Four opposition parties, allied with Bidzina Ivanishvili, who have received GEL 4.1 million mostly from the billionaire politician in recent two months, will no longer be able to use these funds next year, when the parliamentary elections are scheduled, after the Parliament passed with its third and final reading new regulations for party funding.

The Parliament passed on December 28 amendments to the law on political parties with final reading, envisaging, among other issues, banning corporate funding to parties.

The final version of the legislation involves some of the new formulations not featured in the draft’s initial version.
 
One of the new provisions is to apply new rules retroactively to the extent that parties having certain amount of money on their accounts at the time of enacting new regulations and obtained not in line with the new rules should be returned to donors.

Political parties “which have received funding in violation of regulations of this law and by the time of enacting this law these funds are not spent, are obliged to return these funds to a donor within three days after this law goes into force,” reads the newly adopted legislation, which has yet to go into force upon publication by the state online registry of legal acts.

In case of a failure to observer this provision, the funds will be transferred “to the state ownership,” the new regulation reads.

It emerged last week, that in November-December, 2011 four opposition parties, picked by Ivanishvili as his political partners – Republican Party; Our Georgia-Free Democrats (OGFD); Conservative Party and Party of People, received GEL 4.1 million in donations, including GEL 3.3 million from companies and a charitable foundation affiliated with Ivanishvili; rest of the sum, GEL 800,000, was donated by two companies affiliated with footballer Kakhi Kaladze, who is Ivanishvili’s supporter.

Such donations from legal entities will become illegal after the new regulations go into force.

Ivanishvili’s allies made no secret that the donation of GEL 4.1 million – a significant amount for opposition parties in Georgia – was made in order to save these funds for a period when such corporate donations become illegal.

But with the new provision in the regulations, these parties will now have to return these funds back to those legal entities from which they received them.

Meanwhile, the ruling National Movement party released on December 28 list of companies from which the party received donations in 2011. According to the list, the ruling party received total of GEL 1.52 million from seventeen companies. All the donations were made in a period between September 26 and December 14.

Other Provisions of the New Regulations

Among other provisions of the new regulations are: doubling donation cap that a single individual person can provide to a party from current GEL 30,000 to GEL 60,000 per year; a cap of GEL 1,200 for party membership fee annually from each member. No such cap on party membership fees existed previously.

According to the new regulations if a group of individual donors have the same source of income (for example if they are employees of the same company) their aggregate donation to a single party should not exceed GEL 500,000 annually.
 
Total amount of a party’s overall annual funding – received from all sources, whether from donations, membership fees, or state funding – should not exceed 0.2% of Georgia’s GDP. Next year forecasted nominal GDP is GEL 26.5 billion, which means that a party’s maximum annual funding should not be more than GEL 53 million – the ruling National Movement party spent about GEL 14 million in its campaign for last year’s local elections.

New regulations ban a party and its representative or a third person affiliated with a party to donate money, gifts and other material benefits, as well as to sell goods under discount price or to procure goods for higher than market price.

It also bans parties to promise money, securities, or other material benefits to the Georgian citizens.

Similar restrictions will also apply to legal entities, which are “related, directly or indirectly, to a political party or are otherwise under the control of a political party.” The draft defines such potential linkage when a legal entity’s “expenses directly or indirectly are related to the activities or goals of a political party.”

In separate, but related legislative amendments passed on December 28 to the criminal code with its third and final reading, punishment for and measures against political bribery have been tightened.

According to these amendment offering, promising and giving money, services or other benefit of any kind directly or indirectly “for the political purposes” or making any sham deals “for a purpose of evading restrictions” set by the law will be punishable with a fine or imprisonment for up to three years. A legal entity engaged in illegal activities, laid out in this provision, will become subject to “liquidation”.

The parties will have the right to donate gifts during various festivities, but the total amount of such stuff should not exceed GEL 5,000 annually.

The amendment to the criminal code also makes it an offence to accept inducements, involving money or any other kind of benefits, for “the political purposes”; it will also be made punishable either with fine or imprisonment for up to three years.

Chamber of Control

The new regulations put state audit agency, Chamber of Control, in charge of monitoring party funding.

But unlike its initial draft, the final version of the legislation, passed on December 28, further increases authority of the state audit agency in respect of overseeing party funding.

It will gain powers to impound property, including bank account, of a political party, legal entity or of an individual person; this decision by the Chamber of Control can be appealed to the court, but the agency’s decision on impoundment will not be suspended during the court proceedings.

Political parties will have to notify the Chamber of Control about donations within three working days after receiving such donations. Parties will submit their financial declarations to the Chamber of Control every year before February 1 and the Chamber of Control will have to post these declarations on its website. Chamber of Control will be authorized to impose GEL 5,000 fine on a political party in case of its failure to meet disclosure requirements envisaged by these regulations.