Greens announce reform plans for party financing

After the judgment of the Federal Constitutional Court on party funding, calls for a more fundamental reform of party law are becoming louder. On Tuesday last week, Karlsruhe overturned a change in the law by the grand coalition from 2018, which had given the parties more tax money. It is considered likely that the factions of the parties represented in the Bundestag will now try to improve the law.

On this occasion, the political groups could eliminate weaknesses in the current practice, which experts have criticized for years. This is what the Berlin economics professor and accounting expert Regine Buchheim demands: “If the Bundestag now has to change the party law anyway, it should also address the points of criticism that have existed for many years: such as the much too high publication thresholds for party donations, the inadequate control system and the too late publication of the annual reports," said Buchheim WELT.

The SPD, Greens and FDP had already announced in their coalition agreement that they would lower the thresholds above which the parties would have to publish donations. "In the next few weeks we will develop a plan to implement the necessary reforms in the party law," said the parliamentary director of the Greens, Irene Mihalic, to WELT. Large donations should no longer be made public immediately from 50,000 euros, but from 35,000 euros. "As in other areas, we are also working on a major reform backlog of the previous governments," said Mihalic.

For donations to political parties in general – i.e. below the threshold of 50,000 euros – the disclosure obligation has so far only applied to payments over 10,000 euros. All other donations are not published with amount and donor. According to the coalition agreement, the traffic light wants to lower this threshold to 7,500 euros. It would still be unusually high in a European comparison.

In a recently published article, Buchheim advocated a limit of around 3,000 euros. She referred to a study by the EU Parliament from 2021, according to which the average limit for immediate disclosure in the 27 EU countries was 2400 euros. The professor also complains that so far the names of lenders have not had to be disclosed. According to Buchheim, “creditors could exert significantly greater economic pressure when the party is in an economically difficult situation or during upcoming election campaigns” than donors.

Reports by the Council of Europe’s anti-corruption alliance Greco (Groupe d’États contre la corruption) have repeatedly denounced the fact that the German rules on party financing appear opaque and antiquated compared to other European countries.

As far as the transparency of party financing in Germany is concerned, according to a report in March 2019, Greco was “disappointed by the little progress”. The local system "does not meet European standards".

In her essay, Professor Buchheim also took up Greco's criticism of the mechanisms with which the statements of account are checked in this country. In them, the parties disclose their finances every year. From the economist's point of view, the test mechanisms are "to be classified as deficient".

Buchheim criticizes that while capital market-oriented companies in the EU have to publish their accounts after just four months, the parties' reports are usually only made public 12 to 18 months after the end of the reporting year. In their view, political parties entitled to state subsidies "due to the special public interest" and "in view of the ongoing digitization also in the field of auditing" should be able to publish within nine months.

In addition, it is still permitted in Germany today for the external auditors who examine the statements of account to be members of the party whose finances they are checking. Buchheim criticizes this practice, which is illegal in some other countries, as "completely incomprehensible". In contrast to large corporations, there is no regular rotation of the auditors in order to create the necessary distance between the auditor and the auditee.

In the case of so-called "companies of public interest" such as credit institutions, insurance companies and listed companies, on the other hand, the auditor or auditing company must be changed after ten years; this rule has been in effect since 2016. "In view of the importance of the principle of transparency, it is incomprehensible why the level of auditing and security at parties falls significantly short of the requirements for auditing corporations," writes Buchheim.

In fact, among the established parties in the Bundestag, only the CDU changed auditors less than ten years ago. At the CSU, on the other hand, a man recently signed the audit certificate, which has been examining the CSU finances since 2002, for two different companies. One of the youngest examiners of the SPD's annual reports was a man who has been scrutinizing the party's figures since 2010 - for different companies.

For the Greens, on the other hand, auditors from the same group of companies from the Rhineland have been responsible since 2003. The FDP has been loyal to its testing company since 2004. For years, one of the people responsible for them there was a man who had been self-employed since 1997 and had been checking the FDP finances - and was himself a member of the FDP. Finally, according to its own statements, the left recently changed the examiner – after it had been the same person for 21 years.

When asked, the parties concerned pointed out that their practice was in line with the provisions of the Political Parties Act. The FDP also referred to the recommendations of the Institute of Public Accountants (IDW), which rejected an external rotation with good reason.

IDW boss Klaus-Peter Naumann does in fact see fewer shortcomings than Buchheim in the current practice of examining parties. "I don't see independence being compromised for a simple party member," he says. Naumann is also critical of more frequent rotation of examiners. "Because according to the party law, the auditors only have to check at least ten subordinate regional associations such as district associations each year, they only have a relatively limited judgment," says Naumann. "An examiner who has been there longer and examines different regional associations has a better feeling for what is going on in the other areas."

Buchheim, on the other hand, maintains that the number of sub-associations examined should also be increased. And she believes that "digitization also offers new and effective options for examining parties".

From the point of view of both Buchheim and Greco, the lack of rules on independence and rotation are also questionable because the second existing examining authority is the President of the Bundestag, currently President Bärbel Bas (SPD). As in 2013, the Bundestag administration only has a staff of ten people to carry out these checks, currently supplemented by two colleagues who work "temporarily or on a temporary basis", according to a spokesman for Bas. Most recently in 2019, Greco had criticized the staffing as insufficient. A spokesman for Bas pointed out that it is "regularly" the case during budget consultations that "a large number of requested positions are not approved".

According to the traffic light coalition agreement, it is actually intended that the Bundestag administration should be “better staffed and financially equipped” so that it can better fulfill its “supervision and control function in the areas of transparency and party financing”.

The SPD now also referred to the Bundestag administration for questions about the lack of rotation of the examiners. If there are doubts about the quality of the test, they can commission a second expert themselves. However, it is unclear whether this has ever happened in the past 20 years. The Bundestag administration left a question unanswered.