less secure
constituency, or if they offer to switch names on the party list in
return for donations. We can also consider it corruption when party
leaders demand donations from party members as a prerequisite for
promotion within the party hierarchy or for eligibility for party
leadership. In South Korea, for example, from 1961-1993, candidates on
the proportional lists of both the ruling and opposition parties were
ranked according to their contributions to the party (Chon 2000, 71-77).
Another form of party corruption in this context is the regular
collection of parts of a parliamentarian's salary by party leaders as
'contribution' in return for party support at election times.

Another manifestation of corruption in the area of political parties is
vote-buying. In transitional and developing countries, and especially in
countries where patronage is an important social factor, voters may
expect presents and gifts from parties and candidates prior to elections
and then make their decision on the basis of the amount and quality of
such gifts. Once such a tradition has been established, voters are also
likely to demand gifts in exchange for votes. In Thailand, for example,
vote buying has been a major problem for years, and it is still a
wide-spread practice despite repeated reform efforts. Especially in poor
rural areas, voters actively sell their vote to the highest bidder. In
the 1996 election, parties and candidates would try to buy individual
votes or sometimes even buy 'wholesale' votes of families or whole
villages. In return, party representatives would offer cash, sometimes
clipped to campaign literature, food, clothing, and other gifts.
Officials estimate that prior to the 1996 elections, Thai politicians
spent about one billion US\$ for vote buying (*New York Times*, 26 April
1998; *New York Times*, 19 November 1996). Thai parties also actively
pay bribes to candidates of rival parties at election time. In order to
win a majority in national or local elections, or to increase their
number of seats in parliament, Thai parties make it a practice to offer
bribes of up to 720.000 US\$ to candidates who are willing to switch
parties (*Bangkok Post*, 3 February 2000; *New York Times* 19 November
1996).

In this context it needs to be noted that the foundational elections in
a country have incredibly high stakes, and accordingly, the temptation
for corrupt activities is likely to be higher. In the initial stages of
democratic transition, party systems are still rather weak, and the
relationship between civil society and political parties is not yet
fully established. For parties, the potential rewards for victory in the
first election are very high. They include the opportunity to shape the
country's political and economic institutions, thus ensuring future
benefits for the party's supporters and the chance to enter the next
elections as incumbents. Given these high stakes, parties face increased
enticements to engage in corrupt transactions. Similarly, party
supporters hope to invest as much money as possible to make sure that
the winner of the first election will advance their interests.
Foundational elections also attract increased attention from foreign
interests such as neighboring governments or transnational corporations
that are interested in favorable political conditions and a friendly
business climate. In South Africa, for example, prior to the 1999
elections, Nelson Mandela revealed that his party had received donations
in the tens of millions US\$ from foreign governments such as Saudi
Arabia, Indonesia, the United Arab Emirates, and Malaysia (*Business
Day* 21 April 1999).

For all these reasons, even if elections and party systems are new in
developing and transitional countries, the opportunities for party
corruption we see in developed countries can equally apply in the
developing world, and even more so in the first election.

**Party Activities in Parliament**

Politicians who have won a seat in parliament are eager to produce and
work in support of policies which benefit their voters and shape
political and social development according to their and their parties'
preferences. Their performance in parliament is monitored and evaluated
by voters. If voters are content with their representative's performance
in parliament, he or she has usually a good chance to be returned to
office. On the other hand, if voters do not actively monitor a
politician's conduct, or if there is a lack of competition so that
voters do not have many alternatives to choose from, and if reelection
thus is very secure no matter how a politician performs, there is a high
chance that he or she engages in corrupt activities. The same is true
for political parties. Parties whose behavior in parliament is not
monitored by an active opposition or by informed voters, and parties
that are very secure in their hold on power, are more likely to indulge
in extralegal means of enrichment and exercise of power. The longer such
a state of non-competition lasts or the greater the degree of
non-competition, the more corruption can be expected. In extreme cases,
we might see parties that either act on behalf of any group ready to pay
the appropriate sum or demand fees and kickbacks for public contracts,
government loans, or licenses. To various degrees, such corruption can
be found, for example, in the Institutional Revolutionary Part (PRI) in
Mexico, the United Malay National Organization (UMNO) in Malaysia, or
the Kuomintang (KMT) in Taiwan. It is also significant that recently,
some of these parties have either been forced out of power or have
voluntarily changed political conditions that allowed increased party
competition.

While we thus can expect corruption from parties that are facing little
competition, on the other hand, we may also see corruption on the side
of those that are likely to lose their hold on power or whose leaders
are not allowed to run for reelection by their country's electoral
system. In countries with a weak party system, a high level of party
fluctuation, and a high turnover in government, politicians and parties
might face the prospect of losing power after just one term in office,
independently of how they perform. Consequently, they might be more
likely to use their offices to maximize personal profit for party
leaders and to channel as many benefits as possible to supporters,
family, and friends. Party members in parliament also might be tempted
to serve the interest of their parties' leaders in the hopes of securing
a future appointment elsewhere. One example for a country with high
incidence of corruption and an electoral system based on the principle
of "non-reelection" is Mexico. Members of the two chambers of the
Mexican parliament are not allowed to seek reelection immediately after
their first term in office, and for the president, reelection is
prohibited by law. Bribery has long been widespread throughout Mexican
politics, and the 1997 scandals surrounding former president Carlos
Salinas and members of his family indicated a tendency among many
Mexican politicians to maximize profit during their term in office (see
Morris 1999).

A third factor that might lead to corruption in the context of party
activity in parliament is party discipline (see also Rose-Ackerman 1999,
129). A strong party leadership that controls the activities of all
party members in parliament can use its authority to further democracy
and political and economic development, and to benefit the public good.
However, party leaders might also decide to support the agendas of
wealthy organized interest or certain social groups in exchange for
pay-offs, and pressure party members in parliament to support this
agenda. In Japan, the long-term ruling Liberal Democratic Party used to
relocate political decision-making from parliament into party
committees. Diet members would decide in their party committees what
position to take about certain issues. In parliament, party members
mostly voted unanimously along party lines. Often, business and interest
group representatives were present at such committee meetings, and party
leaders made it a habit to introduce young Diet members to interest
group representatives to initiate mutually advantageous relationships
(Blechinger 1998, 249-251).

Party discipline may also be used to suppress criticism from party
members of corrupt activities by party leaders. In Zimbabwe, for
example, leaders of the ruling party Zimbabwe African National
Union-Popular Front (ZANU-PF) have led denunciation campaigns against
party members who publicly spoke out against corruption of the party
leadership, thus preventing critical party members from being selected
to stand for re-election on the party list (*Indian Ocean Newsletter* 10
April 1999).

**Party Control over State Resources and Redistribution**

Ruling parties are not only shaping political agendas and institutional
and economic development, but also monitor the bureaucracy, control the
distribution and management of public resources, and supervise the
activities of public corporations. Parties in government play an
important role in shaping the relationship between state and society,
and between wealthy interests and power.

For the development of corrupt structures, the levels party competition
and party control over state institutions and society are important. The
more control a party has over state institutions and society, and the
lower the level of party competition, the higher is the risk for corrupt
behavior. In countries with strong party control over state institutions
and society, parties might be tempted to abuse their influence to secure
private gain for party members and supporters. Similarly, in
non-competitive systems, i.e. in one-party dominant systems or communist
states where a single political party monopolizes control over
government, the economy, and public life, the ruling party may face low
risk of losing power even if it engages in corrupt transactions. On the
other hand, in liberal democracies with high party competition, a clear
separation of power, leadership accountability and functioning checks
and balances as well as a vibrant civil society, corrupt actors face a
higher risk of exposure and consequently, of being driven out of power,
thus keeping corruption at bay.

One extreme case of a monopoly party in a non-competitive system, for
example, was the Soviet Union. The authority of national and local party
officials was not limited to the allocation of government resources or
to personnel decisions in government and state-owned enterprises. The
party's power reached into all levels of economic activity. Informal
networks which traded contacts to influential party officials or
strategic knowledge became a valuable 'good' in corrupt transactions.
"Information about who, how, and where was the lifeblood of economic and
political survival" (Wedel 2001, 3).

Similarly, autocratic parties whose leaders do not allow opposition
parties, often use their power monopoly to exploit public resources and
to manipulate state institutions for the accumulation of personal profit
for themselves and their supporters. Zimbabwe under the rule of
President Robert Mugabe and his party Zimbabwe African National
Union-Popular Front (ZANU-PF), for example, has been suffering from
wide-spread corruption, illegal confiscation of land, and party-induced
violence (Taylor 2002, *Financial Times* 2 July 2001).

Multiparty systems with active party competition can generally be
considered less vulnerable to corruption. Party competition provides
voters with an alternative when they do not approve of the ruling
party's politics, and it thus prevents parties from extortion. However,
even multiparty systems run risk to suffer from corruption when major
parties politicize society and thus take control over important sectors
of business and public life. Under such conditions, a change in
government might indicate who is 'in' and who is 'out', but might no
longer provide voters with an alternative. The case of Italy illustrates
this corruption regime. The 'clean hands' investigation in the early
1990s proved that Italian political parties had managed to politicize
and control all aspects of public life, from the bureaucracy to public
enterprises to civil society. Corrupt exchanges took place no matter
which party was in government (see DellaPorta and Vannucci 1999).
Another example for a multi-party system with a high amount of party
control over state institutions and society and related frequent
incidents of corruption is India.

Corruption is also likely in states where formerly strong monopoly
parties get weakened in the process of political and economic
transition. In the post-communist countries in Eastern Europe, the
weakening of the communist party's power monopoly and the erosion of the
centralized party-dominated state provided new incentives for
corruption. All over Eastern Europe, albeit in varying degrees, former
high-ranking party officials (*nomenklatura*) used their connections and
insider knowledge to rig privatization bids, to secure cheap government
loans, and to acquire resources for themselves and their associates.
Corruption is further stimulated by the continuing loyalties of state
bureaucrats with their long-established personal ties to current or
former party and government officials, thus impeding the formation of
new state institutions and free market economies. Reformed communist and
newly established democratic parties are often part of such corrupt
networks, especially in cases where party leaders owe their party's
survival to the support and funding of powerful oligarchic groups (Wedel
2001, O'Rourke 2000, Karatnycky 2001).[^2] Similarly, in Mozambique,
after independence, the ruling party Frelimo controlled society and all
economic activities for about one decade. In the context of
privatization in the early 1990s, numerous corruption cases came light
where Frelimo party officials and cabinet members used their inside
knowledge in government to secure interests in profitable state
enterprises for themselves, party supporters, or their family members
(Harrison 1999, 543-44). Corruption in these formerly communist
countries therefore limits the resources available to newly founded
democratic parties, making it difficult to establish a stable and
competitive party system.

China and Vietnam are cases where there still is no party competition,
but party control over society is weakening due to economic
liberalization and the gradual entry of private business activities. In
these countries, the decrease of the party's monopoly on power provides
an opportunity for local actors, usually lower ranking party officials
who are often underpaid and autocratic, to get involved and to spread
corruption even further (*Associated Press Worldstream*, 26 September
2002; *Associated Press*, 14 February 2001; Ma 2001, 145-147).
Similarly, corruption spread in the Philippines when national government
was decentralized in 1992 and opportunities for patronage evolved for
local officials (*Business* *World*, 23 March 2001).

The vacuum left by weakening party institutions in former monopoly-party
states also offers opportunities for organized crime. As recent cases,
for example, from Russia, Ukraine, Vietnam and other countries show,
organized crime in post-communist societies acts both as a 'business
partner' of political corruption networks, paying bribes to high-ranking
politicians and bureaucrats to facilitate illegal activities, and as a
'substitute' for state and party institutions, taking over formerly
party-controlled functions such as conflict mediation or private
security (O'Rourke 2000, Shelley 1995, *Associated Press Worldstream*,
26 September 2002).

As illustrated above, in order to fully understand corruption in the
area of political parties, we have to address both party competition and
the level of party control over state institutions and society. Parties
have to be understood as links between state and society, and between
wealth and power. Their activities relate both to the political world
and to society, and similarly, party corruption affects both spheres.

Parties in postcolonial states face one more temptation for corrupt
behavior. Before independence, the awarding of contracts and the
distribution of public funds was a monopoly of colonial officials. Once
in power, newly established parties were confronted with strong business
counterparts who were often willing to offer bribes to keep their
position as government contractors. Many parties in post-colonial states
were founded with the intention to enhance representation of previously
disadvantaged or narrow interests. Becoming aware of the opportunities
related with their newly won power, political parties often "perpetuated
the colonial system rather than modifying it" (Ruzindana 1997, 134).
Widespread party organizations used the money gained in corrupt
transactions for the building of political organizations that offered
housing, food, and jobs to refugees from rural poverty or conflict in
exchange for votes, thus ensuring their future position in power and
laying the roots for future corruption (see, for example *Africa News
Service*, 12 September 2001). Especially in transitioning countries with
insecure political and economic institutions, such forms of patronage
and clientelism are frequent. Patronage structures can be seen as a
means for parties to build and maintain an organizational basis that can
be activated at election campaigns. For local supporters who are often
poor and do not have other options to get access to political decision
making processes and to public goods and services, patronage networks
are sometimes the only way to receive basic services. Examples of
clientelist and patronage networks can be found throughout Africa and
Latin America. In the literature on corruption and development, the case
of Nigeria is especially well covered (see, for example, Brownsberger
1983; Balogun 1997). Although elements of patronage can be seen even in
advanced industrial democracies whenever there are political
appointments, greater transparency and free media organizations provide
opportunities to check excesses of patronage.

**III. Strategies and Measures to Eliminate Corruption**

Following the conceptual framework developed in USAID's *Handbook for
Fighting Corruption*, policy recommendations are organized in the
following four categories: (1) Restructuring party authority; (2)
improving accountability; (3) realigning incentives; and (4) changing
attitudes and mobilize political will.

To eliminate corruption in the area of political parties, the design of
institutions is important. Generally, the risk of corruption is higher
in political systems where representative processes to enforce
government accountability are weak, and where there are no or only
limited political mechanisms to dismiss governments that engage in
corrupt activities. In order to eliminate corruption in the area of
political parties, reforms thus have to address both the governing
regime in which parties interact and internal party governance.
Political parties whose internal structures are governed by transparency
and accountability and who compete with other parties and interact with
state institutions and civil society can significantly influence and
drive the democratic transition of a country. Parties can even lead the
transition to greater democracy, and democratic parties can be
role-models for former monopoly parties, as can be seen from recent
developments in Taiwan. On the other hand, democratic reforms and
economic development are likely to fail if captured by corrupt parties.
Therefore, the structure of parties is critical for improving democracy
in developing and transitional countries.

**Restructuring Party Authority**

Strategies in this area should address two aims. First, measures are
needed to facilitate the development of a competitive liberal democratic
regime. Such measures may include limitations of monopoly party
authority and incentives to increase civil liberties and to tolerate
opposition formation. On the other hand, in countries with weak party
systems, measures might be necessary to strengthen the authority and
organization of political parties to enable a competitive party regime.
Such strategies include the creation of legislation to define the scope
of activities and authority of political parties, the introduction of
public funding for party activities, and campaign finance legislation to
control campaign spending and to ensure equal standards for party
competition. Second, party restructuring also has to address internal
party democracy. Measures in this context include the creation of rules
for transparent and competitive party leadership elections and candidate
nomination procedures, the provision of incentives for party leaders to
pursue non-factional polities, the introduction of codes of conduct for
party members and related internal party financial checks and balances.

In combination, the measures listed above stimulate party competition
and provide a political environment where an active opposition can
contribute anti-corruption oversight and thus reduce the opportunities
for party corruption.

**Changing the external framework of party activity**

Party laws are critical in framing the context in which political
parties operate. Party laws regularly cover party registration, finance,
and party operation. They provide legitimacy to party activities while,
at the same time, defining party responsibilities and introducing
government bodies empowered with oversight and enforcement. Many
developing countries do not have specific party legislation and only
refer to party activities in election laws, such as the Philippines, or
have introduced party laws only recently, such as South Korea (1987,
amended in 2000), Cambodia (1997), Indonesia (1999), or Nepal (2001)
(for details, see Thornton 2001, 6-8). To create a solid institutional
basis for party competition and to underline the important role parties
play in democratic politics, and to thus reduce opportunities for
corruption, it is important that party laws do not only focus on parties
as organizers of election campaigns, but as important pillars of
democratic politics whose activities go beyond election campaigning.
Otherwise, risks are high that parties act within the bounds of law
during the campaign period, but engage in corrupt transactions all other
times.

Public funding for political parties can be a valuable means to support
the development of competitive political parties and to ensure
transparency and fairness in election campaigns. By making parties less
dependent on large campaign contributors, public funding can also
stimulate more policy-oriented activities by party leaders. Public
funding is common in advanced industrialized democracies in Western
Europe and in Eastern European post-communist states, and has recently
also been introduced in developing countries in Africa and Asia.[^3]
Public subsidies succeed in stabilizing party systems and in supporting
the development of party organizations. On the other hand, experiences
from industrialized countries with a long tradition of public subsidies
have shown that public funding does not always produce a reduction in
campaign spending. In the case of Japan, for example, the Law on Public
Funding for Political Parties originally stated that public subsidies
should not exceed two thirds of the amount a party received in
contributions in the previous year. To ensure that they would receive
the whole amount to which they were entitled due to their share of vote
in the last elections and their number of seats in parliament, Japanese
parties thus started increasing fund-raising campaigns, an effect
contrary to the intentions of the law (Blechinger 2000, 540-41).

Another step towards a more competitive environment for political
parties is the creation of campaign finance legislation. The
introduction of contribution limits for campaign donors or of
expenditure limits for general party activities and campaign spending
can reduce the maldistribution of political funds and increase equality
in political competition. Moreover, public disclosure of sources of
funds provides voters with additional information about the linkages
between parties and interest groups, and thus increases transparency in
the political system. Both spending limits and disclosure rules are
rather frequent in both industrialized democracies and developing
countries, however, in many countries, these regulatory restraints have
little effect because they are either not enforced or contain loopholes
(see, for example, Pinto-Duschinsky 2002, Nassmacher 2001, or Alexander
and Shiratori 1994). Almost every democracy in the world faces problems
of excessive campaign spending, independent of the shape of campaign
finance legislation. While the types of spending might differ, with a
focus on expensive TV and radio advertising in industrialized nations,
and higher cost for campaign vehicles and gifts for voters in
patrimonial systems, the general trend to spend as much money as
possible on election campaigns seems to be true for both industrialized
countries and the developing world. Spending limits for campaigns are
often not enforced or, in countries with very rigid election campaign
laws such as Japan, parties tend to evade spending limits by spending
most of their campaign funds before the start of the official campaign
period.

Three lessons can be learned: first, it is important to introduce
campaign finance regulations at an early stage in political development.
Second, campaign finance regulations seem to be more efficient if they
do not only cover the campaign period, but the general activities of
political parties also outside the campaign period, thus contributing to
equal opportunities among parties and reducing incentives for
corruption. Third, spending limits can be more efficient in combination
with disclosure. A high amount of transparency in political finance
reduces the opportunity for parties to build secret campaign chests and
slush funds. The details of such regulations need to be shaped according
to the context of individual countries. While for example the United
States fully discloses the names and addresses of all donors to
political campaigns, such a practice might have negative consequences
for donors in states where monopoly parties control public institutions
and society, especially when donations are made to opposition parties.
In such contexts, it might be more useful to strengthen intermediate
control bodies such as electoral commissions.

**Strengthening internal party democracy**

To participate efficiently in competitive democracy and to be credible
for voters, parties need internal democratic structures. Measures in
this context include the introduction of party statutes that regulate
membership, leadership and candidate selection, codes of conduct for
party officials and candidates, disclosure of party finances and assets,
and a system of internal party checks and balances. To improve
inner-party democracy, rank and file members should be involved in the
elections of party leaders. Similarly, transparent procedures for
candidate selection and nomination can reduce opportunities for
corruption.

Disclosure of income, assets, and other information useful for the
prevention of corruption, for example, ties to certain firms or
interests, both of the party as a political body and of party leaders,
are an important means to rise the risks for politicians in case they
engage in corrupt activities. It also enables voters to understand who
their representatives are, what social forces are supporting a party,
and what policies and interests the party stands for. However, as with
campaign finance and anti-corruption legislation, disclosure laws can
only be effective when monitored independently.

Especially for newly established parties in developing states, it might
also be important to raise awareness for corruption and related issues.
In traditional societies, for example, party members might see it as
their duty towards their supporters to provide benefits from patronage
and clientelism. As part of anti-corruption work, training seminars and
discussions for party members and candidates can play an important role.
Such initiatives have recently been started by the Democratic Party of
Thailand and the Philippine LDP (Thornton 2002, 11). In recent years,
and under the influence of anti-corruption organizations such as
Transparency International, parties in several countries, such as, most
recently, Pakistan, pledged not to engage in and to confront corruption
(*Agence France Press*, 19 September 2002). Such pledges can be helpful
to raise public awareness of corruption and to educate politicians and
voters about good governance. However, such pledges are often related to
election campaigns and, if their implementation is not monitored by
party members and misbehavior does not produce sanctions, their
efficiency might not go beyond campaign rhetoric.

Finally, it has to be noted that in competitive political systems,
parties might be willing to voluntarily introduce internal reforms if
confronted with a successful competitor. A good example for such
voluntary reforms as a reaction to electoral defeat is the KMT in
Taiwan. After the Democratic Progressive Party (DPP) defeated the
long-term ruling KMT in the last presidential election, and after
opinion polls showed that Taiwanese voters preferred 'clean' political
parties, the KMT leadership initiated a program of internal party reform
and restructuring (Thornton 2202, 14).

**Improve Accountability**

To further increase transparency and accountability, party restructuring
should be combined with anti-corruption legislation and the creation of
independent anti-corruption watchdogs, such as independent electoral
commissions or parliamentary ethics committees that regulate and police
party corruption.

Anti-corruption laws have been introduced by many countries in recent
years (for Asia, see for example Thornton 2002). Such legislation
usually prescribes high punishment for corrupt activities of
politicians, bureaucrats, and business representatives. Punitive
measures, however, are only effective when they are implemented and
enforced. When violations of anti-corruption laws are not actively
prosecuted by the judiciary and trials can be dragged out for years,
anti-corruption legislation remains toothless. A strengthening of the
judiciary, both through legal reform that prioritizes corruption cases
and intense training to improve investigators' and prosecutors' skills
and awareness of corruption, must accompany anti-corruption laws.
Moreover, anti-corruption laws are useless when parliamentarians are
protected from prosecution by immunity, as it is the case, for example,
in Mexico (Economist Intelligence Unit 2002). To make anti-corruption
laws more powerful, it might be useful to partially revoke politicians'
immunity in corruption cases.

A second strategy to improve accountability is the strengthening of
checks and balances within government, for example through the creation
of "watchdog" institutions that monitor government and party activities.
The creation of monitoring and auditing institutions in government, and
of anti-corruption committees in parliament, however, can only be
effective if they have jurisdiction to prosecute and sanction
misbehavior, and if they are independent. Independence can be achieved
by ensuring, for example in the statutes of such institutions, that
committee must represent all parties in parliament, thus preventing such
committees to be used as tools in political infighting.

**Realign Incentives**

Politicians are most likely to engage in corruption when there is a low
risk to be prosecuted, punished, or to lose their seat in parliament as
a consequence of voter dissent with a politician's conduct. Similarly,
parties are less likely to engage in or to support corrupt activities or
their leaders when such behavior is punished at the ballot box. To
prevent corruption, it is therefore necessary to increase the risks. One
strategy is to revoke an election and to disqualify candidates if they
themselves or their campaign staff engage in corruption or vote-buying,
as it is practiced, for example, in Thailand (*Bangkok Post*, 8 November
2000). Since the dismissal of politicians from parliament reduces the
party's number of seats, such regulations increase the incentives for
party leaders to control candidate behavior and to promote 'clean'
election campaigns. This is especially true in competitive systems,
since it can be expected that a party tainted by corruption has lower
chances to get its candidate elected in an ensuing by-election.
Similarly, in the context of party activities in parliament, it might
provide anti-corruption incentives for party discipline when rules are
in place to revoke a politician's seat in parliament when he or she has
been sentenced for corruption, and to disqualify him or her from further
candidacies for public office, both standard practices in many
industrialized countries. An active prosecution and a fast-working court
system are important.

In addition to such punitive measures, activities by donor organizations
to raise awareness for corruption as a problem in political party
systems, for example through regional seminars about 'best practices' or
training for party officials, can provide valuable incentives for party
leaders to keep corruption at bay. In developing countries, political
and economic development and the survival of parties in government often
depend on foreign aid and investment. If good governance, transparency,
and accountability are considered favorable elements in the evaluation
of a country's application for grants, trade credits, loan guarantees,
and investment, party leaders might be more likely to change their
behavior accordingly. This might be even more the case in an
international environment where "clean politics" contribute to the
prestige of government.

**Change Attitudes and Mobilize Political Will**

Civil society and a free press play a crucial role in anti-corruption
activities in the area of political parties. In the industrialized and
the developing world, voter awareness of corruption and their discontent
with corrupt politicians are increasing. Cases of political corruption
and bribery bring voters to the streets in protest, and non-governmental
organizations which fight corruption are gaining influence. Along with
information disclosure and transparency, an informed public is the best
means to prevent corruption. Only if politicians and party leaders know
that their activities are closely watched and chances of exposure are
high, they might refrain from corrupt activities. Moreover, as in the
case of Taiwan and also in the recent elections in South Korea, if
parties can win elections on the basis of their anti-corruption program
and transparent and democratic party organization, other parties might
follow their example, thus instigating change in the party system. In
the South Korean national elections in April 2000, civil society groups
which published 'blacklists' of candidates and parties tainted with
corruption, had a strong influence on the election outcome (Chon 2000,
Park 2000). The press multiplied this effect by reporting about the
blacklists and by providing further background information.

Voter education and financial and organizational support for civil
society groups are thus crucial elements of anti-corruption policies.
Regional and local seminars about good governance and best practices for
civil society organizations that educate voters might be a suitable
strategy to increase awareness of corruption.

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[^1]: For more information on campaign finance and corruption in India,
    see [www.loksatta.org](http://www.loksatta.org/). Loksatta ("People
    Power") is a Nongovernmental Organization devoted to clean
    elections.

[^2]: For local variations of corruption between the post-communist
    states in Eastern Europe, see Karatnycky (2001).

[^3]: For an overview, see for example Pinto-Duschinsky's study of the
    143 countries ranked as 'Free' or 'Partly Free' by the latest
    Freedom House rankings. He found that 59% of these countries have a
    system of public subsidies for political parties (Pinto-Duschinsky
    2002, 76-80).