Memorandum from Dr Michael Pinto-Duschinsky
EXECUTIVE SUMMARY
1. The Loans for Lordships affair of 2006-07
arose out of concerns that there may have been an improper exchange
of nominations for peerages on the one hand and, on the other
hand, financial inducements in the form of major, undisclosed
loans to political parties.
2. The two main aspects of the matter are,
therefore, (1) the process for nominating and appointing peers
and (2) rules concerning the funding of political parties following
the passage in 2000 of the Political Parties, Elections and Referendums
Act.
The process for nominating and appointing peers
In my opinion, the procedure did work broadly
as intended. The House of Lords Appointments Committee (HoLAC)
scrutinised the suitability of the Prime Minister's nominees for
peerages and rejected several of them.
Problems of the Political Parties, Elections and
Referendums Act 2000 (PPERA) and its non-implementation
Some of the problems largely responsible for
the Loans for Lordships affair concerned the system of political
financing.
(a) PPERA was a complex bill passed in a
hurry and without due regard to the small print.
(b) Laws are of little value unless they
are properly administered and enforced. Standards of electoral
administration in the UK—including the administration and
enforcement of political finance laws—are a disgrace.
(c) There is ample evidence that the Electoral
Commission refused in the weeks before the general election of
2005 to offer any advice on the meaning of a loan on "commercial
terms". Under PPERA, loans on commercial terms—however
large—did not need to be disclosed. In the absence of guidance
from the Electoral Commission, the Labour and Conservative parties
consulted their lawyers and apparently followed their advice on
what constituted "commercial terms" for loans. Consequently,
they were not worthy of prosecution for omitting to declare the
loans. In the case of the Conservatives, their loans were in fact
disclosed—albeit to the press—before the 2005 poll.
Lesson Learned
(d) Political finance laws needed to be drafted
and debated with greater care and patience and with greater consideration
of possible unintended consequences. There are further, as yet
unexplored, pitfalls in PPERA, especially regarding the rules
for financing referendum campaigns, rules concerning the funding
of Third Parties, and inconsistencies between rules for candidates
under the Representation of the People Acts and for political
parties under the terms of the PPERA.
(e) The Electoral Commission should issue
advisory opinions on untested, ambiguous aspects of legislation.
(f) There a need for more active enforcement
of election laws.
(g) There needs to be a separate unit responsible
for enforcing political finance laws. This should be EITHER a
separate unit within the Electoral Commission (the Canadian model)
OR a separate body altogether (the New York City model).
(h) The Committee needs to be cautious about
criticising the police or the press for the Loans for Lordships
affair. The fact that no charges were brought and that those investigated
are entitled to emerge without damage to their reputations does
not necessarily mean that the law enforcement authorities acted
irresponsibly.
MEMORANDUM
Personal Introduction
I have specialised for many years in the academic
study of the funding of political parties and election campaigns.
My book on British Political Finance 1830-1980 dealt with
the history of nominations for peerages of donors to political
parties and, in particular, on the events surrounding the passage
of the Honours (Prevention of Abuses) Act 1925 and on the aftermath
of the Act. I have advised governments, international organisations
and public bodies in about two dozen countries on aspects of political
financing, democratisation, anti-corruption measures and constitutional
reform. In recent years, I have been a consultant to the Electoral
Commission, the Committee on Standards in Public Life, the Council
of Europe, the European Union, the World Bank and the Commonwealth
Secretariat. [1]
During the general election campaign of 2005,
I was in correspondence with the Electoral Commission about the
meaning of loans to political parties on "commercial terms".
In 2006, I was called as a lead witness before the Committee on
Standards in Public Life in its review of the Electoral Commission.
The process for nominating and appointing peers
Naturally, the Loans for Lordships affair of
2006-07 has given rise to questions about the system for nominating
peers. In my opinion, the establishment of the House of Lords
Appointments Committee (HoLAC) has proved valuable. The new scrutiny
system worked well in 2005-06.
Recent concerns about alleged "sales"
of peerages need to be seen against the context of the 1920s,
when the Honours (Prevention of Abuses) Act 1925 was passed.
As John Ramsden described in his book The
Age of Balfour and Baldwin 1902-1940, political parties continued
after 1925 to reward large donors with knighthoods and peerages
and the 1925 Act arguably permitted them to do so. In British
Political Finance (109), I wrote that "Ramsden quotes several
instances of peerages that were given to generous donors during
Baldwin's premiership of 1924-29. In some cases the expectation
of an honor as the reward for a contribution was openly expressed.
Ramsden concludes:
It seems clear that, apart from tidying up the
residue of the Lloyd George era, [the Conservative Party Chairman]
did not fundamentally change his party's attitude towards honours.
It is perhaps true that no bargains were made, and in this sense
honours were not "sold"; but since subscribers received
honours and a high proportion of honours went to subscribers to
the Party, the net result was not very different. (347)"
I agree with Ramsden that the main effect of
the 1925 Act was to replace a system of blatant sales of honours
with a more subtle system. It should be noted that all the main
parties have participated in what may be called indirect sales
of honours ever since. However, the contrast between the Lloyd
George system and that which emerged following the passage of
the 1925 Act perhaps need to be given greater stress.
There are three main differences. First, as
Ramsden points out, there no longer were blatant and direct deals
to exchange money for an honour. Second, since the 1925 Act and
the conviction shortly afterwards of the principal honours tout,
Maundy Gregory, there have not been any known traders in honours.
Gregory took a cut from the money contributed by rich men to political
parties and based his livelihood on the trade. Third, some of
the persons awarded honours by Lloyd George were crooks or were
guilty of grossly immoral business behaviour.
It appears that in 2006 the House of Lords Appointment
Commission rejected some of Prime Minister Blair's nominees for
peerages not because of dubious records but because the Committee
considered that they lacked the experience and qualifications
needed for appointment to the House of Lords.
In my opinion, the Crown Prosecution Service
was right in its explanation of its decision against bringing
charges following the Loans for Lordships investigations. It argued
that prosecution under the terms of the 1925 Act required evidence
of an explicit deal linking a contribution with the promise of
a nomination for a peerage. However, for purposes of policy, PASC
needs to take an opinion on whether it is desirable or practical
to attempt to control indirect inducements or hints about
possible preferment. In raising this question, I am not implying
that that there have been any such hints or implicit inducements
in any particular case or by any particular person or political
party.
Possible ways of eliminating the scope for indirect
inducements to large donors include (a) a ban on honours for contributors,
(b) a cap on political donations, and (c) the removal of patronage
powers from party leaders. Such measures have problems and may
not provide a satisfactory solution. In any case they should be
considered only if the current problems relating to political
donations are considered so serious that a draconian approach
is required.
Among the practical problems of a cap on donations
to political parties and of a ban on honours for donors to political
parties is that they would probably lead to the re-direction of
large donations to nominally independent off-shore islands of
political parties. This process seems to be happening already.
For example, some partisan think tanks and single issue groups
supporting the policies of particular parties now attract the
largesse of rich donors.
There is a natural tendency for legislators
to pay attention to perceived existing ills and to give less attention
to the ills of alternative systems. When it comes to issuing rewards
to political donors and supporters, there is a natural tendency
for political leaders to search for incentives. Admittedly, a
special drawback of the typically British reward system of giving
peerage to party supporters have been that peerages involve seats
in the upper house of the legislature. However, reward systems
in other countries have effects that are arguably more damaging
still. Business contracts are typically awarded in some countries
on the basis of the records of contractors as party contributors.
A set percentage of the public contract awarded may be required
as a kickback to the party in office.
Moreover, a system of public funding is not
necessarily politically neutral, but will tend to reflect the
interests of the ruling party or of a governing coalition of parties.
Lessons learned about the system for scrutinising
nominations for peerages
In broad terms, the system for scrutinising
nominations for peerages following the creation of HoLAC is working
well, though proposals for detailed reforms such as those set
out in PASC's interim report deserve serious consideration.
Problems of the Political Parties, Elections and
Referendums Act, 2000 (PPERA) and its non-implementation
This Act embodied the most extensive reforms
of British political finance since the Corrupt Practices Act of
1883. It incorporated many—not all—of the recommendations
made by the Committee on Standards in Public Life in its Fifth
Report (1998).
However, lawmaking in the field of political
finance is an especially perilous process. There are ample international
examples of laws that produce unintended consequences and which
include terms whose meanings are ambiguous. Such ambiguities create
opportunities for evasion, which candidates and parties are then
able to exploit and which they are entitled to exploit.
It has become clear, even to some of those directly
involved in the enactment of PPERA, that its passage was undesirably
rushed during the months before the general election of 2001.
Its details could not be given sufficient attention. It is convenient
to summarise the problems as follows:
(a) there are problems and pitfalls concerning
the wording of provisions of the 2000 Act.
(b) Further problems result from the fact
that important provisions of the Representation of the People
Acts remain untested in the courts and have rarely if ever been
enforced.
(c) There are inconsistencies between provisions
for donations to candidates (controlled by the RPA) and to political
parties (controlled by PPERA).
(d) As the Electoral Commission has justifiably
complained, PPERA does not clearly set out responsibilities for
administering and enforcing the Act.
(e) The words "commercial terms"
for loans to political parties contained in the PPERA proved problematic
in 2005-06, as detailed below. Yet, they are by no means the only
trap in the 2000 Act. If there were to be a national referendum
on really contentious matter, the provisions on the financing
of referendums in PPERA would lead to serious difficulties. Other
problems relate to the provisions in PPERA for controls on political
spending by Third Parties.
Failure of the Electoral Commission to give an
advisory opinion before the general election of 2005 on the meaning
of a loan on "commercial terms"
This matter will be presented in some detail
since it proved significant in the Loans for Lordships affair
and since the facts have been disputed.
The legal position concerning disclosure of
loans under the terms of the PPERA was set out in a communication
from the Electoral Commission to me dated 28 April 2005. (The
exchange of correspondence between the Commission and me before
the 2005 poll is published on the website of the Committee on
Standards in Public Life in the section on its Eleventh Inquiry).
The Commission wrote:
Section 50(2)(e) provides that any money lent
to a party otherwise than on commercial terms, is treated as a
controlled donation. The value of the donation is defined by section
53(4) as being the difference in monetary terms of the consideration
that would have had to have been paid had the loan been made on
commercial terms and any actual consideration paid. Where the
requirement to repay any loan made to the party has been waived
by the lender, the loan at that time becomes a reportable cash
donation (if it exceeds the reporting thresholds).
This communication failed to address the core
question: namely, what are "commercial terms"? On this,
the Commission failed to give an opinion but merely stated:
We would expect that the party and its auditors would
consider what rate would have been charged if the party had obtained
a loan on the normal commercial terms available at the time the
loan was made.
In other words, the Commission explained the
meaning of "commercial terms" for a loan to a political
party as "the normal commercial terms available at the time
the loan was made".
On 21 April 2005, a fortnight before the general
election, an article in The Times revealed that the Conservatives
had received £16 million in loans. A Conservative Party treasurer
acknowledged in the article that the Conservatives were paying
a rate of interest below the rate they would have been obliged
to pay had the lenders been banks rather than political backers.
The logic of this position was that someone
who deposits money in a bank or building society receives a rate
of interest lower than the rate someone who borrowed from a bank
would be asked to pay. The different between the rate demands
from borrowers and that paid to depositors constitutes the bank's
business mark-up.
The Conservatives' interpretation (backed by
legal opinion) was that a "commercial" rate of interest
was one that a depositor would expect to receive from a building
society or bank—in other words, the lower rate.
Thus, by 21 April 2005, there was a clear and
public distinction between two interpretations of a "commercial"
rate of interest.
It is significant that a year after the 2005
poll, the Electoral Commission published a document in which it
defined commercial terms as the rate which a bank would charge
borrowers—that is, the higher of the two rates.
But it declined to give the same opinion—or
any opinion—during the election campaign despite being asked
about the matter by a Conservative official. The Electoral Commission
gave a verbal reply to this inquiry that it was not the Commission's
job to be a referee in real time. I received the same verbal reply
from the Commission.
The distinction between the rate of interest
paid by banks to depositors and demanded from borrowers was not
the only ambiguity about the meaning of "commercial terms".
When the Loans for Lordships affair subsequently became a matter
of debate in 2006, some forensic accountants argued that a "commercial"
rate of interest also needed to take account of risk factors.
Since the main parties were in a poor financial shape, any commercial
lender would need to have charged a premium rate of interest.
The problem with this view is that major political
parties are not like business enterprises when it comes to the
risk of bankruptcy. When they go into debt, they normally can
rely on supporters to bale them out.
But whether or not "commercial terms"
involved a risk premium for the rate of interest paid to lenders,
this was a further uncertainty.
It follows that:
(a) two weeks before the 2005 general election
there were areas of genuine difficulty about the meaning of a
loan to a political party on "commercial terms". Indeed,
the parties were obliged to take legal advice on the issue.
(b) It was publicly known two weeks before
the poll that one of the major parties—the Conservatives—had
received loans of no less than £16 million.
(c) The Electoral Commission was aware two
weeks before the poll that the major portion of Conservative campaign
expenses was being financed by these loans. Indeed, proof that
the Electoral Commission was aware of the position is that the
reaction of the chairman of the Electoral Commission was cited
in The Times article of 21 April 2005 that broke the story
of the loans.
These facts are relevant because they are at
variance with statements made on behalf of the Electoral Commission
in oral evidence before the Committee on Standards in Public Life
on 13 June 2006.
The Chief Executive of the Electoral Commission
asserted before the Committee on Standards in Public Life as a
reason for not providing guidance before the 2005 general election
about the meaning of a loan on "commercial terms":
I had absolutely no doubt that any of the major
parties was in any doubt as to what the law provided and was in
any doubt as to what our guidance said at the time. I did not
feel that it was necessary for us to go beyond that. I really
do not think that the major parties, about whom these conversations
were taking place, were unaware of what the law provided or of
what our guidance said. (188)
In fact, as explained above, there was room
for genuine doubt by the parties on the meaning of "commercial
terms" for the reasons set out in 23-26 above.
The Chief Executive of the Electoral Commission
also said to the Committee:
We did not at the time [the run up to the 2005
poll] have any evidence to suggest that, as has subsequently been
suggested, the parties were as heavily reliant across the board
on loan finance as it is subsequently suggested they have been.
(188)
At the very least, the Commission was aware
before the poll that one of the parties had borrowed no less than
£16 million and was heavily dependent on loans. It is hard
to understand the suggestion that it was only after the election
that the Commission could have known that loans to parties had
become highly significant.
Admittedly, Labour's loans became public only
later. But there were already strong reasons to believe before
the elections that the Labour campaign was heavily dependent on
loans since the total received by the party in donations (which
were declared on a weekly basis during the campaign) were wholly
insufficient to pay for its advertising and other expenditures.
According to the Commission's evidence of 13
June 2006 to the Standards Committee, it issued "comprehensive
guidance" about the provisions of PPERA on loans (182).
However, when subsequently asked under the terms of the Freedom
of Information Act 2000 to produce this guidance, the Commission's
legal counsel failed, in a reply dated 4 June 2007, to produce
any documentation issued before the 2005 election that gave any
advisory opinion on the meaning of "commercial terms"
for loans. He cited several documents, but none of them included
any clarification of the matter.
Moreover, the legal counsel acknowledged that
during the period between the publication on 21 April 2005 of
the article in The Times revealing that the Conservatives
had received loans to the value of £16 million and the general
election two weeks later, "the Commission/its Chairman did
not issue any specific advice in this regard." (See Appendix
1).
On 21 April 2005, the Chairman of the Commission
was cited in The Times as saying that loans to parties
could be against the spirit of the PPERA 2000. But, as the Commission's
Chairman said on 13 June 2006 to the Standards Committee, this
was not about saying to the parties, "We do not think you
are complying with the legislation". (196)
It may reasonably be argued that the role of
an electoral commission is not to give spiritual advice but to
administer and help enforce the law. What was needed before the
election and what one of the main parties specifically requested
was advice about the meaning of an important aspect of what the
Commission itself acknowledged was a "a piece of untested
legislation with definitions that were untested". (189)
Using arguments broadly similar to those given
in 21-32 above, the Committee on Standards in Public Life
cited the failure of the Electoral Commission to give an advisory
opinion as a case of regulatory failure. (Eleventh Report). It
gave this verdict despite the fact that it agreed with the statement
of the Chairman of the Electoral Commission that the loans were
against the spirit of the PPERA. (For the reason given in £32
above, I differ from the Standards Committee on this narrow point,
though I concur with almost all of its recommendations).
The report of the inquiry commissioned by the
Metropolitan police into the conduct of the loans for Lordship
inquiry has reached a conclusion similar to that set out above.
It too blames the Electoral Commission for its failure to issue
any guidance about the meaning of a loan on "commercial"
terms.
Impact of the Electoral Commission's failure to
offer an advisory opinion on the meaning of a loan on "commercial
terms"
In the opinion of Sir Alistair Graham, Chairman
of the Committee on Standards in Public Life, the Commission's
then policy of not offering advisory opinions on untested legislation
contributed significantly to the subsequent furore over alleged
sales of peerages. I agree with this view. Sir Graham said that,
once the issue of ambiguity of the meaning of "commercial
terms" had been raised with the Commission,
it does seem to me you are a pretty ineffective
regulator if you are not at that time saying in a formal letter
from yourself as Chief Executive or from the Chairman, "We
have some fears and worries in this area. Can I draw your attention
again to the guidance that we have issued?" or, "Here
is the guidance that we are now issuing". You might have
saved those political parties from some serious embarrassment
that has clearly occurred and also some loss of confidence amongst
the public. (Committee on Standards in Public Life, 13 June 2006,
187)
Public criticisms of the parties—especially
Labour—in 2006 were in considerable measure based on the
assumption that they had acted in a clandestine manner and had
evaded the law relating to the disclosure of political donations.
Certainly, they exploited a loophole in the
2000 law but they did not do so in an unreasonable or underhand
way. They followed the advice of their lawyers and acted as one
might expect them to act in the circumstances: namely in their
own best interests as they saw them. There is no reason to believe
that they would have refused to follow an advisory opinion from
the Electoral Commission had the Commission been prepared to give
such an opinion. There is no reason to believe that they were
seeking to disobey the law. The new rules were unclear; the referee
(the Electoral Commission) was mute.
According to press sources close to the Metropolitan
Police investigation into "Loans
for Lordships", the police investigators assumed
for several months that the non-disclosure of loans by Labour
had been illegal.
In the early stages of its investigation into
the alleged sale of honours, Scotland Yard intended—according
to the same sources—to hang its case on charges against
Labour and the Conservatives for failing to disclose loans as
required by the Political Parties, Elections and Referendums Act
2000. This subsidiary offence was vital. The Yard reportedly predicted
that it could prove hard to gather sufficient evidence to prove
the central allegation—a direct trade of a donation (or
loan) for a peerage contrary to the Honours (Prevention of Abuses)
Act, 1925.
Once it was revealed in evidence to the Standards
Committee that the Electoral Commission had refused to give an
advisory opinion on the meaning of "commercial terms",
the prospect of prosecutions against the parties for non-disclosure
of loans virtually disappeared. It has been reliably reported
that the Yard was disappointed when it learned the Electoral Commission's
regulatory shortcomings had destroyed its strategy. The police
now had to rely on proving another subsidiary offence, namely
that there had been a perversion of the course of justice. Their
failure to establish this meant that the entire case crumbled.
(See Progress, 1 October 2007, www.progressonline.org.uk/Magazine/article.asp?a=2003)
In the words of the press release by the Crown
Prosecution Service in which it explained why it had decided against
bringing a prosecution for a breach of PPERA,
we are satisfied that we cannot exclude the possibility
that any loans made—all of which were made following receipt
by the Labour Party of legal advice—can properly be characterised
as commercial.
(www.cps.gov.uk/news/pressreleases/146_07_document.html)
Lessons learned from the failure of the Electoral
Commission to issue an advisory opinion on "commercial terms"
Though the primary objective of the current
PASC inquiry is to derive lessons from the Loans for Lordships
affair about the process of nominating peers, some of the most
significant lessons concern the system of electoral law and administration
in the United Kingdom.
Rather than repeat previous statements, I refer
members of PASC to my first memorandum of evidence to the Eleventh
Inquiry of the Committee on Standards in Public Life (May 2006)
and to my initial evidence before the Committee on 13 June 2007.
The conclusion expressed there was that electoral administration
in the United Kingdom is a disgrace. This was a judgement on the
overall system and not just on the Electoral Commission.
A number of the points set out in this evidence
were subsequently reflected in the Committee's Eleventh Report
(January 2007).
More care needed about legislation on elections
The first lesson, which was beyond the remit
of the Standards Committee's report, is the vital need to legislate
with care about issues relating to parties, referendums and political
funding. It is not sufficient to enact bills that set out objectives
and principles, however worthy they may be. Legislation about
matters that are highly contested—such as elections—will
obviously be closely examined by candidates and by parties with
a view to finding legal means to evade onerous or unwelcome provisions.
Therefore, "the devil is in the detail" is a motto that
applies especially to such legislation.
Even some of those closely involved in the enactment
of the PPERA now recognise that the Act had gaps, ambiguities
and unanticipated consequences.
Sometimes, new legislation is defended on the
ground that, even if imperfect, it can easily be amended. This
is a risky view. Even if it is later altered, imperfect laws can
cause harm and confusion while they are in force.
I do not believe that the best way ahead is
yet another piece of legislation to correct and extend the PPERA.
There needs to be further detailed analysis by experts and practitioners
of the detailed provisions of all the main existing legislation
relating to elections before new laws are proposed.
This plea for better empirical analysis and
greater caution applies also to the proposals emerging from the
review of party funding by Sir Hayden Phillips. The factual analysis
of trends in political funding set out in Sir Hayden's two reports
as the basis for his recommendations contains important gaps and
errors. It is, in my opinion, misleading.
The case for advisory opinions
Second, the Electoral Commission needs to give
advisory opinions on unclear aspects of PPERA and on other electoral
laws.
It should be noted that the Commission has issued
inconsistent statements both about whether it has issued advisory
opinions in the past and whether it intends to do so in the future.
Concerning it past practice about "advisory
rulings", the Chief Executive of the Electoral Commission
stated on 13 June 2006 to the Committee on Standards in Public
Life:
That is not something . . . that we have done
in the past. It is something we need to consider and it is something
we will be considering in our own consideration of the rules and
our powers and the way we exercise them. [Concerning loans to
parties] [w]hat we had was a piece of untested legislation with
definitions that were untested and having to be quite careful
as to what we said in terms of what was right or wrong in a situation
where we did not want to be accused by one party or the other
of coming up with an answer that may or may not have been convenient
to one party or the other. We took the view that we would stand
on the legislation and carry on with the view that the party had
looked at the legislation, interpreted it and got on with compliance.
(13 June 2007, 189, underlining added.)
By contrast, a legal officer of the Commission
on 17 July 2007 answered a query under the terms of the Freedom
of Information Act as follows:
Has the Commission issued any advisory opinions
on specific aspects of laws relating to political finance enacted
from 2000 onwards?
The term "advisory opinion" can be
interpreted in many different ways. In some jurisdictions, there
is a formal legislative procedure for persons to seek and obtain
a formal advisory opinion from an electoral commission. This does
not exist in PPERA. However, the Commission has replied to informal
advisory requests throughout its history in a variety of formats
ranging from phone conversations, emails and letters. These requests
have not been tracked specifically as "advisory opinions"
for recording purposes.
Concerning the future, the position also remains
unclear. In his evidence before the Standards Committee on 4 September
2006, the Chief Executive of the Electoral Commission accepted
the case for advisory opinions:
I think the general principle with new legislation
is [that] a regulated body [should] be able to approach the regulator
and ask for the regulator's view on what would be a sensible approach
to a particular issue that has arisen, particularly if the law
is tricky on this subject or not clear, I think that is a good
principle.
I think we should be more prepared in future
to look at those questions and to say, "Well, in our view
the issue here is full transparency, that is what we are here
to ensure, it seems to us the sensible thing to do is X. Please
do X and we will be happy". There is always a risk that in
three year's time a court tells us that our legal judgment was
wrong. That is a risk I think we should take . . . [a]nd it does
happen internationally with other party funding regimes. (334
and 336)
By contrast, the communication from a legal
officer of the Commission on 17 July 2007 cited in £45, it
more tentative
It should also be noted that the Director of
Party and Election Finance has commenced a review of the advisory
request process to see how it can be regularised in the absence
of a statutory basis. (Electoral Commission FOI 58/07, underlining
added).
Over a year after the Chief Executive of the
Electoral Commission appeared to give a commitment to issuing
advisory opinions and nine months after the Standards Committee
published its Eleventh Report, the Commission has yet to move
on the matter and has muddied the waters by suggesting that its
already has issued such opinions throughout its history.
As the Chief Executive of the Electoral Commission
acknowledged in his evidence of 14 September 2006, cited in 46,
there are established systems of advisory opinions on election
law in countries such as Canada and the United States.
There is an admitted disadvantage of advisory
opinions. They may be seen as quasi-legal judgements which take
power away from the legislature and from the courts. However,
I believe that this danger is less than that of uncertainty and
chaos following the passage of unclear laws.
The need for more enforcement
A third lesson is that the enforcement of election
laws needs to be taken far more seriously. As Judge Mawrey rightly
said in his judgement in 2005 on the Birmingham electoral fraud
cases, public authorities are in a state of denial about electoral
abuses. He made this remark in the specific context of electoral
fraud, but there is a similar situation regarding political financing.
(This is argued more fully in my first memorandum of evidence
to the Committee on Standards in Public life).
One problem about the enforcement of political
finance laws is that there is lack of clarity about which body
is responsible for which aspect of enforcement. International
experience shows clearly that the enforcement of political finance
laws is an unpopular task for regulatory agencies. Therefore,
if responsibilities are divided or are unclear, each regulatory
institution will tend to pass the buck.
PPERA gives the Electoral Commission draconian
powers of entering premises and taking away documents. But the
power to bring prosecutions rest with the Crown Prosecution Service.
Moreover, the Commission's powers are different with regard to
the funding of parties and of candidates. The Chief Executive
of the Commission justifiably pointed out in his evidence of 14
September 2007 to the Standards Committee that the regulatory
framework "is not as well thought through as it might be"
(324)
Indicative of the confusion is that a leading
public lawyer has asserted that the Commission is an enforcement
body whereas the Commission itself wrote to a Yorkshire police
force shortly before May 2007:
The Electoral Commission is not an enforcement
agency. In my opinion, the confusion about legal responsibilities
for enforcement of election laws in the United Kingdom does need
to be addressed. Nevertheless, I do not think that this admitted
confusion is the root cause of the problem of non-enforcement.
It is a long-standing and deep-rooted culture of complacency that
is mainly responsible.
The need for a separate unit responsible for investigation
and enforcement of possible breaches of election laws
A fourth lesson is that it is hard for a single
regulatory body to mix responsibilities for routine administration
of laws with responsibilities for enforcing the laws. The skills
needed to administrate and advise are different from those required
to investigate and enforce.
In the past, the Electoral Commission has lacked
a professional capacity to investigate and to enforce. For example,
no forensic accountant has been a member of staff and there appear
to be no plans to employ one in the future. (See reply by the
Commission to FOI 58/07).
International experience demonstrates that self
standing bodies with a special responsibility for enforcement
are likely to be more active and effective than all-purpose electoral
commissions. In an all-purpose commission, investigations are
likely to be postponed because of the everyday pressures of administration.
This is especially the case during an election campaign.
Two alternative models of enforcement that should
be examined are the Canadian model and the New York City model.
In the Canadian system, there is a self-standing, independent
enforcement capacity within the electoral commission (Elections
Canada). In New York City, the Campaign Finance Board is responsible
for the enforcement of campaign finance rules. It is separate
from the body tasked with administering elections. (Descriptions
of each of these systems is included in the transcript of the
international conference on political financing held in September
2006 by the Electoral Commission. They are to be found on the
Commission's website).
In addition, the work and role of the Election
Crimes Branch of the United States Department of Justice should
be examined.
The Metropolitan Police, the Press and the Loans
for Lordships Affair
In my opinion the decision of the Crown Prosecution
Service not to bring charges against those investigated during
the inquiry was correct. Those investigated are entitled to a
presumption of innocence and to emerge with their reputations
unscathed.
However it does not follow from this that the
Metropolitan police should automatically be criticised for undertaking
the investigation.
Policemen and prosecutors are not always angels.
It is legitimate to ask about specific aspects of the investigation
such as the source of leaks to the press while it was being conducted.
If there is specific evidence of improper conduct on the part
of the police, the Committee is entitled to point to this evidence.
By contrast, the Committee and it's witnesses
need to be restrained in criticising the police on very broad,
insubstantial grounds. It is unhelpful to criticise the police—as
some have appeared to do—on the ground that the British
press is irresponsible or on the ground that it is common knowledge
that there is little corruption or improper conduct in public
life.
ENDNOTE
Dr Michael Pinto-Duschinsky: senior research
fellow in politics, Brunel University; Uxbridge, United Kingdom,
president, International Political Science Association research
committee on political finance and political corruption, member
of the board, IFES (International Foundation for Election Systems,
Washington DC, former founder governor, Westminster Foundation
for Democracy, former member of the steering committee, World
Movement for Democracy.
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