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17th Apr 2021

Auditors call for stricter rules on donations to EU parties

  • The Court of Auditors wants potentially unlimited fines for 'irregular' loans and donations (Photo: www.gotcredit.com)

Rules on donations and loans linked to the funding of European Parliament's political parties and foundations should be strengthened, the European Court of Auditors have said.

In an opinion issued on Wednesday (20 December), the guardians of EU finances analysed a proposal tabled by the European Commission on 13 September to address loopholes in the funding of European political parties and foundations, following a series of scandals over the past two years.

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The auditors noted that the commission's proposal do not regulate donations for EU institutions or authorities "involved in the management of EU funds."

They also noted that the commission did not propose rules on donations to entities related, directly or indirectly, to groups and foundations, nor rules concerning the terms and conditions of loans.

All these issues were included as part of several 2013 court of auditors' recommendations to improve the previous legislation on funding of European parties and foundations.

Loans and donations were at the heart of several scandals concerning fraud allegations against MEPs, and the illegal spending of public money by anti-EU parties and foundations, and other scandals concerning lucrative contracts obtained in exchange of donations by people.

These practices were used for example by the Institute for Direct Democracy in Europe (IDDE), a think tank linked to the UKIP-dominated Alliance for Direct Democracy in Europe.

According to the commission and parliamentary services, the auditors report, loans, donations and related "questionable practices" are generally boosted by difficulties encountered by political parties and foundations in finding contributions needed to meet the co-financing threshold.

The co-financing threshold is where EU parties and foundations are required to raise at least 15 percent of their own money before they can access EU funding.

To overcome this issue, the commission proposed to make it easier for parties and foundations to get EU grants, cutting the co-financing threshold to 10 percent for political parties and to five percent for foundations.

Auditors agree with this proposal in order to to "mitigate the risk of using questionable practices".

Other suggestions by the court include that financial sanctions due to any illegal financial activity by political entities "should be raised" and be more severe.

No 'maximum ceiling' on fines

Fines are currently limited to 10 percent of the annual budget of the party or foundation, whereas the court of auditors stated in 2013 that "the amount of a fine should be a multiple of the irregular amounts involved, without a maximum ceiling."

Similarly, auditors considers the ruling of the parliament on imposing fines as too "discretionary".

The auditors recommend that all the provisions concerning the funding of political parties and foundations should be grouped under a single rule book to avoid overlaps and simplify the legislative framework.

Lastly, the auditors warns that "revising legislation early after entering into force and only to address a limited number of issues should, in general, be avoided."

The commission's proposal is part of a 'democracy package' presented by vice president Frans Timmermans, ahead of the 2019 European elections.

The text was approved by the European parliament's constitutional affairs committee on 21 November.

By lowering the threshold for distribution of funds, said S&D MEP Mercedes Bresso on 21 November "we have enhanced the democratic representation of political parties and foundations."

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