KNAB asks political parties to return illegally spent financing

The Corruption Prevention and Combating Bureau (KNAB) asks five political parties to return to the state budget 1 055 582,83 lats (1,5 million euros) in relation to violations of campaign and party financing regulation committed during the campaign for the last parliamentary elections in 2006.[1]

1) People’s party (Tautas partija - TP) has to pay to the state budget illegally received and spent 1 027 366,67 lats.

In result of investigation KNAB has found out that there is a direct link between pre-election campaign of the TP and campaigns organized by several legal persons aimed at specifically advertising TP thus increasing popularity of the TP during the 9th Saeima pre-election period.  Therefore, expenditures of other legal persons and additional pre-election campaigning expenditures of the TP detected by KNAB are to be included in TP’s pre-election campaigning expenses. Altogether TP has exceeded the threshold by 767 775,76 lats. According to law, TP has to pay to the state budget the amount of 235 856,17 lats representing pre-election expenditures which occurred after 25 May 2006.

Besides donations made to legal persons in the amount of expenditures of these campaigns are to be considered as donations to the TP. Therefore, two donations of legal persons and parts of donations of three natural persons, which exceeded the total threshold for donations stipulated by law (10 000 lats for membership fees, membership payments, admission fees and donations within one calendar year) are recognized as illegally received financing in total amount of 791 510,50 lats.

2) Union of Greens and Farmers (Zaļo un Zemnieku savienībai – ZZS) is asked to pay to the state budget illegally received and spent 11 626,89 lats.

After examination KNAB has concluded that there is a direct link between pre-election campaign organized by ZZS and the chair of the board of the political organization “For Latvia and Venstpils City” („Latvijai un Ventspilij”) paid by him and his spouse. Besides KNAB has detected that during the pre-election period the head of the „Latvijai un Ventspilij” signed on behalf of this political organization an agreement with ZZS for organizing a joint pre-election campaign. He was also nominated as candidate for Prime Minister post from ZZS and was widely advertised in pre-election campaigning materials financed by ZZS. Thus, expenditures of these two natural persons for pre-election campaigning in the amount of 2 374,25 lats and 18 276,11 lats are to be considered as donations to ZZS and included in the expenditures of ZZS’s pre-election campaign. Besides the latter donation has been received illegally (according to law, donations from one natural person for one political party cannot exceed 10 000 lats within one calendar year). This donation has exceeded the threshold by 8 276,11 lats. The total pre-election campaign expenditures of the ZZS reached 282 981,98 lats exceeding the amount allowed by law by 3 350,78 lats.

3) Political party “Motheland” (”Dzimtene”) has to pay to the state budget illegally received and spent 9 810,42 lats.

This political party has received donations from legal persons in the total amount of 9 713,94 lats, i.e., an invoice for publication of advertising material in newspaper in the amount of  9 481,48 lats has not been paid; legal persons have paid an invoice for 212,40 lats related to the rent of a vehicle for a pre-election campaigning of this political party, as well as for leaflets, the publication of which was organized by an election candidate (20,06 lats). In addition one anonymous donation in the amount of 96,48 lats was accepted, i.e., an invoice for renting a vehicle for pre-election campaign was paid in cash by an anonymous person. 

4) Political party “Center of Union” (”Saskaņas Centrs” -SC) had to pay to the state budget illegally received and spent 4 691, 69 lats.

After examination KNAB has concluded that there exists a direct link between pre-election campaign organized by SC and pre-election campaigns organized by other persons aimed specifically at advertising SC.  As a result the political party’s popularity before the 9th Saeima elections was supported.  Expenses of several persons for organizing these campaigns in the total amount of 10 811, 07 lats are to be included into SC’s pre-election expenses. Consequently, the political party has exceeded the election expenditure limit for 4 463, 58 lats. KNAB has also detected one donation made by a natural person exceeding the 10 000 lats threshold by 228,11 lats.

5) Political party “New Era” (”Jaunais laiks”)  was asked to pay to the state budget 2 087,16 lats – the amount exceeding the pre-election expenditure limit.

6) After analysis of the pre-election campaign and financial resources used for it by the electoral union of the Latvian First Party (Latvijas Pirmā partija-LPP) and “Latvia’s Way”( „Latvijas Ceļš”-LC) (hereinafter –Union of LPP/LC), KNAB has detected that there exists a direct link between pre-election campaign of the Union of LPP/LC Union and pre-election campaigns organized by certain legal persons. Thus, these expenditures are to be included in the expenditures of pre-election campaign of the Union of LPP/LC. The total amount of these expenditures exceeds the limits set out by the law for about 401 000 lats.

However, two political parties founders of the Union of LPP/LC have been reorganized and excluded from the Register of Political Parties following a decision taken by the Register of Enterprises on 2 November 2007 due to the fact that on 25 August 2007 they together with two other political parties founded and later registered a new political party called „Partija „LPP/LC” (Party “LPP/LC”).  The Activity of the Union of LPP/LC is considered as terminated as it has not applied for re-registering in the Register of Political Parties (information received from the Register of Enterprises as of 24 January 2008).  Therefore, its administratively procedural capacity and legal capacity are terminated and KNAB has no rights to take a decision regarding reimbursement of financing, since the Union of LPP/LC is not recognized as a legal entity any more.

KNAB considers that in this case, the Union of LPP/LC has used the procedure of re-registration of political parties to avoid their obligations to the state in such way acting against the purpose of the law, which is to ensure compliance of political parties financing with the system of parliamentary democracy.

As regards the illegally spent and received finances by the Union of LPP/LC, KNAB will evaluate all judicial aspects related to the reorganization of the Union in order to ensure reimbursement of illegal financing to the state budget as it is provided for in the law.

On 24 October 2007 KNAB has already informed the public on violations detected during the examination of 2006 election’s income and expenditures declarations. For further information on results on these checks, donations received by political parties and declarations submitted to KNAB visit www.knab.gov.lv (mostly in Latvian). 

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[1] During the campaign for election to the 9th Saeima in November 2006 for the first time the expenditure restrictions provided for in the Law On Political Organisations (Parties) Financing (hereinafter – the law) had to be observed, namely a threshold of 279 631, 20 lats if running in all five electorates. According to the law, the pre-election period starts from 270 days before elections and lasts till the day of elections: during the 9th Saeima elections the said period was from 11 January 2006 till 7 October 2006.  On 26 May 2006 a significant amendment to the law entered into force establishing a duty of political parties to pay to the state budget the financing in such amount which corresponds to the amount exceeding pre-election campaigning expenditures after 25 May 2006 (Paragraph 2.1., Section 10).