SOME REFLECTIONS ABOUT THE FINANCING OF POLITICAL PARTIES IN MEXICO^*
Emilio CHUAYFFET CHEMOR

Original Text (Spanish) PDF

SUMMARY
I. Introduction. II. The late development. III. Inspiring models. IV. The decisions of 1996. V. Conclusion.

I. INTRODUCTION

The topic of financing is nowadays in the core of the normativity of the political parties around the world. Few aspects are more important in the electoral ambit than money: where does it come from, what is done with it, in which amounts and activities can it be spent, how is it accounted and its respective publicity, and basically, which is the relationship between the money invested in an electoral process and the decisions of the governors emanated from it, which may eventually benefit the contributors.

Though, precisely when financing has turned into one of the main topics in democracy, the political parties seem to have reached the lowest point of reputation before the citizens.

The progressiveness high cost democracy is acquiring, the political influence of the contributors, and the scandals for corruption even in the most consolidated systems show the need to keep a permanent revision of the norms regarding the money used in the elections.

Evidently, the law is not always an effective means to avoid or nullify the complicities of money and power. Its rationalizations, which implies its constitutional and legal development, does not reaches much if a solid education and a deep civic training in the elections is not encouraged.

The exponential growth of the electoral costs is, by itself, a justified reason to be concerned, even worse, with the ingredient of erroneous management, corruption and illegality.

According to the information published by Jorge Mario García Laguardia, the last elections in the US cost more than two billion dollars, of which 250 referred to contributions to which there were no limits.¹ According to this author, in 1989 the justicialistas in Argentina accepted they had obtained in known source funds 832 thousand dollars, but 4,428 millions were spent without ever explaining the origin of the difference. In order to exemplify the disparities, García Laguardia mentions that a democrat-Christian deputy admitted in Chile in 1993 an expense of 13 million pesos, while his district adversary laid out almost 150 millions.

On the other hand, since the events that took place in Watergate during the seventies, the scandals related to the illegal use of resources to win elections have repeated incessantly regardless the level of political development of the countries involved. In Mexico, the regulation of the political parties’ financing is relatively new.

II. THE LATE DEVELOPMENT

Practically during all the 20th century, since the beginning of the Revolution, certain electoral laws were in force in Mexico. But we could tell that it was since 1963 and until 1996 when a series of reforms were carried out in order to give the Mexican electoral system its democratic perfection.

In 1963 creating the so-called "party deputies", with the purpose of extending the integration of the political representation, made a significant step. But the reforms of that year also established prerogatives in favor of the parties under three modalities: fiscal extensions, postal and telegraphic franchises, and access to the radio and TV during the period of campaign, which may be considered a species of "indirect" financing.

The 1977 reform that granted the political parties constitutional status, appointed they would have "in an equal way, during the electoral processes, a minimum of elements for their activities in order to obtain the popular vote". It also established the permanent access of the parties to the radio and the television. Some authors affirm that the inclusion of political parties in the Constitution led to the regulation of the financing. This did not happen in Mexico, where almost 20 years had to pass between one and the other.

The 1987 Federal Electoral Code was the first one to incorporate the public financing to the parties, granting it over the basis of a minimal cost of campaign, in increasing percentages during the previous years to the electoral process, and of course, of the elections. The public financing contributed fundamentally to strengthen the opposition parties at that moment.

In 1990 the Federal Code of Electoral Institutions and Proceedings distributes the public financing by different kinds of activities: a) the electoral ones; b) the general ones as public interest entities; c) by subrogation of the status of the contributions the legislators were to give for the support of their political parties, and d) by specific activities as public interest entities. By the way, it is worth to comment that in 1991 during the first year the IFE assigned the new financing contained in the Code, 220,227millions of old pesos were destined for specific activities, defined as compromises of education and political training, socioeconomic and political research, as well as editorial. A large proportion of these resources were returned at the end of the corresponding performance to treasury authorities by the IFE because the parties incurred in the insufficient use or defective proving of expenses. This information offers us the reflection of a well-rooted practice of conceiving that money in politics is only meant to reach power.

In 1993 the Federal Code of Electoral Institutions and Procedures in order to set limits to campaign expenses, regulate the private financing and establish the obligation of the parties of presenting reports of both annual and campaign incomes and expenses. The topic of financing was the origin of the Mexican Electoral Reform of 1996. I want to be clear: it was its origin but not its exclusive subject.

The previous electoral reforms had been solving in a more or less satisfactory way, serious deficits in our model and in our electoral practices. This way, during almost thirty years they were successively conceived as advances: facilitating the emergence of new political organizations; extending the integration of the national representation in order to incorporate minorities; purging the electoral register until turning it into a reliable instrument for the elections; and offering sufficient legal protection to the citizens’ and parties’ political rights.

Once the 1991 elections finished, the IFE organized for the first time, a series of conferences as a reflection about the elections, decision that, in general terms was welcomed by the political parties registered as a tendency that shall be pursued. The prevailing topic during the participations was the need to modify the objective conditions of the electoral competence in order to become truly equal.

In 1993 reforms on financing were introduced, but during the presidential campaign of 1994, scholars and analysts concluded also that they were insufficient, because of the lack of fair conditions for the competence. Even the presidential candidate of the PRI, after his victory in the elections, declared that they had been clean but unequal.

In its 1994 report on the elections, the IFE underlined, for example, that the election regarding federal deputies, one single party had spent 81.2% of the total money invested in the campaigns. Therefore, it was not casual that the new government convoked since the second month of its mandate, a comprehensive electoral reform that, through consensus, would mean a deep exercise with a high sense of democratization in order to eradicate uncertainty and conflict in the Mexican elections.

III. INSPIRING MODELS

Once the topic of financing was defined as the core point of the 1996 agenda, the discussions generated around it had three electoral systems as referents: the North American, the Spanish, and the German. The analysis of comparative law was made with the double care of not denying progress in other systems and making profit of them. This purpose was only partially reached.

Providing that there is not a universal democratic prototype, the negotiators of 1996 had a series of guidelines quite clear in order to develop the democratic principle regarding financing.

The agenda for the discussion of the topic covered:

1. The predominant type of financing: public or private.

2. The activity to finance: the electoral one, as the German jurisprudence suggested; or the ordinary expenses of the party, as the Italian legislation stated. Even if the money was to be assigned to permanent activities, there was the option to support the national or local structure of the parties, or both.

3. The equal treatment or proportional to the parties, or a combination of both. It was not only about the money, but publicity and propaganda.

4. The establishment of several kinds of limits either on inputs, outputs, or on both of them. Together with such limits, the incorporation of conditions and modalities to private and external contributions. The limit of expenses was necessarily related to another aspect: the campaigns’ duration.

5. The vigilance of the relationship between the cost of the election and the right to political participation, so that the most powerful contributors’ taxes would not grant them a definitive weight in the outcome of the election.

6. Transparency in the sources and the exercise of the financing: clear, adequate and public accountability; and the existence of an organ of control and punishment implementation.

The discussion around all these topics is still present, and different opinions develop on each one of them. About the first point, those who claim prevalence of the public financing point out that: it coincides with the character of the political parties as entities of public interest; it guarantees its liberty and equity in the competition; it preserves its independence with respect to the big capital; and it sets them apart from criminal economy, preventing corruption in a considerable way.

Its critics, however, point out that: it is highly paternalist; it reduces or nullifies responsibility of the leaders; it bureaucratizes and strengthens the elites’ rigidity, and isolates them from the organization of the militants; it discourages the parties’ local organs; it does not encourage a strict management of the expense; it fosters an exaggerated pluripartisanship; it distracts funds that should be used for other purposes; and the worst, it does not fight corruption, but even propitiates it.

Those who decide to support private financing point out that in the first place, it agrees with the conception of a political party as a private association founded on freedom of expression. It offers more freedom and obliges the leaders to hold a permanent contact with the militants, adherents and sympathizers. It fights corruption in a better way since it shall be absolutely transparent, and is subject to more controls.

Its adversaries point out that the private financing propitiates all the effects of a perverse relationship between politicians and businessmen: corporativism, clientelism, traffic of influences, and dubious advantages. They even add an observation that seems to find similarities with reality: the political parties’ contributions have diminished considerably in general terms around the world, for the discredit of politics, of the parties and of the politicians.

Not even the fiscal privileges granted by certain legislations to the donors in favor of political parties have been able to overcome this stereotype.

On the other hand, it is said that private financing is less effective in countries with an electoral system of proportional representation, because the candidate’s figure is diluted before the party’s, and the contributors are more guided by the people than by the formations.

The issue of granting equal or proportional treatment to the political parties has been decided in most of the systems, in favor of a combination of both. Equal treatment may create a fictitious equality and discourage the parties that make efforts to conquer the vote and awake the interest of the contributors and donors. The proportional treatment may favor the biggest parties in detriment of the small ones, accentuating the differences.

The limitations and conditioning to the contributions and the expenses depend on several reasons. But actually, the limitations to the income are the ones that have a direct relationship with equal opportunities in the competition, as it is not the case of the limitations to expenses, which not all the parties reach.

The maximum electoral expenses is a measure known since the 19th century in the Britannic and North American legislations, but in both cases, the limitation lies exclusively on the candidate’s expenses. In England, its scope is actually tangential, since most of the expense is made by the political parties and is not submitted to any limitation. In the United States, the tops were adopted at the beginning of the 20th century; afterwards, they were suppressed, introduced again in 1974 as a consequence of the Watergate case, in order to be considered unconstitutional in 1976, for violating freedom of expression.²

In the majority of the European countries and in the United States, the maximum expenditure are considered useless because of the difficulty of its effective control; on the contrary, in Mexico in 1996, having a more detailed regulation than that of 1993, became an undeniable claim of which the viability of every reform depended.

At present there are alternative and indirect forms in the world, that influence in the control of the expenditure, such as the restrictions to the debt that may acquire the political parties or the reduction of the duration of campaigns and precampaigns, which are often not regulated. Since 1993 in Mexico the parties are banned to be indebted with the bank of development.

Regarding the controls, these are almost unanimously oriented to the obligation of accountability (of incomes, expenses, or both), to demand an internal organ in each party in charge of carrying the accounting in order to easily fulfill the requirements of publicity and transparency (the Spanish electoral manager), and to create a reviser and punishing organ (which may be within the Legislative Branch as in Germany and Italy; within the electoral administration, as in the Saxon countries; or within the Judicial Branch as the Account Tribunal in Spain).

Regarding the three systems that conformed the referents of comparative law in the discussion on the Electoral Reform in 1996, it is worth examining the elements that characterized our legislation, as well as pointing out those features different to our own reality, which explain why certain norms adopted in Mexico do not have a successful execution.

The North American model had much influence in the 96’s decision despite the considerable differences among the political systems. In the first place, the bi-partisanship is totally far from our reality, at least along the 20th century.

In the second place, in the United States there are three clear stages in the electoral process: pre-nomination, nomination by the conventions, and the campaign itself. On the other hand, in the Mexican Law there is no regulation on precampaigns. Their determinant influence in the North American politics inspires great deal of its regulation regarding financing.

The precampaigns are so important in the United States that there is the phenomenon of the so-called perpetual campaign, when the aspirants to become elected for a charge shall work permanent in order to get funds for that purpose, becoming distracted many times from the public responsibilities, when they have them.

The limits of expenditure for the candidates are not respected. It is even very well-known that since the beginning of the precampaign, these tops are fixed by states, are frequently breached in the primary election in New Hampshire, and for being practically the first one, it has a psychological effect over the sequence of the process, which pushes the precandidates to invest in it above the limits.

Another way of violating the tops established for the campaign is through the so-called parallel money, which is money applied directly by particulars in radio and television in favor of one of the precandidates.

There is also the "soft" money, which consists in giving the local and state partisan structures, money obtained beyond the limits of the federal laws, and thus, far from the top.

Despite having been implemented in Mexico three years before, the participants in the discussions of the political reform regarding the North American model were quite interested in the different types of limitations to the contributions and the tops of expenditures, reason why they were again regulated in 1996 despite three basic differences with the US which were not properly analyzed: bipartisanship, primary elections, and the conviction in that country about the inutility of the tops of expenditures.

Since its origins in 1977, the Spanish legislation has designed a mixed public and private system of financing of political parties, in which the first one is fundamental and the second one is minimal, with respect to the presumed protective character of the public money before corruption.

The Spanish State grants all the forms with parliamentary representation, with economic subventions, both for the different electoral processes (general, autonomous, municipal and European) that for the expenditure derived of the parties’ ordinary activities.

Private financing is limited regarding the amount of donations the parties may receive.

The private donations a party with parliamentary representation may annually receive cannot surpass the 5 per cent of the total amount that in the State’s general budge are destined to give a subvention to the political parties’ activities.

With respect to the tops of electoral expenditure the great topic has been the political parties’ capacity of becoming indebted. In the debate some consider that by limiting that debt capacity there is a more efficient comprehension of expenses.

There is an accountability carried by the respective tribunal, which revises the parties’ accounting and applies the corresponding sanctions.

Some consider, however, following the theses of other European countries, that accountability scares the donors away and that it constitutes an undue intervention in the parties’ performance. Evidently, accountability is deeply related to the level of reliability or unreliability the political parties’ activities inspire in terms of political culture.

The German system admitted since 1966 public financing to the parties, but only to restitute the necessary expenditure of an adequate electoral campaign.

A jurisprudential change occurred in 1992 establishes: the parties’ independence from the State; the faculty of the latter to grant them resources under strict limits that prevent the parties from distracting themselves from the purpose of looking for financial support from their sympathizers; and, limits for private donations.

The German jurisprudence follows the principle of equal opportunities granting the resources in function of the votes, the donations and fees each party accomplishes, but it also compensate the less important ones in order to create an equilibrium in the competition. In the ambit of Tributary Law, the jurisprudence prevents against fiscal privileges that excessively favor the most appealing political parties to the contributors.

IV. THE DECISIONS OF 1996

In January 1995, the political parties with legislative representation convoked by the government, agreed on an agenda of topics to develop in order to continue modernizing the political structures in the country.

The works carried by the parties and the Office of Governor^** were called "definitive political reform", not because it was naïvely pretended to be the last one, but because it was meant to eradicate suspicion and conflict of the Mexican elections.

The definitive political reform was elaborated by the consensus method, according to what was established in 1995. It was evidently harder reaching agreements, but they were reached unanimously in the reforms to our Constitution made in 1996, and by majority, in the supplementary legislation reformed in November that same year.

Precisely the theme of financing was the one that prevented from reaching unanimity with respect to the changes in the law, which had been reached in the constitutional text.

I would like to mention two conversations I held as Officer of Governor during the days of the 1996 reform.

One of them, with professor Giovanni Sartori, where he expressed almost prophetically, that we were inserted in another political reforms, which was partial because it was only about the legitimate access to power, leaving aside new rules to facilitate the governments’ efficiency with divided majority in the Congress.

I exposed my concern to Dieter Nohlen regarding that, in my point of view, some of the consensus reached did not coincide with the doctrine and practice more or less generalized in other countries. He answered that the maximum consensus possible was to be reached regardless the heterodoxy, since the consensus would allow the norms to be executed and also corrected.

The first big decision regarding financing was taken in 1996, in the sense that public financing should prevail over the private one.

Much has been written about what the ratio legis of this disposition had been; actually it was only one: protecting the political activity and the electoral competition from the influence of drug traffic. The issue was not minor given the unfortunate experiences in our continent. Other reasons such as transparency of the parties’ resources and encouraging a fair competition were related to this decision, but I insist, they were not the main reasons.

The flux of public resources was divided into three modalities:

1. Sustaining the ordinary permanent activities of each party, which was granted with 30% in an equal way between the political parties with representation in the Congress, and 70% in proportional terms to the percentage of the voting. It shall be underlined that the formula that had ruled the 1994 elections was improved, where only the 17.3% of the financing to the political parties was granted in an equal way, against an 82.7% proportional to the voting.³

2. For campaign’s expenses. The election year every party shall receive an equivalent amount to the one received to maintain their ordinary permanent activities.

3. For specific activities, such as political education, training, investigation and the editorial activities of the political parties. In this case, the General Council of the IFE may authorize supports of up to 75% of the annual expenses proved by these matters.

As we can see, the kind of public financing granted to parties by subrogation of the quotas their legislations had to give them, disappeared.

The Law designed a new system of calculation in order to determine the quantity of public resources to allocate, and this measure increased substantially the amount to distribute. This way, for example, the amount of public financing for the 1997 elections was six times larger than the one of 1994 in real terms.⁴

The private financing was submitted to a series of taxes in order to avoid suspicion about its origin, disproportion and inequality, or even, that the donors could obtain undue benefits through them.

No party could receive as concept of private financing of sympathizers, an amount superior to 10% of the total public financing granted to the political parties for ordinary permanent activities in the respective year.

Anonymous contributions are banned except for those obtained through collections made in meetings or in the public thoroughfare. Donations by foreigners were also banned.

The contributions of money made by each physical or moral person empowered to do so, would have an annual limit of 0.05% of the total amount of public financing for the performance of ordinary permanent activities granted to the political parties in the respective year.

The reform introduced the following innovations for control effects:

1. The parties’ and political associations’ obligation of rendering an annual report of their finances as well as campaign expenses was shortened to 60 days; in the last case, the term of delivery shall begin since the day the campaigns concluded.

2. The commission of control of parties’ and political associations’ resources of the General Council of the IFE may order the practice of audits to the parties’ and political associations’ finances and may even order verification visits to prove the reports’ veracity.

The reform granted great importance to the tops of expenditure in the campaigns of the political parties, which are questioned in other systems for the practical inefficiency of their verification and control.

The negotiation of 1996 granted the tops of expenditure an almost automatic double effect: reducing the disparity of the resources available to each party for campaigns, and avoiding waste, providing that the main origin of resources were public funds.

Centralizing in the General Council of the IFE the faculty of determining the tops, both for the President’s campaigns, as of the senators and deputies, the 1997 data seemed to confirm the double virtuous effect assigned to the tops: in this year a real decrease of 50% was produced in the top for the election of deputies with respect to 1994, and a 61% lower regarding the campaign for each senator, although we shall remember that during that year the elections of senators was only carried through registers by the principle of proportional representation.⁵

Despite these numbers, the reality shows us multiple examples of the inefficiency of the tops of expenditure.

For the elections of 2000, before the legal beginning of the campaigns, several political parties began a series of internal processes to choose their candidates for the presidency of the country.

The invested money, which in legal terms is not accounted as campaign expense, has similar effects to that which is applied to campaigns, since it promotes candidates and it intends, even in an indirect way, to win the vote beforehand.

Although they are not carried out with this purpose, these processes are an expedient to breach the top of campaign expenditure and the equality of opportunities, since the parties that turn to these internal processes gain a real advantage over those who, because of lack of money or for their own decision, do not carry them out.

Another asset certain precandidates have before their internal competitors, and in case of winning the nomination, before their competitors in the elections, is the following: should they be officers that while during the exercise of their attributions, manage budgets for publicity and propaganda of the institution to which they work, nothing prevents those expenses from being laid out in a concentrated way, even respecting the budgets’ annuity during the closest dates to the formal beginning of the elections. For example, we could think about a governor or in a State secretary. They follow the law by executing their publicity budget, which does not prevent them from promoting their image for electoral ends.

This practice is so evident that, for example, in the United States, an aspirant to the re-election has a positional advantage that allows him to collect funds in much higher amounts than those who are aspirants for the first time.

It seems that Law has not accomplished much until now in this respect.

Notwithstanding the regulation of the private finance, regarding the top of contributions and the people authorized for it, the particulars find means to put money in the campaigns without the possibility of detecting it easily.

The constitution of structures parallel to the parties’ to collect and invest money in the campaigns turns the real accountability of expenses and even the verification of the legitimate source of the contributions quite hard.

The practice of granting movable property; the purchase of time in TV and radio by a particular; the allocation of private resources to the ordinary expenses of a party’s structure, generating it savings and thus additional resources, are some of many other ways to evade the tops without the controls noticing it.

Despite the meticulous regulation of the financing, certain issues regarding the internal management of the resources are left out, related to the possibility of committing illicit actions by the officers responsible of managing the money each party receives, and to the possibility of a relationship between the party itself and third parties.

This way, business in favor of political parties’ treasury officers or managers could be established not only at a national level but even at a local level, where the vigilance is less could be made, when services such as the propaganda design and printing or diffusion are hired.

The parties have full autonomy to contract goods and services thanks to their independent character before the power. Though, they handle public funds and this would be enough to regulate, without yielding their autonomy, the transparency of their administration.

In Costa Rica there is a very useful disposition about this matter. All the companies of radio, television, newspapers or printing houses shall be inscribed in the Supreme Tribunal of Elections, indicating their schedules and tariffs of the services, which shall not surpass the average of those which are charged during the twelve months previous to the summoning of the respective elections. Political parties may only contract with the inscribed companies.

It could also happen that despite the interest each party has that the money it receives serves the end for which it was granted to it, treasury officers or managers could negotiate personal assets over the banking yields with financial institutions.

With respect to third parties, we shall state the case of a party’s insolvency to face its debts and how it could solve its slump. Here, as in the case of loss of register or dissolution of the party, the public interest shall be privileged, and our legislation shall create a figure of reversion of the party’s resources found in any of these hypotheses, providing the prevalence of the public financing.

We ought to think also in the convenience of the law demanding the treasurer officers or the title-holders of the parties’ administration organs, a bail to pledge its handling, and turning them into co-responsible before the State and before third parties.

A next-to-last-reflection. It has been said that the public financing is an instrument that propitiates the formation and consolidation of the system of parties.

I believe it is time to review the legal framework that rules the requirements to give registration to the political parties in Mexico in order to avoid, on the one hand, an artificial electoral offer, and on the other, the waste. Specifically, the percentage required by the law to grant a political party its definitive record shall be revised.

Finally, regarding controls, I coincide with who leave the revising and punishing powers regarding political parties’ financing, in hands of a jurisdictional, absolutely technical organ, where the political parties do not take part: the Federal Electoral Tribunal of the Judicial Branch. The IFE might continue having the powers of reception of reports, pre-qualification of the latter, practice of audits and verification visits, submitting all this material to the tribunal for its final decision.

This change would entail modifying the terms for rendering reports in order to act opportunely.

One of the pitfalls the effort to make electoral expenditure transparent faces is the bank secret. Being is the electoral issue fundamental to the public interest, our legislation should be modified so that, once certain requirements are fulfilled, the treasury authorities get to be compelled to give the competent organ —that as I propose is the Electoral Tribunal— all the necessary information.

V. CONCLUSION

We have made progress in completing our democracy, in a gradual but consistent way. This does not keep new problems from emerging, as well as questions, practices against the spirit and the law, and the need to continue modernizing our electoral system.

The theme of financing entails many risks to democracy in any part of the world. These risks derive in the fact that precisely in this aspect, money and power are involved, which are not precisely the best combination. If, as Sartori says, the contemporaneous challenge is having a better political quality, it is imperative to avoid money’s pitfalls. In other words, we should continue refining our electoral legislation, and simultaneously, fighting to build and promote a solid political culture that prevents money from deciding who deserves to execute power.

Notes
* Translated by Ingrid Berlanga Vasile.
1 García Laguardia, Jorge Mario, "Dinero y política", Boletín Mexicano de Derecho Comparado, new series, vol. XXXIII, no. 99, September-December 2000, pp. 1055-1083.
2 Del Castillo Vera, Pilar, "La financiación de los partidos políticos: propuestas para una reforma", Aspectos jurídicos del financiamiento a los partidos políticos, UNAM, Instituto de Investigaciones Jurídicas, 1993, p. 95.
** In Spanish, "Secretaría de Gobernación" (N. of the T.).
3 Woldenberg, José et al., La reforma electoral de 1996. Una descripción general, Mexico, Fondo de Cultura Económica, p. 112.
4 Ibidem. p. 111.
5 Ibidem, p. 115.