GOLOS analyses unlawful foreign campaign financing

Election Campaign Financing for the Election of the Heads of Subjects of the Russian Federation

The results of the study clearly show that the system of election fund financing for gubernatorial candidates is sorely in need of transparency. Financing mechanisms used by parties and candidates prevent voters from gaining full access to information about the behind-the-scenes sponsors of individuals vying for positions of power.

Firstly, such obfuscatory mechanisms allow candidates with administrative resources to use the budget and public funds for their campaigns. This violates the principle of the political neutrality of the state as well as the principle of the equality of candidates, and, as a result, distorts competition in elections.

Secondly, the financial transparency problems that we observed allow many candidates and parties to illegally receive funds from abroad. In fact, last year some regions were already governed by “foreign agents.” Judging by this year’s continuing trend, the number of re-elected governors with foreign donors will increase after Election Day on September 13. The biggest beneficiaries of foreign funds are the candidates nominated by the ruling “United Russia” party and the ruling party itself.

Unfortunately, we could not establish the point of origin for a large portion of the donations. In particular, the real owners of closed joint stock companies are virtually unknown. Moreover, funds close to political parties that accumulate a significant portion of financial resources are not obligated to disclose information to voters about the real donors.

Donations by individual persons often perform the function of hiding the identities of the real sponsors: in the information published by the election commission there are no donor names, and the data that can be obtained from the parties’ financial statements shows that funds often comes from people whose financial situation makes it impossible for them to donate such large sums of money.

The findings of the study suggest the following recommendations:

• It is necessary to make changes to Russian electoral law, specifically in order to close the loophole enabling the financing of election funds by companies with foreign ownership or companies belonging to the Russian Federation, to the subjects of the Federation, or to municipalities.
• When publishing data on the legal entities making campaign donations, the true owners of the companies must be disclosed. This same principle should apply to closed joint-stock companies.
• When publishing information on the sources of election fund financing, it is imperative to indicate the individual tax number of the legal entity. Accidentally identical company names might otherwise hinder the work of establishing the identities of the real sponsors.