Financing of Political Parties and Electoral Campaigns 
in Republic of Macedonia

Farije ALIU

State Commission for Prevention of Corruption, Skopje

Abstract: Political party in the Republic of Macedonia began to operate after independence and the adoption of the Constitution in November 1991 and has since become an integral part of the political scene and the data from the Central Registry of the Republic of Macedonia registered political parties more than 50 political parties active in the current system. The electoral system in the country is set according to the proportional model where direct and free elections by secret ballot to elect members of Parliament and members of the municipal councils and the City of Skopje for four years, while according to the majority model is the selection of the President of the Republic for a term of five years and the election of mayors of municipalities and the City of Skopje for four years. The legal framework for the financing of political parties in the country is well developed. The main law governing the financing of political parties and their supervision law on financing of political parties and the amendments to the same law1. The provisions contained in the law is comprehensive, addressing the financing of the regular activities of political parties and their supervision and demonstrate ensuring transparency and accountability in political financing and a ban on anonymous donations and donations from abroad and determine the rules for cap on private donations and prohibiting quid pro quo agreements2. Some provisions relating to the financing of political parties included in the Law on Political Parties3 and certain provisions governing the various supervisory authorities, in particular the Law on Prevention of Corruption4 and the Law on State Audit footnote5. The basic law that regulates elections is the Electoral Code6. Under the provisions of the Electoral Code the political parties and election campaign organizers are required to submit financial reports to the authorities to ensure respect for the principles of transparency and accountability and are made public. The law does not provide for submission of financial reports by donors of political parties. This is considered a disadvantage of this law and expressed doubt that allowing circulation of funds from illegal sources in the financing of election campaigns. Electoral Code prohibits election campaign financing by funds from the state budget. However, the organizers of the campaign receive compensation from the state budget if they won at least 1.5% of the total vote7. Also political parties, their electoral campaigns financed from private sources in the form of membership fees, donations from individuals and legal entities8. Despite the legal aspects on transparency, general public perception is that in a country where the economy in cash still plays an important role, transparency is generally low in practice and that political parties and candidates for elections receive and spend much more money than what is officially shown in the financial statements. Higher spending funds still dominate especially in the area of paid political advertisements. Transparency in political financing provides elected officials and leaders of political parties to be responsible for their finances and facilitate the monitoring of their integrity. Based on current practice can be said that despite the controls performed financial activities of political parties by the state institutions, punitive measures are not implemented despite the apparent state of inconsistency regarding the practice of financial reporting and transparency. In this scientific article is exhausted comparative and empirical methodology, which include an assessment of source funding for political parties and financing of election campaign for local elections in 2013, parliamentary and presidential elections in 2014. The methodology involves checking the legal framework as it is applied in practice in terms of transparency of political financing, compared with internationally recognized principles. By getting thorough information provided empirical evidence to create a clear picture in areas that require reform. Based on empirical data and results of research conducted within this work it can be concluded that the functioning of the state and public oversight over the financing of election campaigns of political parties in Macedonia is more pronounced within the law than in practice. There is a large discrepancy between the legal and factual situation.

Keywords: political party, financing, electoral campaign, transparency.

1. 1. INTRODUCTION

This article was prepared after the presidential elections for the President of the Republic and early parliamentary elections for Members of Parliament in 2014.

In the period from 1991 to 2014 held six parliamentary elections, four presidential elections and six local elections. All the mentioned elections were held in very high political competitiveness.

During this entire period, the research by Transparency International Macedonia9 there is a perception “that political parties do not work very transparent, as during the election period and the regular operation, then their operation there is a high degree of corruption” which data is recorded in the whole world that the most corrupt organizations or institutions are just political parties10.

Based on legal provisions on the one hand political parties receive direct and indirect state subsidies and the other political parties rely on citizens to support and hence the need for the citizens or the public to know where political parties and candidates receive their revenue and how they are using (wasting). This means that transparency in political financing will allow the citizens to be well informed and make choices about which candidate will vote in elections, while elected officials, parties to enable them to act responsibly funds and help in monitoring its integrity.

In Macedonia, although a lot of talk about politics and political parties virtually no public debate on the specific topic related to political financing. This may be due to the fact that political influence is widespread and control every segment such as the economy, legislation and the media11. These findings in the future will be used for reforms in the legal framework to facilitate and implement transparent practices in the financing of political parties.

The purpose of this work is still to focus on the process of financing political parties and electoral campaigns.

1. 2. DEFINITION, ESTABLISHMENT AND IMPORTANCE OF POLITICAL PARTIES

Political parties are certain forms of social organization and should not be confused with associations, foundations and social clubs. Well-known definition of political parties comes from political scientist Antony Downs, who writes12: “A political party is a team of people looking to control the governing apparatus by acquiring mandates on regular elections.” Also Italian scientist Giovanni Sartori, political party defined as13: “Any political group identified with an official label / name that appears during the elections and has the ability, through elections to decide on candidates for public office.” This definition contains the minimum requirements necessary to identify the party koi intend to carry out political activities.

An organization to define a political party has to meet certain political and legal criteria. The need to be able to draw up a program on public policy and expanding its activities in all areas of public life, to have regular participation in the electoral process with the candidates and their political program in order to win more parliamentary seats short of a majority needed to rule. This means that a political party has to have an independent organization, free and democratic, constitutional and legal provisions of the country and regulated by the statute.

Although these definitions show some differences in understanding of the political parties, they all emphasize the participation in the elections and the interest to get public services and mandates as basic elements that characterize the political parties.

Under its definitions political parties can be seen as permanent associations of citizens, based on free membership and program their team leaders and seek through elections to receive key political positions in the country, in order to materialize the proposals for solving outstanding issues.

Politics is the process by which people organize themselves to each other for their life in society. Every citizen can participate in this process- through free access to information, dealing with political issues and openly manifest their opinions on public issues, by building expectations through proposals or requests without fear of repression during the vote in the elections, by involving civil society or political party or candidacy through democratic elections.

In modern societies, the process of raising the awareness of political opinion is a polymorphic process, because you need to include mass media, social organizations, associations, citizen initiatives, religious communities and other modern forms - electronic communication over the Internet, messaging (SMS), Facebook, etc. The politics in a democratic country there is a need for ideas and values that will set goals and standards in political organizing, free social organizations, who know the interests of citizens, they will unite and communicate with government and party institutions in order identify interests, to gather suggestions, discuss and then present political organization to make appropriate decisions and to implement that will actively contribute to the functioning of political institutions. Freedom, justice and solidarity are the basic principles that serve as a guide to the political organization of society.

In order to successfully participate in the political process and to contribute to the consolidation of democracy, political parties have to demonstrate some capacity or to realize the following activities: articulate common social interests, recruit political stance, to foster political future generations to select people and present as candidates for elections, to develop political programs which they are campaigning to obtain the consent and support of the majority, Promote political socialization and involvement of citizens, to participate in elections in order to occupy political positions and to organize the government.

They articulate a common social interests recruit political attitude and cultivate future political generations, and people choose to present as candidates for elections, develop political programs which they are campaigning to obtain the consent and support of the majority and promote political socialization involvement of citizens, organized government in the elections in order to occupy political positions.

Based on the law political party is a voluntary organization of citizens established for the protection of political, economic, social, cultural and other rights and convictions for participation in the process of making political decisions on participation in government14. Before the Constitution and laws are the same and are guaranteed the freedom and independence of action in determining their internal structure, goals and selection of democratic forms and methods of action.

Political parties are organized and operate in the territorial principle, must be established and act in the state government (legislative, executive and judiciary) and public enterprises, public institutions and other organizations established by the Republic of Macedonia, municipalities and the City Skopje15. They may be members of international organizations and to cooperate with foreign political parties, while political parties registered in other countries cannot act on the territory of the Republic of Macedonia.

Establishment, operation and financial and material operations of political parties is public. A political party may establish at least 1,000 Macedonian citizens who have voting rights and who gave their signature to the establishment of only one political party16. Member of a political party can be any adult and capable of working citizen of the Republic of Macedonia to give a signature for voluntary membership in the political party. They are based on the founders of the Assembly which adopted a decision on establishment, program, and statute and elect its officers17. The decision on selection of the bodies of a political party should be referred to the personal name of the president of the political party or name of the person who represents the political party and the name of the person or persons responsible for financial operations. The decision to found a political party shall contain18:

• - Name and abbreviated name of the political party headquarters of the political party;
• - Behalf of the authorized person to perform the duties of the entry in the Court Register and the names of the founders, personal identification number and address with permanent residence in the country.

1. 3. THE POLITICAL AND ELECTORAL SYSTEM IN THE COUNTRY

Republic of Macedonia’s secession from the former Yugoslavia and after the adoption of the Constitution in November 1991 considered the new democratic and transitional country. In recent years this country has gone through significant changes, such as political pluralism, private property and competitive economy.

Political parties began to operate in 1991 and became part of the political scene, so by 2014 held six parliamentary, presidential and four six local elections.

The political system in the country consists of the President of the Republic, members of the Assembly, municipal councils, the Council of the City and the mayors and the City.

In our country the political system of parliamentary democracy is established under the Constitution of 1991, which sets out the basic principles of democracy and guaranteeing fundamental rights and freedoms of citizens. The President is the Supreme Commander of the Armed Forces of the Republic of Macedonia and their rights and duties on the basis and within the framework of the Constitution and laws in the country. Parliament is a representative body of the citizens and the legislative power in the state. The Council of municipalities and the City Skopje ‘s Council is the representative body of local and legislative body that adopts general legal acts in accordance with the law (statute, budget) creates public services within the municipality, etc. The mayor of municipality is an executive body, is the head of the management and administration of local authorities, represents the municipality controls the legality of Council regulations and performs other duties in accordance with the competences provided by law.

The electoral system in the country is established by19: Proportional system and Majority system.

According to the proportional system, in the Parliament are elected 123 deputies for a term of four years, of which 120 are elected proportionally and three are elected by majority system in one round and one member of Parliament from the three constituencies in the Diaspora (Europe and Africa, North and South America and Australia, and Asia). Based on the law in the Republic of Macedonia is divided into six districts and each district elects 20 members of Parliament20. In constituencies the number of voters may vary from minus 5% to plus 5% compared to the average number of voters in the constituency with the exception of the constituencies in the Diaspora21. According to the proportional system, members of the councils of the municipalities and the municipality of City of Skopje are elected in term of four years22.

According to the majority model is the selection of the President of the Republic for a term of five years where the entire territory of the country together with diplomatic - consular offices of the Republic of Macedonia in Europe, Africa, North and South America, Australia and Asia is one constituency23.According to the same model of electing the mayor of the municipalities and the municipality of the City Skopje for four years24.

President of the Republic, deputies, council members and mayors of municipalities are elected in general, direct and free elections by secret ballot. Nobody can call the voter to responsibility for voting, or ask him to say who they voted for or why he has not voted25.

1. 4. REGULAR FINANCING OF POLITICAL PARTIES IN REPUBLIC OF MACEDONIA

The term financing of a political party shall mean the financial activity of the political party (all financial transactions are carried out on the account and property of the party) related to provision of financial resources (revenues) for its actions and operations, as well as non-financial donations (donations of equipment, donations in the form of professional services and other in-kind donations)26.

Money is an important element for the functioning of the democratic system. We know that political parties and candidates need resources to build strong organizations and for providing public support. However the financing of political parties without adequate regulation rule could seriously undermine democracy.

The manner and procedure of providing financial resources, availability of funds for ongoing work and activities of the political party, as well as the financing and control of financial and material operations of political parties are regulated by the law on financing political parties.

Political parties can not perform economic activities, they are non-profit organizations where the funds for its operations and activities may acquire under the conditions and manner specified by law27.

Funding of political parties is publicly performed transparently, with full insight of the citizens and the competent authority for controlling the financial and material operations28. Every citizen or a member of a political party has the right to equal access to the inspection of the financing of the political party. Also every citizen or member of a political party has the right to stop or report an act constituting abuse or violations of financial and material operations of a political party29.

Regulations relating to the financing of political parties are different in every country. But in almost all democratic countries can be seen that the increase in costs that are necessary for their functioning. There are several reasons for this trend. First, today more than ever the success of political parties depend on advertising which is not only costly, but also the most effective way the electorate be familiar with the objectives and program of the political party. If in the past functioning of political parties depended on volunteer work of its members, today they are more dependent on the involvement of professionals, marketers, agencies and political consultants in exchange for their services receive compensation from the political parties. Also in the period between election cycles becomes inevitable for political parties to spend funds in order to maintain its presence in the media. That is why the political parties to use all available means to maintain their position. But sometimes, when legal means are exhausted, parties are reaching and illegal (corruption) methods. For these reasons, in recent years, the biggest corruption scandals in European countries not bound to the personal abuse of public powers but are related to the illegal and non-transparent financing of political parties30.

Parliamentary democracy cannot be imagined without the existence of political parties that represent the means by which citizens articulate their interests in the institutions in the system. The ultimate goal of any political party is by participating and winning election to take over the country. But to realize this goal, political parties often reaching corrupt methods. Considering the key position of political parties in the political life of a society, the question of the existence of corruption in them is of utmost importance. The latest survey by Transparency International Global Corruption Barometer 2013 Report31 which was conducted on 114,000 participants in 107 countries around the world, which measured the perception of citizens about the level of corruption in different segments of social life, it was determined that in most countries citizens believe that the level of corruption is highest in the political institutions of their country.

As the countries of the region 72% of respondents in Croatia32 and Albania33 believe that political parties in their country are corrupt, 75% of respondents in Kosovo34, 76% of respondents in Bulgaria35, 77% in Bosnia and Herzegovina36, 80% of respondents in Serbia37 and 51.4% of respondents in Macedonia38. This perception of corruption that exists in political parties is not a decision just Balkan country in transition, but is widespread in almost all countries worldwide. For example, USA39 citizens believe that the 76% is a corrupt political system.

1. 4.1 Sources of funding of political parties

The sources of funding of political parties and their expenses are public and transparent and subject to control by the public authorities responsible for financial and material operation.

Political parties have the right to ownership of real estate (business premises), of movable property (equipment, supplies, vehicles and other movable property) and funds required to achieve the objectives and execute the activities set forth in the statute of the party and by law40.

Based on the law on financing of political parties, political parties are financed from public resources and private sources of income41.

1. 4.1.1 Public sources of income of political parties

Public sources of funding of political parties funding provided by the State Budget and budgets of municipalities and the City of Skopje. Total assets for annual funding of political parties in the amount of 0.06% of the total revenues of Budget that need to use them exclusively for the realization of its objectives set out by law, statute and other regulations of the party42. Also from the state budget and provide funds totaling 280,000 euros in denars for annual funding of Research and party analytical centers formed pursuant to the law as part of the internal organization of the political party43. Funds in the amount specified in the budget plan of the Ministry of Justice for each fiscal year and allocated in accordance with the law.

The funds for the financing of political parties, in the amount of 30% provided from the State Budget are allocated equally to all political parties that won at least 1% of the total number of votes of the voters who voted in the last elections held for Members of Parliament, on the level of the Republic, or the last local elections in the local government, while the funds for the financing of political parties, in the amount of 70% provided from the State Budget are allocated to political parties whose candidates elected Members of Parliament at the last held parliamentary elections, in proportion to the number of elected member of the Parliament and political parties whose candidates have been elected councilors in the last local elections, in proportion to the number of elected councilors44. All these funds are allocated to political parties with a decision of the Minister of Justice.

For transparent distribution of funds, the State Election Commission to the Ministry of Justice submitted a list of political parties that won at least 1% of the total votes of the voters who voted in the last elections held for members of Parliament, at the level of the whole country, or the last local elections in each municipality and in the City of Skopje on a municipal level. Also the State Election Commission to the Ministry of Justice submitted a list of political party on the number of elected Members of Parliament at the level of the whole country and the number of elected councilors at the last local elections for the whole country.

In case the Member of the Parliament is elected as candidate of two or more political parties, among them are divided into equal parts, unless amicably political parties agree otherwise and if the mayor or councilor was elected as candidate of two or more political parties, funds are shared between them in equal parts, unless the parties pre-election agreement have agreed otherwise.

1. 4.1.2 Private sources of income of political parties

Public sources of funding of political parties should not be the only and main source of primary income of political parties. Therefore, the parties should develop the ability to create appropriate means of income. This is an essential task of any political party and should be taken into account when structuring and divide tasks within the party and when projected budget of the political party. According to the law, political parties are financed by private sources of income. Private sources of funding of political parties by45: membership fees, donations, gifts, donations, grants, sponsorships and legacies, sales of promotional and advertising material and own revenues according to the law.

The original assets as revenues from fees is considered a regular amount of money that member of the political party paid annually in accordance with the acts of the party. The amount of the membership fee for a period of one year each member individually cannot be higher than the average salary in the Republic in the previous year, which publishes the State Statistical Office46.

Funds from membership fees should be a large part of the revenue of the party, which are not just financial outcome, but also improve the integrity of the party and oblige the party leadership to be transparent to its members.

Source revenues from donations are controversial sources of funding of political parties. This is especially for large parties that receive a significant portion of its income through donations. The concern is that the main economic donors could try to commit political influence in this way, and this is contrary to the fundamental principles of democratic equality. Political parties must respect the principles of the Foundation Konrad Adenauer (KAS), which is always and everywhere in the world, is committed to promoting human rights, democracy and its values and practices, and to promote institutions to promote the rule of law and the principles of market economy.

These revenues political parties may receive in the form of money, material assets or services. Non-monetary donations can receive if they, according to their status, can be used for their activities.

As a donation, in accordance with the law, is considered the provision of free services to the political party and the provision of services to political parties paid by a third party. The service provider is obliged to inform the political party of the value of the service provided. Also donated is considered the sale of goods and provision of services to political parties at prices below market. The seller of goods or service provider is obliged to inform the political party of the market value of the goods sold or the service provided. The difference between the market value and the price paid is considered a donation47.

The total amount of the individual donation shall not exceed the amount of net pay of 150 legal entities and 75 net salaries of individuals in the Repy90ublic48, paid in the previous month and published by the State Statistical Office. This amount should not be cumulated more than once a year. If the amount of the donation is greater than the amount indicated above, a political party shall not use and shall immediately and not later than 15 days from the date of receiving the donation, the difference between the allowed value and donated back to the donor. In case if you cannot determine the origin of the donation, the political party shall immediately, and within 15 days of receiving the donation, the donated value to shift the Budget49.

Political parties are required to keep a register of donations in a special form, which by the Minister of Finance Regulation regulates the content and manner of keeping the register of donations. The register of donations shall contain the following information50: name or the name of each donor separately; data paid donations to entities directly or indirectly related to the political party or under its control; type and value of the donation and the date of receiving the donation.

Political parties shall publicly on its website to publish the register of donations every six months for the past six months, within 15 days of the expiry of the six-month period or in another appropriate way to make it accessible to the public51. If the political party be transferred funds from donations, they are sold by judicial auction and the monetary value realized from the auction is transferred to the account of the political party52.

Political parties cannot acquire other types of income, except the following which are provided by law53: interest on deposits placed in the bank; rent or lease of the premises of the party; revenue from the sale of printed, audiovisual and digital publications and promotional materials and other publications that is put the name or any of the symbols of the political party, as well as royalties and revenue from the sale of tickets for attending events organized for political purposes, the ticket must be placed name or any of the symbols of the political party, loans are important but problematic source of revenue for financing political parties and send them into debt, and many parties debt is a serious problem because it is not easy to reduce the debt by legal means. Political parties should avoid this source of funding because in any case they need to legally calculate their liabilities to credit institutions.

All these revenues political parties should be used exclusively for carrying out activities in accordance with the law and regulations of the party and must be used in order to achieve a profit.

Political parties in accordance with the law cannot be financed by54: Governments, international institutions, bodies and organizations of foreign states and other foreigners; State and local authorities out of the funds provided by the State Budget, except for the funds provided by the Law on financing political parties and election laws; public institutions, public enterprises, public funds or other legal entities with state capital; public enterprises, public institutions and public funds established by municipalities; enterprises that have at least 20% state capital, public bodies and institutions, including those that have initiated the process of privatization; private companies that at the time of giving a contribution to a political party performing public services for state authorities or public institutions, enterprises and funds in an agreement; association of citizens (NGOs), religious communities or religious groups; means of joint ventures where the dominant owner is a foreign investor and anonymous or unidentified sources55.

If the donation comes from listed entities, political parties shall, within ten days of receipt of donation to inform the donor for refusing the donation and the same to return within 30 days56. Also political parties must not have assets in foreign banks or other financial institutions outside the Republic of Macedonia57.

Political parties are banned from performing any pressure on legal and natural persons in order to gather funds for the political party. Also forbidden is the promise of preferences and personal benefit or the benefit of a legal entity of any kind to the donor of the political party. Any person if there is knowledge for these abuses is obliged to inform the State Commission Against Corruption, which further prolongs the procedure by submitting to the competent authorities if it concludes that there is a criminal or misdemeanor liability.

1. 5. FUNDING OF POLITICAL PARTIES DURING ELECTION CAMPAIGN

According to the Electoral Code regulates the manner, conditions and procedure for election of the President of the Republic of Macedonia, election of Members of Parliament, members of the municipal councils and the Council of the City of Skopje and election of Mayor of the municipality and the mayor of the city of Skopje, as well as the manner and procedure of registering the right to vote, running the Voters’ List, determining the boundaries of election districts and determining, changing and publishing the polling stations, conditions for the operation of polling places and election campaign financing of political parties through public funds and donations from legal entities and individuals58.

President of the Assembly makes a decision for elections. From the day the decision to call an election until the completion of election of the President of the Republic of Macedonia, Members of Parliament and government of the Republic of Macedonia in accordance with the election results, and the date of the decision to call the elections until the completion of elections for mayor or council members, or till the council of municipalities and the City of Skopje cannot59: to dispose of budgetary funds of the Republic of Macedonia means the budgets of municipalities and the city of Skopje, public funds and public enterprises and public institutions or legal entities with state capital; to start construction by the budget or public funds or assets of public companies and other legal entities managing state capital of new infrastructure facilities such as roads, water supply, power lines, sewers, playgrounds and other facilities or facilities social activities, schools, kindergartens and other facilities, unless for the purpose previously secured funds from the budget, or works for the program adopted on the basis of law in the current year and to carry out payments of salaries, pensions, social benefits or other payments and material benefits from the budget or by means of public funds are not regular monthly payments or transfers all annual and one-off payments or transfers from the budget or by means of public Funds nor sale of state capital or to sign collective agreements.

Also in the period from 20 days before the start of the election campaign until the completion of election of the President of the Republic of Macedonia, Members of Parliament and government of the Republic of Macedonia in accordance with the election results and the completion of the elections for mayor or members of the council, or till the council of municipalities and the City of Skopje cannot: to pay subsidies that are not regular monthly payments and to hold public events marking the start of construction or commissioning of facilities with funds from the budget or public funds, or assets of public companies or other legal entities managing state capital in infrastructure such as roads, water supply, power lines , sanitation, sports courts and other facilities or facilities for social activities schools, kindergartens and other facilities.

Under the ban on holding public events does not mean giving in particular a public statement of a public official or candidate for public office for a meeting, interview the media debate on media or answer a reporter’s question.

From the foregoing, the Ministry of Finance is obliged all budgetary payments, except regular salaries, pensions and utilities, to publish publicly on the web page in a separate basis for budget expenditures in the election period, and two weeks after the announcement of election campaign finance report filed which will be included review of all planned and realized revenues and expenditures of the budget item by item, from the beginning of the fiscal year to the date of submission of the report which is published on the website of the Ministry of Finance.

Electoral processes can be under undue influence when substantial and undercover amounts of money given to political parties and candidates of organizations with their own political agendas. Political parties and candidates can distort the electoral process as it would reach for buying votes rather than focusing on the quality of their electoral messages. The quality of government is seriously compromised when elected politicians making decisions that benefit those who financed their rise to power, not the broader public interest.

The single most important step aimed at regulating political finance and the elimination of any excessive influence of money is imposed by disclosure. Without disclosure, you cannot know how much money circulating in the political system, where they come from or who are given. Without disclosure, cannot be applied to the upper limit of donations and spending money, nor can it prevent illegal money to find a way to campaign coffers. The lack of disclosure bolsters suspicions that donors buy favors from politicians and undermines public confidence in the clean and legal resources and political representation.

Public funds for conducting elections shall be provided from the Budget and managed by the State Election Commission. The funds intended for the elections two thirds to cover costs related to the election activities of the bodies for conducting elections and one third of the funds for the conduct of elections serves to cover part of the expenses incurred by participants in the election campaign organizers whose candidates have been elected, while for local elections shall be provided from the municipal budget and the City of Skopje and managed by the Municipal Election Commission or Election Commission of the City of Skopje and means of election materials are provided from the Budget and managed by the State Election Commission60. In case of inability to provide funds for the local elections due to blocked bank account by the municipality and the City of Skopje, the funds for the local elections shall be provided from the Budget and managed by the Municipal Election Commission or Election Commission of the City.

The election campaign must not be financed61 by the State Budget, the budgets of municipalities and the City of Skopje, funds from public enterprises and public institutions, funds from citizens’ associations, religious communities, religious groups and foundations, funds from foreign governments , international institutions, bodies and organizations of foreign states and other foreign entities, funds from joint ventures where foreign capital is dominant and funds from unidentified sources, except the funds in the form of62: reimbursement elections have participants in the election campaign whose candidates are elected candidate for president of the Republic, Members of Parliament, Members of Council, candidate for mayor in the amount of 15 denars per vote, reimbursement elections have participants in the election campaign whose candidates not selected candidate for President of the Republic, a candidate for member of parliament, a candidate for member of the council or mayoral candidate in the amount of 15 denars per vote won at least if 1.5% of the cast votes at a national level, the electoral district or municipality.

Also the payment of the cost of election campaigns by third parties, such as non-governmental organizations (NGOs) affiliated with the parties, is not stipulated in the legal form and they (NGOs) are not subject to notification or oversight, and thus opens up a possible legal loophole for avoiding the rules for financing election campaigns63.

The reimbursement of election expenses will be paid from the State Budget or the budget of the municipality and the City of Skopje no later than three months after the filing of the financial report on the election campaign on the basis of the report of the State Election Commission for the elections.

The reimbursement of election expenses is determined by a decision of the Parliament and by the Council Decision of the municipalities and the City.

Table 1. Compensation for the expenses of the participants in the election campaign whose candidate list is elected President of the Republic of Macedonia for 2014 and the participants in the election campaign whose candidates not elected candidate for president of the Republic of Macedonia

Source: Official Gazette, no. 104/July 2014.

Decision on determining the compensation of the costs of participants in the election campaign whose candidate list was elected President of the Republic of Macedonia for 2014 and the participants in the election campaign whose candidates not selected a candidate for President of the Republic of Macedonia.

It is evident from the table no.1 that the amount of 8,023,650.00 denar paid for the reimbursement of the expenses of participants in the election campaign whose candidate list was elected President Georgie Ivanov of Macedonia, on the basis of 534,910 votes, while the remaining amount is paid for compensation of participants to other candidates in the election campaign whose candidates were not elected president of the Republic of Macedonia.

Table 2. Compensation for the expenses of the participants in the election campaign whose candidates have been elected Members of Parliament and the participants in the election campaign whose candidates are not elected members of Parliament

Source: Official Gazette, no. 104/July 2014.

Decision on determining compensation for the costs of the participants in the election campaign whose candidates have been elected Members of Parliament and the participants in the election campaign whose candidates are not elected members of Parliament.

As described in table no. 2 of ordinal number 1 to 6 is paid compensation for the expenses of the participants in the election campaign whose candidates have been elected Members of Parliament, while the number 7 to 8 paid compensation of expenses participants in the election campaign whose candidates are not elected members of Parliament.

Participants in the campaign are required to register tax number and open a separate bank account in a bank through which all financial transactions related to the election campaign must realize.

In accordance with the legal provisions of the electoral campaign of political parties may be financed by64: political party’s membership, donations from individuals with 5.000 euros in denars and donations from legal entities in the amount of 50,000 euros in denars.

Donations from individuals and legal entities can be in the form of money, goods and services whose value does not exceed the stated amount. If the amount of the donation is greater than the amount specified in the election campaign participant shall, within five days of receiving the donation, the difference between the allowed and donated value to shift in the Budget. In case if cannot determine the origin of the donation, the participant in the election campaign is obliged within five days of receiving the donation, the donated value to shift the Budget65.

A donation may be considered giving free services to participants in the election campaign and the provision of services to the participant in the election campaign that pays a third party and the sale of goods or provision of services to the participant in the election campaign at prices below those in the market. The seller of goods or service provider is obliged to inform the participants in the election campaign of the market price of the goods sold or the services provided and that his invoice. The difference between the market value and the invoiced value is considered a donation. Public companies are required to offer equal prices for their services to all participants in the campaign through the official price lists. Also broadcasters and print media discounts in the prices they provide for political advertising on election campaign participants are considered a donation, expressed in monetary value, but not higher than 50,000 euros in denars66. From the date of adoption of the decision to call elections until the day of the elections, state authorities and municipalities and the City of Skopje is not allowed to publish advertisements funded from the Budget, the budgets of the municipalities and the City.

Тhe participant in the election campaign may spend up to 180 denars per registered voter in the electoral district or municipality that has submitted a list of candidates and the list of candidates in the first and second round of voting67.

The participant in the election campaign is obliged 11th day of the election campaign to submit a financial report on revenues and expenditures of the account for the election campaign from its opening until the end of the tenth day of the election campaign. The participant in the campaign is required one day after the election campaign to submit a financial report on revenues and expenditures of bank - account for the election campaign for the second half of the campaign, as for the second round of vote is required one day before the second round of voting to submit a financial report on revenues and expenses of the transaction account for the election campaign68.

The participant in the election campaign is obliged immediately, and within 30 days of the completion of the election campaign for the first or second round to submit a total or final financial report on the election campaign69. Broadcasters and print media in the Republic of Macedonia shall, within 15 days after the completion of the election campaign to submit a report on the advertising space used by each of the participants in the election campaign and the funds paid or claimed on that basis70. The financial statements are submitted in the form prescribed by the Minister of Finance which contains information on the name or the name of the donor, type and value of donations, date of receiving donations and expenditures for each donation and revenues and expenses during the election campaign.

Financial reports are submitted to the State Election Commission, State Audit Office, the State Commission for Prevention of Corruption and the Parliament and local elections to the municipal council and the City of Skopje. Mentioned institutions are obliged to publish on their websites71. State Election Commission, State Audit Office and the State Commission for Prevention of Corruption sign Memorandum of Cooperation regarding the implementation of the provisions for financing the election campaign for the exchange of information on irregularities in respect to the financial statements and the measures taken by them against a subject of surveillance.

Table 3. Financing of political parties of the bank accounts for election campaign for local elections in 2013

Sources: Final financial statements of the organizers of the election campaign for local elections in 2013.

It is evident from the table. 3 that the election campaign of the political party for the local elections in 2013 was financed by source revenues from donations (money and services) and other revenues. The political party VMRO-DPMNE of total revenues for financing the election campaign has provided donations in cash and a percentage of 55.70%, while donations in the form of services are realized in a percentage of 44.30% (type of service more for advertising).

Also it is obvious that the political party SDSM revenue for financing the election campaign has provided the basis of other income as a percentage of 98%, while the political party DUI funds for financing the election campaign has provided donations in the form of cash percentage of 97.50%.

It is worth stating that all political parties after the election campaign remain large debts to its creditors, i.e. against their service donors.

Table 4. Financing of political parties of election campaign

for presidential elections in 2014

Sources: Final financial statements of the organizers of the election campaign for presidential elections in 2014.

The data in Table No. 4 show that the presidential candidates in the presidential elections in 2014 Georgi Ivanov and Zoran Popovski funds for campaign financing have provided donations in the form of money, and the candidate Ilyas Halimi funds has provided donations in the form of services. While candidate Stevo Pendaroski funds for financing the election campaign has provided donations in the form of cash as a percentage of 38,54%. on grounds other income as a percentage of 61.46%. It is important to point out that all presidential candidates in the presidential elections in 2014, commitments to creditors remain unpaid.

Also, the financing of political parties during the election campaign in 2014 for the election of Members of Parliament still higher proportion of revenues provided from other income in accordance with law, where the financial report of the political parties do not explain the type of those revenues. This situation is explained below in the table. 5 as follows: the political party VMRO-DPMNE coalition of total revenue 65.63% of the funds are provided by other income, DUI 58.60%, a coalition of SDSM 81.73% and Macedonia coalition positive 76.24%. It is important to state that all political parties after the completion of the electoral process remain obliged towards its creditors and 23.45% of the total realized costs.

Table 5. Financing of political parties of election campaign for early parliamentary elections in 2014

All elections were held in a very competitive political environment in view of the fact that in Macedonia there are 39 political parties officially registered. During this period the political parties do not work very transparent, both during the election and in non-election periods and that their work involves corruption.

Corruption among the political parties during the elections does not apply only to the way they are financed election campaign, but they often try to bribe the electorate during the campaign period in order to return to get their voice and thereby increase the chance of success. The forms of bribery that serve political parties are different and can vary from one-time material reward to promise for employment or other service. To obtain information on the extent and forms of corruption that serve political parties, it is necessary to investigate the perception of the conduct of political parties during elections and who use corrupt methods.

According to studies that measure the exposure of citizens to buy their votes by political parties, it may be noted that citizens who live in rural areas, those who have low incomes or welfare recipients and those with the lowest level of education more often are at purchase their vote by political parties or candidates during the elections72. The survey results show that over 2/3 or 67.7% of respondents believe that during the election vote buying is very present, while 28.8% of respondents believe that vote buying is not present. This is, not true only in the country, but around the world as the most corrupt institutions or organizations are considered political parties73.

The key reason for this perception is the general lack of transparency in political financing political parties and electoral candidates as during election periods then there are no elections. Given that political parties receive direct and indirect government donations, and political parties rely on citizens to support, it is essential that the public is aware and more importantly, where political parties and candidates receive their income and how they are used. Transparency in political financing will allow to the citizens to be informed and make a choice when they become members of a political party or vote for a candidate in an election. It will also allow elected officials and parties to behave responsibly with the funds and to help in monitoring and building its integrity.

1. 6. MONITORING AND SUPERVISION OF FINANCIAL AND MATERIAL OPERATIONS OF POLITICAL PARTIES

Political parties in accordance with the Law on financing political parties are obliged to carry out internal control of political party funding. The statute or other regulations of political parties regulates the performance of control. They are obliged to keep accounting records for financial and material operations of the party under the provisions of the Law on accounting for non-profit organizations74. Revenues and expenditures of political party are public and the political party is obliged to inform any member of the party with the income and expenditure of the party. The political party is required to designate a body and a person responsible for financial operations of the party, who will be obliged to prepare a report on donations and be aligned with data from the register of donations75. On the state of revenues from donations, the political party shall submit quarterly reports to the Ministry of Finance, the Public Revenue Office and the State Audit Office, together with the annual financial report by March 31 for the previous year76. State Audit Office and the Public Revenue Office received reports shall publish on their websites.

Supervision over the financial and material operations of political parties is made of The State Audit Office in accordance with the law and is conducted each calendar year for the previous year77.

Political parties can have only an account and sub-party of their Research and analytical center, but in case of existence of the same, shall submit consolidated - summary financial statements.

Annual account for the financial operations, in accordance with the law, political parties shall submit to the Ministry of Finance, the Public Revenue Office, Central Registry and the State Audit Office by 30 April for the previous year. The report contains the financial performance of the account of the political party and the account of the party research and analytical center. The form, content and manner of keeping the financial report are written by the Minister of Finance.

The Ministry of Finance least annually conducts training of political parties for material and financial operations and how to fill in the financial report. Annual Financial Report contains data on: total income which includes data on the total amount of donations, gifts, contributions, grants, money, materiel, equipment, services, own revenues, fees, etc. and legacies and total expenditures.

If the State Audit Office found irregularities in the annual financial report of the political party that contravenes the provisions of the law, it can apply to the initiation of infringement proceedings or request to the public prosecutor within 30 days of the determination of irregularities78.

The annual financial report political party is required to publicly announce on its website, while reports from the control or audit the financial operations of a political party the body responsible for auditing publishes it on its website.

At election time the State Audit Office within 60 days of submission of the financial report for election campaigns shall conduct the audit of the financial and material operations of political parties. The audit conducted by the opening of the bank account for the election campaign until the completion of transactions on that account79. Audit reports from the audit of the financial statements of the participants in the election campaign, the State Audit Office published on its website within the period stipulated by law.

1. 7. CONCLUSIONS

Republic of Macedonia as a new democratic state should build a solid basis for political pluralism based on the principle of transparency and the rule of law. In this direction work towards improving the transparency of political funding, especially the way political parties are supported by members and donors in their daily work is of great importance and is a key factor for the support of democracy and competition.

One of the main challenges to democratic governance is to ensure transparency and accountability in political financing. The challenge is great at developing new societies that are in transition and new political elites, but even more is when politicians want to implement expensive election campaigns. So, one of the biggest challenges for the mentioned societies is to ensure transparency in political financing prerogative as to avoid the creation of arrangements that may affect competitiveness and the rule of law.

The activities of political parties and relating to fundraising should be in accordance with the law and must respect the principle of transparency. It is particularly important for donations in the form of money, because the political parties should donors to explain for what purpose will be used donations and must be careful not to spend resources giving generous gifts without foundation.

Financing of political parties remains opaque, with a lack of transparency in the process, because the public is not aware of the importance of spring means their spending because political financing influence in society. The legal framework governing the financing of political parties and election campaigns is good, but still need significant improvements. The political parties should be given a legal obligation to provide detailed information on sources of income and expenses during the election campaign because the current analysis of financial reports provide only general figures of items of income and expense without analytical details.

The current legislation does not oblige political parties to provide official identification of donors and retailers, but the name of the donor and the political party. The provision of official identification of donors and traders will increase the reliability of information and it will increase public confidence in political parties and funding system. The application of this tool will leave less room for illegal acquisition of assets by the parties and will increase accountability of political parties prior to its membership, supporters and the general public.

For efficient and transparent use of funds based on donations necessary amendment to the law on donations and sponsorships for public activities. It’s necessary to put a provision that the contract must have a clause that abuse of the donation or sponsorship, recipient is obliged to return funds of the donor, and the state will return the used tax incentives.

To enhance public confidence in the effectiveness of the relevant national supervisory authorities and other state institutions regarding the irregularities in political financing is crucial to strengthen the existing legal practice and the implementation of existing sanctions - fines.

Bibliography

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