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Mister Speaker

Excellency,

After receiving, to be enacted as law, Parliamentary Decree No. 285/X, altering Law No. 19/2003, dated 20 June, which governs the rules applicable to the financing of political parties and electoral campaigns, I have decided, in the terms of article No. 136 of the Constitution, not to enact that legislation, with the following bases:

1. In democratic regimes it is essential to ensure that the political parties have sufficient means available to exercise their functions, since this is crucially important for the structuring of the political wishes of the people. On the other hand it is absolutely necessary to guarantee the transparency of the sources of party funding, in order that political parties exercise their activities freely and independently from any constraints, either public or private, and so that the controlling bodies and the people in general may be aware of the resources available to each political party and the means with which these are obtained.

2. Not by chance, financing of political parties and electoral campaigns is a core issue of contemporary democracies, and discussions have been raised, all over the world, surrounding the most adequate model to reach this twofold effect: guarantee that political parties have the required means to exercise their activity and, simultaneously, safeguard that such resources are independently and transparently obtained. Although a sole model does not exist, the current trend in consolidated democracies points toward an increase in the control of the origins of private funding as a means of guaranteeing the referred transparency.

3. In Portugal, after several solutions were tested – which were provided in successive laws, as follows: Decree-Law No. 595/74, dated 7 November, Law No. 72/93, dated 30 November and Law No. 56/98, dated 18 August – the legislator adopted, through Law No. 19/2003, a model conducive to public funding. This model, which is a heavy charge on the State Budget, has been justified with the reason of bearing the «costs of democracy», which the State and the taxpayer have to provide in order to lessen the possibility that unclear situations should arise, which could eventually involve corruption or cronyism.

4. As such, the choice of a model conducive to public funding, due to its associated costs, is only acceptable if it follows two criteria: (1) firstly, the amounts that the State provides for the political parties and for the electoral campaigns must follow standards of reasonability and adequateness, specifically taking into account that such an allocation of resources must depend upon the economic situation of the Country in general, and upon the public accounts, in particular; (2) secondly, the costs inherent to a model conducive to public funding imply the existence of substantial limits to alternative forms of financing or, at least, that these are subject to special controls, which would otherwise lead to a system which could end by suffering, simultaneously, with the characteristic problems of public funding – i.e., the costs to the Public Budget – and with those of private funding – the risks of the occurrence of less than transparent situations.

5. In this context, the changes which are now intended to be implemented through Decree-Law No. 285/X, are not coherent with the objectives expressed at the time when Law No. 19/2003 was approved. In effect, without assuaging the efforts of the taxpayers in the funding of the political parties – which, on the contrary, will even be increased – the demands which intended transparency and the control of private financing of the political parties are now diminished.

6. It is immediately ascertained, under No. 3 of article no. 3, that the limits placed on the value of the financial receivables of the political parties which are not paid by cheque or any other banking means of payment which allows the identification of the amount and its origin, are increased by nearly 60 times, from approximately 20,691.00 euros (50 IAS) to 1,257,660.00 euros (3,000 IAS).

These receivables may originate from membership fees or other contributions from political party members, as well as from fund gathering activities promoted by the parties.

7. It is recognized that the possibility of legislative change which covers a better adequateness to reality should not be excluded from the start, in order not to create obstacles to civic participation and to financial contributions from the citizens.

However, this reflection must not ignore the need to guarantee the transparency of the limits to the non-identified financial funding, now substantially increased, as well as to the clear determination of the boundaries of the nature of the estimated receivables. On the other hand, it is necessary to guarantee adequate tools for accounting controls, in order that unclear situations of party financing should not result from the exercise of civic participation or political militancy activities. Apart from anything else, it is obvious to all that modern technologies offer today new possibilities of identifying the origin of receivables.

8. It is equally ascertained that, with the changes now approved, the limits to the amount of the receivables arising out of fund gathering initiatives foreseen under article No. 6, doubles, from approximately 628,830.00 euros (1,500 IAS) to 1,257,660.00 euros (3,000 IAS).
This alteration becomes yet more relevant due to the change in the concept that determines the object of the limits in article No. 6. Whilst in the legislation currently in force the limits refer to “receivables from fund gathering”, the law now approved refers to the “product of fund collection initiatives”, with the latter defined as “the amount which results from the difference between receipts and expenses in each fund gathering initiative.”

9. Without greater consistency of what is understood by “fund gathering initiatives” and of the respective accounting control tools and, above all, without any limits beyond what is established for the difference between receipts and expenses, it is difficult to foresee the future effects on the nature and dimension of the referred initiatives. Indeed, in the legislation under review, the limit to fund gathering has as a reference, not the receipts, but the difference between the receipts and the expenses, which creates uncertainty as to the reach of the change now established. It would be possible, for instance, for a political party to carry out a large publicity project and deal with it, for accounting purposes, as “a fund gathering activity”, charging it with all the deriving expenses and thus manipulating the limits of the receipts foreseen under article No. 6.

10. It is also ascertained, with respect to electoral campaigns, that in item c) of No. 1 of article No. 16, the limits to the donations by private individuals to political parties are stretched to approximately 25,153.20 euros (60 IAS). As such, the possibility of accumulating this receivable with the “product of fund gathering activities for the electoral campaign”, already foreseen under item d) of No. 1 of article No. 16, together with the changes to article No. 18, raises several issues.

11. In effect, the legislation currently in force establishes, under No. 4 of article No. 18, that the “subsidy may not, in whatever case, overrun the value of the budgeted and effective expenditure, deducted from the amounts accounted for as resulting from fund gathering activities”. It happens that the change now approved simply establishes that “the subsidy may not, in whatever case, overrun the value of the effective expenditure”.
As such this change now allows that, through the accumulation of private funding, resulting from donations by individuals and from fund gathering activities, the political parties may obtain profits in an electoral campaign deriving from State subsidies.

12. This possibility did not previously exist, and requires adequate reflection. The mere idea of profits deriving from an electoral campaign, now strengthened by donations to the parties by individuals, can subvert all the logic of the operation of a political party, based on its non profit characteristics. The premise cannot be excluded of a political party trying to obtain profits from a given campaign to enable it, in a subsequent period, to distribute dividends from that profit, since this will be deposited in a bank in its name.

13. In effect, No. 5 of article No. 18 establishes that any excess funds must be “deposited in the bank account of the respective party, opened for that purpose, in order to be allocated to the subsequent electoral campaign and there duly accounted for”, missing however any further clarification as to the nature and effects of such accounting. It is not clear whether the excess is added to the public funding of the subsequent campaign or, if not, that the excess will be deducted from the public funding. In the latter premise, this may provide an incentive to an increase in campaign expenditure, since the eventual accounting, should it take place, will only be carried out in the following electoral campaign, when the accounts with the public subsidy are offset, thus avoiding, at this time, that the excess obtained be “penalized” by a reduction in the state subsidy. On the contrary, in the premise that the parties may accumulate profits from the campaigns, it could possibly happen that the amounts of state support should be reappraised, due to their being excessive or unadjusted.

14. With respect to the funding of electoral campaigns, it should be also stressed that there is no justification for the increase now approved to the limit of the expenditure established for the second round of the election for the President of the Republic, from approximately 1,048,050.00 euros (2,500 IAS) to 2,096,100.00 euros (5,000 IAS).

15. It should be noted that, in addition to the above referred objections as to merit, the changes made in the final text, after the approval of this legislation in the Plenary meeting, raise great doubts in a juridical/formal point of view.

From the preparatory work it results that the Parliamentary Committee for Constitutional Issues, Rights, Freedom and Guarantees changed, in the text of Decree No. 258/X, the provisions of articles Nos. 4 and 5, and of No. 5 of article No.18 of Law No. 19/2003, dated 20 June.

It happens that, once the voting of a legal document is completed by a Plenary meeting, the Committee responsible for the final drawing up of the text may not, in accordance with No. 2 of article No. 15 of the Rules of Parliament “(...) change the legislative thinking, and should limit itself to perfect the systematization of the text and its style”.

It happens, however, that the new text that the Committee for Constitutional Issues, Rights, Freedom and Guarantees attributed to the provisions of No. 4 of article No. 5 and to No. 5 of article No. 18, is not a stylistic or systematic perfection of its text, but respectively, a substantial change in a provision approved at a Plenary meeting and a direct alteration of Law No. 19/2003 itself.

16. In short, the legislation now approved very significantly changes the rules now in force governing the funding of political parties and electoral campaigns, increasing the limits of the amounts arising from private sources with reduced control, thus prejudicing transparency and contrary to the best international practices in this matter. Such reductions in control and transparency occur without a reduction in the effort of the public funding of the political parties, thus reaching a perverse system that accumulates the difficulties associated to the deficit in the control of private funding with the heavy costs of a system of public funding. These changes seem to lack opportunity especially considering the proximity of several electoral acts and the Country’s current economic and financial situation.

As such, in the terms of article No. 136 of the Constitution, I have decided to return to Parliament, without enacting, Parliamentary Decree No. 285/X , altering Law No. 19/2003, dated 20 June, that governs the funding of political parties and electoral campaigns.

With highest regards,

Palace of Belém, 9 June 2009

THE PRESIDENT OF THE REPUBLIC
Aníbal Cavaco Silva