Political Party Finances: Time to Clean House
As part of my office's ongoing campaign to stop the culture of corruption in Malaysia, we are proud to release our policy paper on party finances. This is our little bit of speaking truth to power. This paper addresses the true basic question of how much money a mid-sized political party needs to spend (operations) and save (elections). Once we have transparency on this, then we can address the next issue of how to raise the required money without corrupt practices. Without the knowledge and full transparency on both matters, corruption will fester in political parties. If political parties become corrupt, what hope do we have for Malaysia? Please share this report widely with your family and friends. The fight against corruption is the duty of every Malaysian. My office will continue to help the fight and in about two weeks' time we will release a paper on police corruption. This paper is the result of collaborative efforts of the interns and staff. Special mentions to: our interns Sean and Yodhin for research and initial writing; Tania Loke for editing and expanding the paper; and Nadirah for graphics.
Corruption is rife in Malaysia. In this paper, we surmise that politicians use the excuse of “party fundraising” to justify the practice of influence-peddling and money politics.
To stress-test the viability of raising funds legally, we project the finances of a hypothetical political party with nationwide presence. Our paper illustrates that it is feasible for a political party to cover its operational, extraordinary, and general-election expenses through legal sources, namely: membership fees, a 20% tax on salaries of its members elected to public office, and fundraising activities.
Our hypothetical mid-sized national party requires RM9.3mil a year and is able to generate legal income of RM9.4mil a year.
In addition to making the above case, we present two proposals that will help eliminate corruption and reduce political parties’ reliance on fundraising activities in the current party-finances system in Malaysia, namely: 4.1 Direct government grants to political parties. An annual grant of RM5 per vote received in the last parliamentary election to political parties with at least one federal seat will cost the government around RM53.9mil per year to implement. 4.2 Tapping into crowdfunding i.e. small recurring donations. This encourages political parties to be more financially transparent and less dependent on large donors.
Our paper is but one ingredient in the formula of reforming political party finances in Malaysia. Two key ingredients remain: firstly, limiting the size of assets a party can own; and secondly, limiting the size of donation per person or per entity to the party.