Concept Paper on Establishing a Campaign Finance Unit in COMELEC

Background[1]

One of the most important functions of the Commission on Elections under Philippine laws is the enforcement of campaign finance regulations.[2] In the Constitution, the Commission is mandated to enforce all laws, including campaign finance laws, relative to election. The Constitution specifically expects the Commission to recommend to Congress effective measures to minimize election spending[3] manifesting a clear state policy to ensure that the amount of money and resources spent by candidates and political parties for elections are kept at a minimum and, by implication, must not be a primary factor for election victory. Together with the declared policy that equal opportunity for public service must be guaranteed,[4] the policy of minimum election spending provides a guidepost for lawmakers in the enactment of campaign finance legislations.

It must be added that under the United Nations Convention Against Corruption,[5] each state party is mandated to consider taking appropriate legislative and administrative measures to enhance transparency in the funding of candidates to elective public office and, where applicable, the funding of political parties.[6] It also direct state parties to adopt, maintain, and strengthen a system that promotes transparency and prevent conflicts of interest.[7] The Philippine Senate has ratified the convention,[8] thus, making it part of the law of the land.[9] This being so, the principles embodied in the convention must also serve as guide for the Commission in performing its regulatory functions.

Under Philippine election laws, we can readily see the importance given to minimizing election spending and in making sure that candidates and parties, rich and poor alike, are on equal footing in campaigning to win in elections. The campaign spending limits are kept low.[10] Likewise, all sorts of reports from candidates, political parties, contributors, and from campaign contractors (printers, broadcast and print media) are required to be submitted to the Commission. The Commission, in turn, is expected to work on the reports to determine whether or not political finance laws are complied with.[11] In order to better ensure compliance with campaign finance laws, the reports should be supported by documents such as receipts, vouchers and other transaction papers, all of which shall be preserved by the candidates and parties, and are considered public records available for inspection by the public.[12]

After every election, these reports abound in the Commission, both at the head office and in its field offices, as candidates usually comply with the reportorial requirements to avoid being administratively fined.[13] Moreover, election winners are not allowed to assume office if they fail to submit their reports.[14] Broadcast and print media establishments that advertise campaign propaganda for candidates and parties also submit their reports to the Commission. In the case of broadcast media entities, they submit, within 5 days from signing their advertising contracts with candidates and political parties to the Commission[15] broadcast logs and certificate of performance, or the log of the actual time for which the advertisements for each of the candidate or party actually appear, are also submitted.[16]

The Omnibus Election Code, as amended by the Administrative Code of 1987,[17] empowers the Commission to “inquire into the financial records of candidates and of any organization or group of persons, motu propio or upon written representation for probable cause by any candidate, organization or group of persons or qualified voter, after due notice and hearing.” It may also “avail itself of the assistance of the Commission on Audit, the Central Bank, the National Bureau of Investigation, the Bureau of Internal Revenue, the Armed Forces of the Philippines, the Integrated National Police of the Philippines, barangay officials and other agencies of the government.”[18] Thus, with all the statements and reports submitted, there is clearly a wealth of information available to the Commission for it to determine whether candidates and political parties are complying with what the law requires. Auditing the financial reports by comparing and cross-checking those submitted by candidates, political parties, donors, and by the contractors, will likely reveal whether or not they have been forthright with the data they reflected in their reports. After examining the documents, the Commission may summon or issue subpoena to candidates, donors, and contractors to require them to clarify nebulous or inaccurate entries in their reports. Should there be clear violation of our campaign finance laws, the Commission can initiate the necessary formal investigation leading to the prosecution of offenders.

Campaign finance however, does not only include campaign donations and expenses. It also covers vote buying and vote selling, as well as the use of government or state resources for political gain. Thus, the Commission is likewise expected to address the issues related to these aspects of political finance as part of its mandate to enforce election laws.

Current Campaign Finance Regulatory practice

The Commission, the sole election management body (EMB) in the Philippines, is the one tasked to regulate campaign finance in the country. However, it is conceded even by the Commission that little, if any, is being done to work on the campaign finance reports submitted to it. There are no regular procedures for auditing the reports, nor are there established protocols in the conduct of inspecting the books of accounts of political parties and candidates. More importantly, there is no permanent unit within the Commission that is specifically dedicated to the monitoring, examination, auditing, and inspection of the campaign finance documents.

By default, it is the Law Department of the Commission that is tasked to receive the reports as well as the one expected to examine them. In so far as the advertising contracts and broadcast logs are concerned, the Education and Information Department (EID) is the Comelec unit that receives them. This state of affairs does not even consider those submitted to the field offices of the Commission. The Law Department, especially after the election, is burdened with myriads of responsibilities related to the conduct of election, and would expectedly not give urgent attention to campaign finance audit work.  The same thing can be said of the EID.

After the 1992 elections, an ad hoc committee tasked to investigate and audit campaign finance reports submitted by candidates, political parties, donors, and campaign contractors, was organized. The investigation work was started, although it was not completed. The documents that were gathered were reportedly lost in the fire that gutted the main office of the Commission in 2007.

In 2010, the Pera at Pulitika (Money and Politics) or PaP coalition monitored the political finance aspect of the election. Conserving its resources with a view to coming up with an effective monitoring and campaign finance reform advocacy, PaP decided to limit its focus on the Presidential and Vice Presidential candidates. Apart from looking at the reports submitted to the Commission, PaP also factored in the actual advertisement placed by candidates in television and radio networks. This, it did by partnering with AGB Nielsen, a private entity that measures viewership of shows and advertisements in mass media. The reports to the Commission were analysed and compared with the data from AGB Nielsen. The analysis initially revealed that the official reports were not consistent with the actual advertisement published or shown on media. This was attributed not only to lack of serious enforcement and to unclear guidelines, but also to the porous laws and regulations governing campaign finance.

Although the Commission and its personnel can theoretically conduct audit and inspection of the financial records of candidates and parties, it does not have the capacity to do what AGB Nielsen did. Of course, the Commission can always partner with AGB Nielsen just like what PaP did, but unless it has a dedicated unit with more or less permanent personnel trained to do the monitoring, as well as the analysis and audit of the reports, nothing substantial can happen.

The Necessity for Establishing an Effective Political Finance Enforcement Mechanism

There is therefore a clear need for reform in the area of political finance, both in terms of improving the legal framework and in establishing a more effective enforcement mechanism. There is a growing international attention on political finance as it is a widely accepted belief worldwide that issues on governance and corruption can very well be linked to the system of political finance regulation that each country has. The recognition in the UN Convention against Corruption of the importance of transparency in the funding of candidates evidences the growing attention given to political finance.  There is an emerging consensus that too much unregulated money in politics has the potential to undermine important democratic values and stifle the growth of emerging democracies.[19] While there are yet no formally established international standards on how a political finance regulation system should be designed, the consistent trend have veered towards transparency and public disclosure, with emphasis on the importance of an effective enforcement mechanism[20] as indispensible requirements. Needless to emphasize, establishing a permanent dedicated unit that will handle political finance matters is absolutely necessary to coming up with an effective enforcement mechanism.

Ideally therefore, and to give political finance the necessary attention it rightfully deserves, a Political Party and Campaign Finance Department within the Commission may be created. It is to be headed by an official with the rank of a Director IV, just like the other departments of poll body. In many jurisdictions, political party and political finance regulations are usually related functions. Effective enforcement of political finance activities are done through regulations of political parties. The Constitution provides as well that it is the Commission’s mandate to register political parties and coalitions,[21] thus, this new department can serve as a Registrar of Political Parties, to which regular reporting by the parties may be made just as corporations are required to submit their annual General Information Sheets (GIS) and financial reports to the Securities and Exchange Commission (SEC). It could also serve as the repository of all campaign finance reports and function as the auditor and inspector of the same reports for the purposes of determining compliance with laws. Under this Department would therefore be a Political Party Division and a Campaign Finance Division.

Unfortunately however, creating a new department may need a new legislation. The existing departments of the Commission are statutory creations. The present law, Section 9, Subtitle C, Title I, Book V of Administrative Code of 1987,[22] lists the departments now in existence in the Commission. The creation of the desired Political Party and Campaign Finance Department must therefore be by law or be incorporated in a political party law and in a law on campaign finance reform.

The Campaign Finance Unit (CFU)

It is in this regard that this concept paper for the establishment of a campaign finance unit (CFU) was presented to the Commission. This paper will not tackle reforms in the legal framework on political finance as that would be another important undertaking, Rather, it proposes the creation of a campaign finance unit within the Commission to operate initially under existing laws while that the desired law reform legislations are being crafted. It will not be an ad hoc body like the task forces that were created in the past; it will be a permanent unit that will function every election. The principal aim of this proposal is to convince the Commission to create and develop a stable of experts in campaign finance monitoring, auditing, inspection and investigation within the Commission who would function on a regular basis in every future election. It can also serve as a transition unit to a department that is hoped to be created under a new law.

This concept can be likened to the Commission’s creation of a Management Information System (MIS) unit in the early 1990’s to digitize voter registration data, as well as to create an electronic data base of election information to aid in the general management of the poll body. The MIS unit was created when it was not yet part of the then existing plantilla structure of the Commission. It was filled with employees detailed from the different departments of the Commission and from staffs in the offices of the commissioners. Eventually MIS metamorphosed into the Information Technology Department (ITD) when the latter was created under Republic Act No. 8436[23] in 1997. The personnel assigned to MIS became the personnel of the new ITD.

The Powers and Functions of the Campaign Finance Unit

The role of the CFU as a unit within the Commission is for it to be the office through which the poll body will perform its constitutional and statutory duty to enforce the laws on campaign finance. It must make sure that election spending is kept at a minimum, that opportunity for public service is equalized, that the required reports are submitted and the data supplied in the reports are truthful, and that the reports are made transparent and accessible to the public. Along this line, the powers and functions of the CFU should be, as follows:

  1. Monitor the fund raising and spending activities of candidates and political parties during election period, by itself, or in partnership and collaboration with civil society organizations who are performing similar monitoring work;
  2. Receive original copies of the contribution and expenditure reports of candidates for President, Vice-President, Senators, and of political parties, other parties and organizations which participated in the party-list system of representation, as well as reports from donors and election contractors, advertising contracts and broadcast logs pertaining to the foregoing candidates.
  3. Receive duplicate copies of the contribution and expenditure reports submitted by other candidates pursuant to law to the NCR Regional Directors, the Provincial Election Supervisors, and to the Election Officers, as well as reports from donors and election contractors, advertising contracts and broadcast logs pertaining to said other candidates.
  4. Compile and analyse the reports as soon as they are received and make an initial determination on the basis thereof as to whether there was faithful compliance by the candidates, political parties, donors, and campaign contractors with the regulations.
  5. Develop and manage a logical filing or recording system for all the campaign finance reports received by it and to digitize the information contained therein as soon as the reports are received.
  6. Create and develop a web site or a web page that may be linked with the Commission’s main website, where the digitized information may be published and made available to the public as soon as they are ready.
  7. Create, develop, and improve reporting templates and recommend the same to the Commission to enable the CFU to obtain all the information it needs to perform its function
  8. Audit all the reports submitted before it and determine on the basis thereof as to whether there was faithful compliance by the candidates, political parties, donors, and campaign contractors with the regulations.
  9. Conduct inspection of the books and records of candidates and political parties, which are required to be kept for a period of three years,[24] summon individuals and issue subpoena in relation thereto.
  10. Make an initial evaluation of complaints of overspending, receipt of contribution from unauthorized sources, or use of state resources for election or during election period and submit its evaluation to the Commission.
  11. Coordinate with the Law Department on the conduct of formal investigation of those who, on the basis of the CFU’s initial determination, may be liable for criminal or administrative offense.
  12. Coordinate with the Commission’s EID as regards providing regular media updates on the candidates and parties’ expenditure status.
  13. Coordinate with the Commission on Audit, the Central Bank, the Bureau of Internal Revenue, the Anti-Money Laundering Council, the National Bureau of Investigation, and other government institutions to enable it to perform its function more effectively
  14. Engage and partner with civil society organizations like the Philippine Institute of Certified Public Accountants, the PaP, and other similar organizations, to achieve the objective of effectively enforcing campaign finance regulations.
  15. Come up with plans and recommendations on how the CFU and the Commission can provide a more effective enforcement mechanism of campaign finance regulations.

The above-functions are intended to make the Commission fully comply with its mandate coming up with an effective campaign finance enforcement mechanism, taking into consideration the international standard of transparency and reasonable disclosure.

Proposed Organization and Staffing of the CFU

The main CFU should hold office at the main office of the Commission in Manila. To give the unit the stature and authority commensurate to the importance of its role, it should be headed by an official to be appointed by the Commission whose rank should be no lower than Director III, and who can be referred to as the Chief Campaign Finance Officer (CCFO). In the absence of personnel dedicated to performing primarily campaign finance regulation functions as listed above, it is suggested that the CCFO be assisted by staff complement composed of existing permanent employees of the Commission who shall be detailed to the CFU. The unit may also be manned or supplemented by staff members from the offices of the Chair and the Commissioners, as these offices have more flexibility in hiring and assigning relatively more skilled personnel to perform the desired functions.

It is also suggested that there be a Regional Campaign Finance Officer (RCFO) in regional offices where campaign finance reports are submitted, as well as Provincial Campaign Finance Officer (PCFO) and a City or Municipal Campaign Finance Officer (MCFO). They shall perform the above functions in so far as practicable. In addition, they are required to submit to the main CFU a duplicate of all the reports they received in their jurisdiction immediately upon receipt.

Considering that functions related to campaign finance regulations are at present formally assigned to the Law Department, the CFU can be placed structurally within said department. Notwithstanding that, the CFU should be supervised directly by the Chairman of the Commission or by a Commissioner who would be assigned to do the job. The Law Department can come in when there arises a need to conduct formal investigation against probable offenders based on the initial investigation conducted by the Unit. The CCFO will have the power to summon individuals or groups or to issue subpoena, upon the authority of the Chairman or the Supervising Commissioner, if deemed necessary.

The technical personnel of the CFU main and in the field should ideally be accountants or with accounting training considering that the bulk of the unit’s work would be to audit and inspect reports submitted to the Commission. The technical personnel will be assisted by administrative staff, which would also be sourced from the other existing offices of the Commission.

Finally, after the CFU is created, a series of trainings and orientations should be conducted to capacitate the officials and staff of the unit in performing their functions. The trainings and orientations will not only include skills development; it will likewise include democracy education in order to imbibe upon those who would compose the Unit the value of their work in regulating political finance and importance of their role in promoting and preserving democracy in our country.

Corruption is inextricably linked to poor campaign finance regulatory regimes. This proposal should hopefully convince the Commission that the institutional deficiencies in its existing campaign finance enforcement structure must not deter it from performing its mandated campaign finance regulatory functions. It is believed that it has enough personnel in its organization that could be prepared, oriented and trained to do the regulatory and audit work. This is something the Comelec can perform in between elections. All that it should do is to decide to act now.

[1] This is a revised version of an earlier paper prepared by Luie Tito F. Guia presented and submitted to the individual commissioners of the COMELEC and to the “en banc” on November 15, 2010, and published as an appendix in the book “News for Sale: Cash Overload, Media Overdrive” of the Philippine Center for Investigative Journalism (2011). The concept paper is part of the output of Libertas for the consortium Pera at Pulitika (Money and Politics), which is a coalition of civil society organizations engaged in campaign finance monitoring and in the advocacy for campaign finance reform in the country.

[2] “Campaign finance,” is a term that refers to financing of actual campaign activities during election or campaign periods. The term “political finance” is a much broader concept that also includes financing of political parties and candidates for activities beyond actually campaigning. It covers fund raising activities and expenses incurred in-between elections, such as maintenance of party organization, party-building activities, and the like. See also Plair, Ryan Patrick, and Laurel E. Shanks. “Political Finance and Corrupt Practices.” Edited by James Hardin Young. International Election Principles, Democracy and the Rule of Law (ABA), 2009: 348-349.

[3] Section 2 [7] Article IX(C), Philippine Constitution

[4] Section 26 Article II Constitution

[5] Adopted by the United Nations General Assembly by its Resolution 58/4 on October 31, 2003

[6] Article 7 Paragraph 3 of the UN Convention against Corruption

[7] Article 7 Paragraph 4 of the UN Convention against Corruption

[8] In 2006

[9] Article II Section Philippine Constitution

[10] Section 13, Republic Act No. (RA) 7166

[11] Section 110, Batas Pambansa Blg. (BP) 881, otherwise known as The Omnibus Election Code of 1985 [OEC]

[12] Ibid.

[13] Section 14, RA 7166

[14] Ibid

[15] Section 6.3, RA 9006

[16] Section 6.2, RA 9006

[17] Section 57 of BP 881, as amended by Section 3, Subtitle C (The Commission on Elections), Title I (Constitutional Commissions), Book V of Executive Order No. (EO) 292, otherwise known as the Administrative Code of 1987

[18] Ibid

[19] Plair, Ryan Patrick, and Laurel E. Shanks. “Political Finance and Corrupt Practices.” Edited by James Hardin Young. International Election Principles, Democracy and the Rule of Law (ABA), 2009: 348

[20] Id. p 352, citing Walecki, Marcin. “Political Finance.” Challenging the Norms and Standards or Election Administration: Politiical Finance (International Foundation for Electoral System), 2007: 75

[21] Section 2(5) Article IX-C, Philippine Constitution

[22] Executive Order No. (EO) 292. Section 9. Staff and Operating Units. – The Commission shall have the following staff and operating units: Office of the Chairman, Office of the Executive Director, Office of the Electoral Contests Adjudication, Regional Offices, Election and Barangay Affairs Department, Law Department, Election Records and Statistics Department, Administrative Service Department, Planning Department, Personnel Department, Finance Services Department and Education and Information Department

[23] Section 26

[24] Section 110 BP 881