Wendy Carolina Sierra 201425969

Martha Juliana Sánchez Gómez 201513649

Pablo Felipe Peláez 201531960
Emilio Corradine

Financing of political campaigns

1. Definition of the problem

In Colombia, the problem could be defined as a lack of transparency and ethics in access to power.
This is due to a weak accountability system, inequity in access to power and high dependence on
private resources, the high sums of money donated by companies in exchange for political favors, and
the influence of armed groups and drug trafficking. In 2013 the Government established the
mandatory registration of incomes and expenses for electoral campaigns, but in the current elections,
only 8.4%1 of the registered candidates reported their incomes and expenses. The foregoing indicates
that, 17 days after the elections, a total of 91.6% of the candidates to hold positions of the popular
election have not registered information in the application "Cuentas Claras". Additionally, statutory
law established a real-time record in the official software of this information, but in reality, the few
candidates who register this information do so within a few days before the elections. On the other
hand, the information available reveals a gap between income and expenses. Approximately the
reported expenses are equivalent to 62% 2 of the reported income. That means that there is a 48%
budget for campaigns that are not being executed, which opens questions. In addition, there are
candidates who have only reported expenses without income 3, and there are regions where no
candidate has reported any information, such as Amazonas 4 (Componente Asuntos Públicos y
Transparencia, 2019).
Secondly, one of the causes identified is the dependency of private resources on political
campaigns, which can result in the State capture. Besides, this dependency favors the concentration of
power in detriment of political participation and liberal democracy. Therefore, it is necessary that
public funding resources reach all candidates equally and equitably. However, in the 2018 legislative
elections, advances in public financing accounted for only 6.18% of the total income. In addition,
these funds were mostly destined to support the Senate candidacies 5 (Transparencia por Colombia,
2018). Additionally, bribery is an institutionalized practice within companies 6, where contributions to

1
Between July 27, 2019, and October 10, 2019, a total of 9,929 candidates from 117,822 registered
have reported income and expenses in the application “Cuentas Claras”.
2
The income reports total $ 86,785,743,505 Colombian pesos, while the expense reports correspond
to $ 53,816,111,174, that is, there is a difference of $ 32,969,632,331.
3
445 candidates have reported expenses, but not income.
4
No candidate in Amazonas - Government (7) and City Hall of Leticia (10) - has reported information.
No candidate for mayor of Mitú (8), Mocoa (7) and Quibdó (8) has reported income or expenses.
5
$ 12,980 million were allocated for the Senate and $ 2,638 million for the Chamber.
6
96% of entrepreneurs perceive that bribes are offered in the business environment, where the main
motivation to offer bribes to public sector officials is to obtain business.
political campaigns are one of the most common forms of bribery 7. This added to the low percentage
of companies that keep an accurate accounting records of political contributions 8 (Transparencia por
Colombia & Universidad Externado de Colombia, 2017). For example, in 2014, 30 companies
donated 44.6% of the total contributions to all campaigns in the country (Espinosa, 2015). Thus,
dependence on private resources creates an opportunity for companies to put their own interests on the
political agenda. In the same way, public employment is vulnerable to political interests because it can
be used as a payment to people who made donations to campaigns.
Lastly, one particular challenge in Colombia is the colluding between politicians and illegal
armed paramilitary groups and drug traffickers to obtain votes, or even these traffickers can come to
power. This problem has been present throughout the political history of the country. Pablo Escobar,
the head of the Medellin Cartel, was elected at the beginning of the 80s as a substitute representative
to the House of Representatives, and Carlos Lehder, also from the Medellín Cartel, was elected
deputy to the Quindío Assembly. Afterward, in the mid-1990s, the financing of the presidential
campaign of Ernesto Samper by the Cali Cartel was discovered, along with a list of congressmen
elected at that time. Now, these cases are known as the “8000 Process”. More recently, a process
known as "Parapolitics" revealed the alliances of drug trafficking and paramilitary groups with
political leaders of different levels: local mayors, regional governors, and congressmen. Additionally,
La Corporación Nuevo Arco indicated that 34 of the 102 senators elected in 2006 (33%) are being
investigated for links to narco-paramilitarism, as well as 25 of the 169 representatives to the House
(15%). In addition, 570 municipalities had electoral irregularities discovered and demanded by the
Office of the Attorney General in the 2006 Senate elections. Misión de Observación Electoral noted
that 15 departments9 have the largest number of municipalities with irregularities reported. In
addition, 576 municipalities have worrying risk levels of corruption due to violence variables (Vargas,
2010). Currently, drug trafficking continues to finance some electoral campaigns. For example, the
Norte del Valle Cartel is allegedly financing campaigns in Risaralda in the current year (Ortiz, 2019).
In short, the problem of the lack of transparency in the access of power leads to corruption
behavior, such as embezzlement of public funds due to the exchange of favors. Also, public
employment is susceptible to influence trafficking. This is an important problem to solve because
democracy in Colombia has been harshly affected by clientelism. Therefore, it is necessary to
encourage accountability mechanisms and fight the causes of the problem to get access to power more
transparent.

2. Current regulation

7
51% of entrepreneurs consider that contributions to political campaigns is one of the most common
forms of bribery.
8
only 8% of companies keep this record
9
Guaviare, Putumayo, Meta, Cundinamarca, Magdalena, Cesar, Chocó, Tolima, Risaralda, Guajira,
Bolívar, Sucre, Arauca, Valle del Cauca and Córdoba.
 Currently Colombia has a very strict regulation regarding political campaign financing. The
resources used for the campaigns are the main object that this regulation restricts. For this Colombia
divides the resources in two categories. Public resources, which are resources that the government
gives the political parties to finance their campaigns and vote replenishment. Moreover, there are also
private resources, like bank loans, candidate resources party resources and private donations. Each of
this resource’s origins category has a different guideline.
Moreover, Colombia’s regulation is divided in two main categories, first there is a regulation
specifically for presidential campaigns and there is another regulation for all other campaigns. This
last one includes major, governor and congress elections.
The combination of both, resources origins and campaign categories, is how the current
regulation establishes the spending limit on the amount of money that politicians can spend in their
campaigns. Regarding the resources there is a limit established by the CNE (National Electoral
Census in Spanish), which all campaigns cannot exceed. This limit is determined every year and it is
adjusted to the inflation and a spread.
For private resources the current regulation states that resources must come from a national
entity, no foreign recourse should be allowed. Also, resources cannot have any link with ML/FT
activities. And finally, donations need to be anonymous for the public, this means that political parties
are obligated to know the origins of their resources but cannot disclose the identity of their donors to
the public. There is also a total expenditure limit for private resources which is 20% of the total limit
for the presidential elections and for the other elections there is no limit regarding private resources
only a total expenditure limit.
Finally regarding public resources, there is one main regulation which states that the public
resources will be determined by de CNE and will adjust depending on the number of people listed in
each county, the more people there is in one county, the more money the candidates will receive.

3. Trade-offs
The role of the government towards the regulation of financing political campaigns is quite
complex. In a country like Colombia there are multiple problems towards this issue as it was
described in the problem analysis. The objective of this section is to describe the different dilemmas
that policy makers face towards financing of political campaigns. To do this we will analyze three
aspects: sources, uses and accountability.
Espinosa (2015) in his work “Apuntes para una reforma a la financiación electoral en
Colombia” mentions the sources of political campaigns which can be private or public. The question
around this topic is which type of funding is better for an adequate electoral competition. On one hand
we have the private resources given by natural and legal persons. This is based on an individualistic
perspective where each individual has the right to contribute to the political party or candidate that
he/she feels empathy to. This idea is in line with guaranteeing the right to participate in a democracy
and the right of individual freedom.
However, not having limits on private funding can have negative effects. Unlimited private
funding can affect the democratic principle of “one person, one vote” since politics could turn to a
plutocracy where rich people have huge influence over candidates. Also, there could be social and
electoral inequalities: the first one is understood as the control of politics by economic elites in the
long run and the second one as the victory of candidates not with the most popular ideas but the one
with more economic resources. Additionally, excess of private financing leads to future commitments
of the ones who contribute to a particular campaign.
On the other hand we have the public financing which is based on the resources that the
government gives to political parties and candidates. This type of financing is based on an egalitarian
theory where all candidates must be in the same conditions for the electoral competition. Despite that
this model promotes equity it hasn't been applied in any country. Some of its disadvantages are that
public financing creates a high dependency of political parties with the government. This could be
risky for the political parties of opposition since the government in power could hinder the financing
of these parties. This type of financing could discourage the relation between political parties and
citizenship. If political parties have a guaranteed amount of money given by the government then they
will don’t have any incentive to have a close relation with the electors.
Now we will analyze which are the trade-offs related to the uses of funds in political
campaigns. Here we mention two specific models: free and restricted. The free model is the one
applied in the United States since 1976 when the Supreme Court, by the Buckley vs. Valeo law,
declared that imposing limits over political campaigns was unconstitutional. In this sense, this model
suggests that natural and legal persons can not have a limit to their contributions since this would
violate their right to expression and individual freedom. However, this model would create a huge
budget difference between traditional and new political parties in a country like Colombia. The
alternate model is the restricted model which is applied in most of the countries like Colombia,
Canada and Central Europe. This model establishes limits to the expenditure in political campaigns.
This contributes to a more equitable electoral competition and also avoids social and electoral
inequalities which were mentioned previously.
Despite that Colombia has a restricted model, this has been a constant challenge to the CNE
due to the high cost of campaigns compared to the established rule. One example of this where the
Congress elections of 2014 where the expenditure limit was 740 million pesos, but the average
expenditure was 3,000 million pesos (Cifras y Conceptos). It is clear that in the Colombian case there
is an issue between the limit of expenditure and the one that candidates really expend in their
campaigns. This fact brings to debate different questions: i) how to define the limit of expenditure in
political campaigns? ii) should the limit be close to the real expenditure of campaigns? or iii) should
the limit be lower in order to reduce the real expenditure in campaigns?
 The final aspect that would be analyzed in this section is the accountability process. We will
focus on who, when and what should candidates and political parties report to the CNE and the
different institutions related to Colombian elections. In the debate towards who should report there is
the question if only political parties should report their incomes and expenditures or should candidates
do it so. If the regulation only demands the political parties to report then this will create a
misunderstanding on specifically who is in charge of reporting. Also, there is the debate if natural and
legal persons should declare their contributions to political parties or candidates. Towards when the
reports should be delivered there is the debate if candidates should make preliminary reports, partial
reports, final reports or a combination of this options. Candidates argue that political campaigns are
quite short so doing partial reports would be difficult and inefficient. Other intellectuals argue that
partial reports impede the alteration of income and expenditure reports of the campaigns. Finally,
candidates say that creating preliminary reports before the campaigns is quite difficult since at that
moment is not clear how the funds will be expended. About what should be reported in political
campaigns there are different trade-offs. The first one is about which type of information should
candidates report. This controversy rises in the local context due to the big amount of contributions in
kind that are done in electoral times. Contributions in kind refer to non-monetary donations like some
type of advertisement or a place to make political meeting that a natural or legal person contributes to
a particular campaign. The problem with this is that usually candidates declare these contributions
with a value that does not correspond to the real one.

4. International comparison
To make the comparison between countries, three areas are evident in funding regulation that
could be improved: parties-citizens relationship; transparency and control; and sanctions. This
section shows some of the "good practices" observed in other countries on issues related to
the regulatory areas.
A. Measures to improve the parties-citizens relationship.
 Public Case
o Reduce the gap between public and private funds.
The distribution of public resources among political parties have four different forms:
o Distributed equally among all those parties
They are distributed equally among those parties that reached a certain electoral
threshold, these are: Poland and Chile.
o Distributed equitably
They are equivalently distributed according to the number of votes, these are
France and Austria. However, France only finances through this method.
o Distributed equitably and equally
 It is distributed in both ways, because it depends on the type of choice, these
are: Argentina and Mexico.
o Matching funds
This initiative seeks to promote the financial participation of citizens in the
electoral process. It also seeks to encourage campaign participants to collect
their own resources. This helps not only to ensure independence of the state,
but also encourages the political participation of citizens by strengthening the
bond between parties and voters. This bring highest levels of trust in political
parties. These are Germany, Netherlands and Argentina.

o Conditionality in the use of public subsidies

Allocate political funds to public funds parties receive from the state
 Finance their campaign spending, these are: Austria, Chile.
 Finance their ongoing party activities, these are: France, Argentina
 Finance their fulfilling party goals or program, these are: Poland, Mexico,
 Earmarked10, this is Netherlands.

Table 1. Type of financing per country

 In table 1 we can observe the different forms of financing of political campaigns, together with
whether in each country it is mandatory to report their campaign expenses and if they do not incur a
penalty.

10
Political training and educational activities, dissemination of information, maintaining contacts with
and engaging in training and education of sister parties outside the country, political-scientific activities,
promoting the political participation of young people, member canvassing, involving nonmember in
activities of the party, canvassing, selections and guidance of holders of political office on top of activities
related with electoraln campaigns (art. 7.2).
On the other hand, it is classified if the country can buy audiovisual media or not. So only Austria and
Chile allow the purchase of these means, since there are countries like France that offer this service in
a free and equitable way. There are also countries like Poland that do not allow the reproduction of
any type of advertising campaign.
B. Trasparency and Control.
 Internal control
The objective is to regain the confidence of the candidates in the political parties.
Thus, we must aim to improve their internal integrity standards, as well as their
regulatory controls through the adoption of international control and supervision
mechanisms. Is necessary adoption of internal mechanisms of control and
supervision:
o Foster internal party accountability
- External supervisory body to have on-site inspections, these are United
kingdom, Portugal,Poland and Chile.
- External audit company, this is France and Argentina
C. Sanctions

Table 2. Type of sanctions per country

In table 2 we find the different concerns that arise in the countries given the breach of the laws
regarding campaign financing, vote buying, and other cases.
o Suspension/ los of public funding
- Political parties which fail or delay the fulfillment of their reporting
obligations, these are France and Germany.
o Prision
- False statements, these are United Kindom and Germany
 - Illegal use of public funds, this is Chile case.

- No renders public account, these are Poland and Germany

- Vote buying, this Netherlands case.

o De registration/ suspensión
- Criminal penalties have almost never been applied in France, Italy,
United Kindom and Poland.

5. Lessons learned
In summary, from the previous analysis, it allows us to better understand the characteristics of the
problem and the viability of some solution alternatives. Chiefly, the current regulation does not
encourage the necessary incentives for candidates to report the actual costs of political campaigns.
One of the main reasons, it's the lack of coercive power of the rules about accountability. This is
because politicians are not penalized for not complying with the mandatory registration of income and
expenses in the virtual platform. Besides, it is established in the law to record this information in real-
time, but compliance with this law is also not given. As a result, without proper sanctions, not only
political accountability mechanisms becomes ineffective, but collecting information about the real
cost of campaigns becomes difficult. This is an important matter because the maximum ceilings of
campaign expenses must be suitable and in line with reality.
On the other hand, the public financing alternative to avoid dependence on private funds is
tough to implement, since finding a balance between public and private financing is difficult. This
difficulty arises from the different rights that citizens have to participate in a democracy and to
support the candidate that they like. Also it is quite difficult to find the real cost of political campaigns
due to the huge amount of species contributions that are seen in the colombian political system.
Finally, this paper allows us to observe several examples of good practices developed in a
comparative way in different countries. These measures belong to three large groups that allow
structuring the management of different political campaigns, these are the increase in participation,
transparency and more effective sanctions. Therefore, the selection of practices from different
countries suggests that there is no ideal Model implemented that combines each of them.

6. Proposal
Our proposal is focused on improving accountability and establishing an appropriate system of
penalties and limits. To improve the coercive power of the current law, it will be necessary to
establish fines and other penalties for those who do not report income and expenses properly and on
time. Besides, there must also be judicial and administrative consequences for those who do not
justify the origin of the revenues. To enhance accountability will be required to reinforce the social
empowerment of citizens, through informed voting. Therefore, it will be necessary to make the
information public, such as publishing it on online platforms. In this vein, advanced investigation due
to unjustified revenues of candidates should be public. Further, lobbying activities should be public to
clarify possible conflicts of interest that citizens can condemn.
Other idea that we developed and that is mentioned in the literature is the creation of an
independent institution which takes control of the political problem in the country. It would be similar
to the Banco de la República which is a public institution but it is independent from the government.
This would delete the Consejo Nacional Electoral in other to look for new ways of regulation this
problem
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Espinosa, J. (2015). Apuntes para una reforma a la financiación electoral en Colombia.

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