The relationship between money and politics has always been a low-key issue in Nepali politics. The fact is that increasing flow of corrupt proceeds into politics has complicated the money-politics relationship. The recently released public survey on corruption by the Berlin-based Transparency International (TI) speaks volume about this endemic money-politics dynamics in Nepal. The TI report Daily Lives and Corruption, Public Opinion in South Asia rates Nepal´s political parties as the most corrupt bodies in the country. It is no consolation that the parliament has come a close second.

According to the report, 53.4 per cent of Nepali citizens feel the level of corruption has increased in the last three years. Around 2.2 per cent of Nepali households paid the highest average amount of bribe, exceeding Rs. 3,500 annually. Another 18.8 per cent reported paying bribes ranging between Rs. 2,485 to Rs. 3,429. Forty per cent of respondents reported bribing public officials in the past one year, mostly to speed up administrative processes on essential services and entitlements. This hints at the scale of prevalence and acceptance of ´speed money´ in the public service delivery system.

Public rating of the political parties and the parliament as the most corrupt institutions is a proof that corruption is intrinsic to the Nepali political system. There are three main reasons for this. First, income and expenditure of the political parties are a closely-guarded secret; second, party funding and campaign finances are opaque; and third, political parties are increasingly inclined to tolerate graft and rent-seeking.

Poor transparency

Political parties´ income and expense records are still considered a no-go-area. The unhindered flow of money into politics from criminal and other mysterious sources has often led to unethical practices such as buying of lawmakers and floor-crossing in the parliament to topple various governments since the 1990s. The Election Commission data also showed that 1,000-plus candidates (out of the 6,400 contestants in the CA elections) until a few months ago were yet to submit the details of their electoral expenses. According to the CA Election Rules, candidates must furnish details of the expenses within 35 days of the polls.

Similarly, the Political Parties Act-2002 makes it obligatory for the parties to submit audited financial reports within six months from the end of the fiscal year. They are also obliged to disclose names of contributors donating above Rs. 25,000. But the EC record revealed that they did not submit their audit reports for years since the CA polls in 2008. Even the big political parties openly flouted the laws. Rules alone will not be enough without strong oversight, enforcement and monitoring mechanisms.

A degree of credibility in the political system can be restored if the electoral finance records are made public. On the other hand, unhealthy competition can destabilise the whole political system and undermine the legitimacy of state institutions. Thus, it is an imperative that the political parties are held to high standards of accountability and transparency.

Party financing rules operate successfully in an environment of robust institutions and strong rule of law. Legally, election candidates are obliged to disclose all sources, types and amounts of financial support, both before and after elections. Thus information on the party income and expenditure must be made public on a regular basis via websites and public postings.

Opaque party funding has muddied our political and electoral systems by creating an uneven playing field. To level the field among candidates, legal instruments should be enforced to ensure all donations and other sources of party revenue are made public, so that both donors and amounts of donations are identified and made available for public and legal scrutiny.

One of the ways to achieve greater transparency is to make party politics and elections as inexpensive as possible. As election expenses are exorbitantly high, demand usually exceeds the supply of funds, thus leading to search for illegal funding. This quest in turn eases the entry of corrupt money into politics.

International experience

Experience abroad shows regulation of party funding can be effective if they are well-designed, are backed by effective sanctions, and accompanied by a parallel effort to ensure a high level of ethics and norms. This is the reason many countries oblige political parties and election candidates to disclose their campaign and political finances periodically.

In the United Kingdom, political parties need to publish party donations quarterly, but weekly disclosure is mandatory during the elections. They need to disclose all donations above $7,500 in cash (or kind) through regular updates to their websites. Setting a contribution threshold of $ 200, the US law also demands both the parties and candidates report names and addresses of contributors, grant size and in-kind contributions. Failure to comply leads to strict legal actions.

The US, the UK, France, Australia, Brazil, Canada, Denmark, Japan, among others, have completely outlawed foreign donations and contributions, even from multinationals. Some have even banned donations from public and private sector companies, such as France, since 1995. Thus, effectiveness of any legal instrument lies in its reach: Does it cover the entire gamut of party funding and campaign finance?

Indubitably, mandatory public disclosure can be a strong deterrent to entry of corrupt and illegal money into politics, particularly during elections. Robust public disclosure regime, therefore, must address four fundamental concerns: Who gives money? How much money do they give? Where does the money go? And for what purpose?

In this regard, public disclosure laws ought to fundamentally demand three types of reporting requirements - disclosure by candidates of income or expenditure details, disclosure by the political parties of income and expenditure details, and disclosure by candidates and political parties of the names of donors.

No matter how flawless a country´s electoral system, however competitive its political parties, however active its civil society and however responsible its media, influx of illegal money, if it continues unchecked in politics, will continue to have severe repercussions on the quality of politics and governance in Nepal. Drawing up a legal boundary between money and politics is thus an imperative for a transparent, accountable and value-based political system.

(The writher can be reached at pbhattarai2001@gmail.com)